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18 December 2012

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Paul Coffin

Dear Sir,

I enjoy reading your posts and in the main I am in agreement with you! However this time I think you may be paying too much attention to our short term past with regard to inflation.

Since the B of E remit was changed in 1997 I was concerned that a remit purely with a focus on inflation was misguided and that the remit should consider inflation AND growth.

Now that circumstances have changed so significantly I am more than ever convinced of this need.

As you will know, monetary policy is so very useful and powerful because it can convey powerful messages to citizens, which they then act upon. (Theory of rational expectations).

It is because of this that I believe the focus of monetary policy now needs to change to one where much greater heed is paid to Economic Growth, as opposed to yesterdays war of fighting inflation.

Ah, the cries of 'yes but we will store up problems up for tomorrow'...
It is not so much the rate of inflation which is a problem, it is unexpected inflation, and a strong and credible central bank would be able to ensure that such a situation occurred.

The problem is that we remain focused on fighting inflation. In effect we are saying to economic agents, people and business, that they must still remain guarded. Put another way we are telling rational people to hold back. To constrict their spending, price setting and general activity because if we don't things may get out of hand and we may end up like Germany in the 1920's.......

Britain had problems with inflation in the 1970's because it was an inefficient old fashioned manufacturing economy and could not produce an increase in goods without unions demanding a bigger slice of the cake.

Britain today is a much more efficient and internationally diverse open economy. It is able to cope with many shocks to the system e.g. financial crisis of 2008, ERM fall out 1992, high commodity prices globally during the last 5 years. Despite these events and others, the economy still created 500k new jobs in the last year, something which I doubt would have been possible 30 years ago.

Times have changed and so it must be for monetary policy. Its is Christmas time and for the sake of a better economy in 2013 Central Bankers should be telling everyone to get the punch bowl out........

yours
Paul Coffin
www.investglobally.co.uk/blog
[email protected]

Helenjo78782592

In all of this everyone has totally cast aside and forgotten Pensioners who have no option but to rely 90% on savings interest
Theres millions of them who went without there whole lives to save from low wages and taxed income for a crumb of comfort in old age .
They were denied the options of Company pension schemes etc and often had no option but to stay home and care for children and aging parents hence they do not even get full state pension.

Their reward now is to be royally ripped off in favour of Mervyn Kings rich friends
the B of E Pension Scheme and everyone who took out loans they could not afford

By robbing the prudent to benefit Bank bonuses and their ilk the trouble this country is storing up has yet to even be thought about by the Treasury

All of these Pensioners are no longer paying tax and will soon have to claim Pension Credit at what cost to the welfare budget ?

Small wonder newer generattions see no point in saving.

Yet each month Mervyn and all the other Central Bankers meet in Switzerland dining high on the hog in order to devise more and more schemes to rob every kind of Pensioner of their savings.

Theres 7 savers to every 1 mortgage holder and Cameron , Clegg and Osbourne all PROMISED to help savers .


instead between them all they have done is helped themselves to savers lives

Terry Smith

Paul Coffin: I think we are going to have to agree to disagree but thank you for the contribution.

Alan Dykes

If I thought we could create growth by destroying the currency, I might swallow my distaste at the Central Bankers' highly choreographed switch from inflation targeting and reserve judgement.

I had my doubts about Mr Carney anyway, despite the girlishly giggly hagiographies in the quality press. Anybody pursued so enthusiastically by this government and this chancellor is not going to be Volcker's natural heir.

As it stands, I think this may be time to embrace debt and gear up to the hilt. The chances that the combination of Central Bankers and politicians keeping this thing under control must be close to zero.

At least, high personal gearing might offset the wealth destruction heading towards my bond heavy pension funds when the tsunami arrives.

Paul Coffin; I suggest you watch the Martenson Crash Course.

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