Douglas Carswell's Blog

Inflation is up; what will the Chancellor do about it?

I’ve a question on the Commons Order Paper today asking the Chancellor what steps he’s taking to reduce inflation.  It could be rather timely given that the Retail Price Index has just hit 5.5%.   

Assuming I get the chance to ask it, I wonder what his reply will be?

Will his reply be:

a)      We’ll raise interest rates. (The problem with that reply is that the quango committee at the Bank of England that sets the price of credit, or interest rates, is supposedly independent)

b)      We’ll turn off the printing press. Quantitative easing has created many, many more £’s than there were before. Many of these new £ still sit inert of the zombie banks balance sheets. But as they seep out, they reduce the worth of the £’s already out there.

c)       Nothing. This rise in inflation is just a blip caused by ad hoc events.  The real danger is deflation (However absurd, this is more of less the view of the Monetary Policy muppets who set the price of credit at the Bank of England)

Inflation is a tax.  It transfers wealth from the private sphere to the public.  It also rewards borrowing and overconsumption, at the expense of those who save and produce things.  

Whether or not I get the chance to ask my question – or get any answer today – how we deal with high inflation is going to be the key question the Chancellor needs to address between now and 2015.

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