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-- Posted Wednesday, 16 June 2010 | Digg This Article | | Source: GoldSeek.com
 Former Bank of England Monetary Policy Committee member and leading UK economist David Blanchflower is suggesting that the UK target a higher inflation rate to deal with one of the highest national debt mountains in the world.
In doing so he is advocating the robbing of pensioners on fixed incomes and those with savings to bailout the stupid and incompetent who have gotten themselves deep in debt. It is a monstrous slight of hand and all investors should be aware of this, and should seriously consider whether they want to keep any wealth in the UK in the long-term. The awful thing is that this is probably going to become national policy by default. The alternative of paying down debts does indeed have the negative consequences that Professor Blanchflower suggests, namely that the recession it involves is actually more damaging than inflation to the national economy. Inflationary disease But make no mistake, somebody still pays. It will be honest savers, investors and pensioners who are robbed by this Peter to pay Paul. ‘Creating a bit of inflation’ as Blanchflower advocates in his latest article on Bloomberg, is letting a genie out of the bag. In Germany in the early 20s people ended up burning cash to keep warm because it had become so worthless. That would at least keep British pensioners warm in the winter. Can we trust the same monetary authorities who brought us the totally unexpected financial crisis to handle inflation correctly? The past precedent is not very good. Inflation has a tendency to spiral. It is advisable therefore to avoid UK pound denominated assets (which have already devalued by 20 per cent against the US dollar in the past year) and buy something that will actually benefit from inflation like gold and silver. This chart shows what gold should be worth adjusted for inflation:  Now as inflation approaches the rush into gold will be considerable and the price will spike like in 1980 but there is no sign of this just yet. The price has been rising steadily with a few ups and downs for almost a decade. Precious metals Any pensioner who bought gold or silver in the UK a year ago is laughing today as silver has doubled in value and gold is up by around 50 per cent in UK sterling. This is a trend that will continue as devaluation gives way to higher levels of inflation and then yet more devaluation. Getting out of equities also makes sense. Inflation is bad for company profits as they cannot raise prices fast enough to keep up with rising operating costs. Treasury bonds will also crash because their yields will be negative after inflation. Cash is obviously devalued by inflation. UK houses are a terrible investment (see this article). There is not much left except precious metals in this nasty investment crash. Don’t be a victim of ‘creating a bit of inflation’. Get some protection while there is still time.
-- Posted Wednesday, 16 June 2010 | Digg This Article | Source: GoldSeek.com
Previous Articles by Peter Cooper
About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in
1999 to complete his first book, a history of the Bovis construction group.
Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.
 Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.
He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.
Order my book online from this link
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Blanchflower Says Rob the Pensioners to Pay off UK Debts
