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And the phone didn't ring
Apr. 11th, 2005 03:11 pmI informed them at work that I might have to take an unscheduled long-term leave of absence. I turned on the mobile phone (a rare occurrence these days) and headed off to the gym.
But it was not to be. Once again I have not been picked for the Lions' tour. I knew that I was a bit of a long shot, but there was still that small disappointment when the text message failed to arrive, that feeling of once again having just missed the boat. Perhaps next time, although I accept that once you are in your 50s you are little bit over-the-top for scrum-half.
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For some years I have been predicting the return of inflation around about 2012, but I am now beginning to worry that I might be a little premature. And in the world of finance it isn't just a matter of being right — you have to be right at the right time.
My thought processes are somewhat radical and certainly do not follow the lines of Philip Coggan in the FT. My premise is basically that too many people who will become decision-makers are being saddled with high levels of debt. In the old days the inflation fairy magicked this debt away. But now the debt is real, and has to be paid off with real money. For the moment, those in power are not saddled with a problem. Like me, they went to University when you got things called grants, and you only paid tuition fees if you were American and had rich parents. Our current leaders probably bought their first house about 25 years ago and thus benefited from the massive boom in house prices between 1982 and 1988, as well as the recent boom between 1996 and 2003. For them everything is gravy, and low inflation is good.
But fast-forward 10 years (yes, I now this takes us to 2015 -- that's why I said that I was worried that my prediction of 2012 might be a bit premature). The decision-makers now will be saddled with debt that has not been paid off. Although they are unlikely to make moves that increase the level of inflation, I suspect that there will not be the political or economic will to take the steps needed to stop it.
There is another reason. If we carry on at the present rate, the banks will be owed too much money. When you get a situation where a small minority (banks and their shareholders) benefit from a situation (i.e. low inflation) but the large majority (those with credit card debts and large mortgages) do not, then the money will inevitably be shifted from point A to point B in order to keep the economy ticking over. The best way to do this is to inflate away the debt.
This would appear to make index-linked gilts a good investment, despite the fact that they have performed well over the past couple of years. I have also advised anyone in their twenties or early thirties who will listen that they should take out a 30-year fixed mortgage at about 6%. For a small sacrifice in income now, you would basically be taking a no-lose position for your later years.
But it was not to be. Once again I have not been picked for the Lions' tour. I knew that I was a bit of a long shot, but there was still that small disappointment when the text message failed to arrive, that feeling of once again having just missed the boat. Perhaps next time, although I accept that once you are in your 50s you are little bit over-the-top for scrum-half.
---
For some years I have been predicting the return of inflation around about 2012, but I am now beginning to worry that I might be a little premature. And in the world of finance it isn't just a matter of being right — you have to be right at the right time.
My thought processes are somewhat radical and certainly do not follow the lines of Philip Coggan in the FT. My premise is basically that too many people who will become decision-makers are being saddled with high levels of debt. In the old days the inflation fairy magicked this debt away. But now the debt is real, and has to be paid off with real money. For the moment, those in power are not saddled with a problem. Like me, they went to University when you got things called grants, and you only paid tuition fees if you were American and had rich parents. Our current leaders probably bought their first house about 25 years ago and thus benefited from the massive boom in house prices between 1982 and 1988, as well as the recent boom between 1996 and 2003. For them everything is gravy, and low inflation is good.
But fast-forward 10 years (yes, I now this takes us to 2015 -- that's why I said that I was worried that my prediction of 2012 might be a bit premature). The decision-makers now will be saddled with debt that has not been paid off. Although they are unlikely to make moves that increase the level of inflation, I suspect that there will not be the political or economic will to take the steps needed to stop it.
There is another reason. If we carry on at the present rate, the banks will be owed too much money. When you get a situation where a small minority (banks and their shareholders) benefit from a situation (i.e. low inflation) but the large majority (those with credit card debts and large mortgages) do not, then the money will inevitably be shifted from point A to point B in order to keep the economy ticking over. The best way to do this is to inflate away the debt.
This would appear to make index-linked gilts a good investment, despite the fact that they have performed well over the past couple of years. I have also advised anyone in their twenties or early thirties who will listen that they should take out a 30-year fixed mortgage at about 6%. For a small sacrifice in income now, you would basically be taking a no-lose position for your later years.
