Inflation Control

An Inflated Conclusion

If the inflation target can be 2%, then why can't it be 0%?

Growth

It's all about the perception of improvement. No growth then stagnation and consequential death! It's the financial illusion. The £1 of today is worth less tomorrow. Everyone has to run faster to stay in the same place. Otherwise there is no growth and everyone dies! Pathetic isn't it? Rather like buy one and get another at 50% of the purchase cost. Unless you genuinely need two of the same thing then the real cost is effectively 50% more for the single item you did want.

Whenever a 'business' needs more funds to stay afloat the answer is always raise the cost of products/services. This presumes that the business is really dying (like the consumers). Clearly, an end must eventuate when there are no more customers. This is the dilemma of the railway companies. More funds = raise costs. But raise costs and lose customers. Some 'customers' rely on trains and these businesses know that. Raise costs and screw the passengers. They have no choice (cue nauseating hand-wringing).

When gas/electricity prices are not controllable ('wholesale marketplace cost') it can only be assumed that this marketplace actually exists. What is it? Where is it? Nobody seems to know, but the concept persists anyway. Bit like God. Or the Devil.

OPEC (Organisation of Petroleum Exporting Countries) cuts the production of oil to maintain high costs. Or maximise profits. In a world economy that is in an effective global recession (two consecutive periods of that classic oxymoron: negative growth = decline), it becomes a very clear Winners And Losers scenario.

Oil Production Increase - Cynicism

Everything is affected by the cost of oil and typically by withdrawing a 'product' (preventing a Gordon Brown glut solution) presents a shortage so raising the cost by increased competition because of its scarcity. No oil and, even if a commodity is produced, nothing is moved. The result is inflation and explains why the term negative growth exists. The mindless charge towards growth is driven by the 'need' for an increase in wealth. Not showing a gain in the Winners And Losers mindset shows failure. More subtly it defines hypocrisy. Investors must have a profit to invest any asset. It's a business and the aim is to simply increase wealth, either personal or corporate. Shareholders provide the money to feed the business and it must grow to produce a profit to the shareholder otherwise there is no investment and as a consequence stagnation or death. This is the primary reason that shareholders get the first cut in any business success and not the customer. It's business.

The fluctuation in oil price (almost $150 a barrel in July dropping to a predicted $50 by 2008 year end) is transparent massaging and manipulation in action. The financial 'crisis' was predictable in that inflation outstripped pay increases, borrowing was effectively thrust onto those attempting to stave off a personal melt-down created by ridiculous inflation rates itself created and perpetuated by the world seemingly awash with money, money, money. This would inevitably create a disaster and would need a solution. The result was the sting, but on a global scale. It's happened before and, in principle, will happen again after the latest milk round. And designed to repeat.

In the redistribution argument, negative growth to one (Loser) is positive growth to the other (Winner). The hapless consumer (the host) yet again becomes the prey of the parasite. Those that control the supply of a natural resource. That any country has an oil resource is just the 'luck' that any geological area may enjoy if it produces diamonds. Another example of hypocrisy: the indigenous black population in South Africa does not enjoy the natural wealth of that country any more than the majority of those in Saudi Arabia share in the revenue from the natural oil resources.

There's none so blind as those that will not see and the psychologically blinded will always agree that this represents good business.

Spiritually devoid of humanity as soulless money shouts the loudest.

The most lethal subset of the human species? The egotistical extrovert couldn't give a damn about anything other than self. And in the present. No vision. They end up screwing themselves and don't even notice.

The OPEC members are not nations made up of better people, just the benefactors of a natural resource. There is no overall increase (or decrease) in wealth. It's all smoke and mirrors. Inflation creates the problem and appreciation of an investment through growth and interest at best keeps up with the decline of worth.

Imagine the value of British old money 50 years ago: the smallest denomination was 1/480th part of a £. Decimal day created the current (2008) smallest denomination of 1/100th part (New Penny). Regardless of any real or perceived worth and value, the smallest coin for change or pricing is almost

5 times

greater than 50 years ago, but NOT in worth and value. The highly cynical move of 'decimalisation' was justified as 1/100th part being easier to calculate than the 1/480 part of one pound (£).

It was effective instantaneous inflation

The original New half-penny (15th February 1971) disappeared from circulation in the early 1980s as essentially worthless. A very quiet death.

• Rounding up or down to the nearest half penny as 1/480th part is very different to rounding (always up) to the nearest 1/100th part.

Saudi Arabia
Saudi Arabian Oil
Saudi Arabian Arms Deal

Intrinsically, the regime is unstable and brutal solutions are meted out to quell any dissent. A benefit of the OPEC greed ethos is an increase in the motivation to find alternative energy sources. Gas price is linked to oil. Any oil price rise or fall in costs should see a concomitant change in the cost of gas, but since the high cost of energy sources is artificially maintained by removing resources, reversing a certain glut by cutting production, purchase cost will remain high. In the UQ (aka UK) both gas and electricity are cripplingly high and petrol cost is amongst the highest in the world mostly as the result in taxation. Food prices are steadily rising and the diversion of food sources to feed cars and not people is exacerbating the effect of a desperate situation. No attempts are made to reduce or slow the global population and actually the move is to increase it. Even now an insufficiency of foodstuffs is made worse by fuel production involving human feedstock. The specious arguments are solely based on global warming and climate change and carbon dioxide levels. However, little if any price reduction of the resulting 'petroleum based' fuel happens. If such a scenario actually revealed itself by becoming uncloaked, then the removal of the oil resource by limiting production and so maintaining the overall pricing level would also be uncovered. More people, more opportunity to recover tax revenues and logically the faster the profiteering, the faster the end of (human) life: Inverted Pyramid thinking.

Biofuel Scam

Motoring by taxing distance and not fuel used will offset lost revenues as petrol usage continues to dwindle: smaller engines and more economical driving. Using the example of the car, depreciation is a (two-pronged) pincer attack: as a result of inflation, the value of a car will decline not just in that absurd description of real terms, but actual age. The cost of obsolescence involves vanity, perceived improvement and real technological advancements. Any manufacturer requires finance to develop a product and grow. This comes from sales to those agreeable to buying the latest incarnation. Not necessarily an innovation, but the perceived improvement. It keeps the company buoyant and shareholders content with returns on their investment (mostly based on profit) and maintains jobs. It also fuels inflation, so the vicious circle goes around in perpetuity. Each revolution appears to 'create' wealth, but in fact tightens the grip of global control.

Add a few wars to deplete the world population a little, though slower than its increase to 'balance' increased control and profiteering caused by fear and ultimate death. The power players still manage to remain cloaked so the conspiracy theorist joker in the pack is played. And it still works. The positive result of this is that the greater the population, statistically it should become more difficult to keep the curtain closed across the stage.

The roundabout continues, but on each revolution the growth works against it as resistance to its movement increases

Energy Price Reductions

Claims are being reported in the press that large price reductions in energy are to be expected next year (by up to 30%). The combination of gas and electricity could see a drop in the annual outlay of up to £400. The first part (15%) is expected in the New Year with a further reduction of 15% in the summer. Since January 2008, the duel energy bill has risen from an average of £900 to £1300 (+£400).

The proposed figure for the overall reduction is...

...interesting

Energy prices have plunged over the past 6-months and these reductions are morally expected to be passed on to consumers. It's inevitable as any justification, however specious, for massive rises evaporates. The volatility of price fluctuation is exposed by the summer high (2008) of $147 a barrel and less than $100 (December 2007).

The real test will be whether any price reduction actually happens. If it does then this should only be expected, but if it doesn't then the charge of profiteering would be difficult, if not impossible, to defend. Shareholders' profits will be reduced if the moral reduction of prices is passed on. Otherwise it becomes a simple case of taking money under false pretenses, unless there is a quality case for imposing a high charge, and is then tantamount to theft.

Any argument that includes repayment of an overestimated charge has absolutely no foundation as any interest on the predictable overcharging would not happen. The energy company would profit by accruing interest on the growing balance of its account, but not pass it on when the overcharge amount is returned.

It's child's play accounting.

Ofgem has claimed it would consider "naming and shaming" those companies that fail to pass on wholesale price cuts. It is very likely however, that any price reduction would take a very long time to drip into a customer's account. It would mean diverting profits away from the shareholders and back to the consumers who partly fund those profits.

The main predictable event is that oil production will be drastically cut back. OPEC has already announced a cut by 2.2 million barrels per day. This is the mechanism for price massage and control: cause a glut and prices drop so create a shortage and see those prices escalate. And since gas and oil prices have been linked (for no justifiable reason) the inevitable becomes entirely predictable.

A cynical comment from British Gas:

• "We are committed to passing savings on to customers wherever we can. While wholesale gas prices are still high, they are falling. If that continues we are hopeful that we will be able to reduce energy prices for our customers next spring."

...hopeful...?

...will be able...?

So, why should it be only a possibility should prices go downwards?