23 january 2010, up, up and away

Saturday 23rd January 2010

Wow – 2.9%, the sharpest inflation rise on record – ever. Who could have predicted that ? How about me (22 Nov), “inflation, inflation, inflation is likely today's biggest legacy.” Yet the bank of england’s governor is astoundingly relaxed, even as he notes that “inflation is likely to pick up markedly in the first half of this year”. Interest rate rises then are not imminent. They are needed though, or would be if a manageable bout of inflation were not needed more to help whittle away our mountainous debt. It’s been entirely evident for a long time now that the cost to all this monetary laxity building up inexorably will come back to haunt us. Inflation’s leap, no temporary blip, shows that macroeconomics has no respect for electoral cycles. Meanwhile, does communism have something to teach us in this respect ? My other half is baking a (6th) birthday cake for my youngest, from her grandmother’s recipe. Amongst the ingredients are “70 filler” of baking powder - a filler being 1/100th of a hungarian forint, its currency. Now that’s what I call financial stability...