As products become less relevant or tastes change, they are removed and replaced with something else.
If there is evidence that people are driving a lot less (which current traffic volumes don't support), then that would likely be factored into the overall calculations. Without insight into the exact formula I can't say what the impact would be, but the goal is to track such trends and be representative of overall costs of living.
Globalisation and open borders mean labour shortages are a thing of the past.Eventually price takes get to be price setters when they go on strike or labour shortages increase prices.
Periods of high inflation are, in the medium term, great for working people as they erode the real value of debt. They also increase the value of labour.
Labour inflation is way behind capital inflation (stock markets, houses etc) so in real terms the value of labour is reducing. This is a good paper on the subject. Looking at tax takes or labour price inflation in isolation is meaningless. We are creating a Capital Owning class in this country which will be just as embedded as the old Anglo-Irish landlords. That infamous leftie Michael McDowell was writing about it in the IT the other day. Apparently even the wee man in the Park was breathlessly pontificating about it on the Late Late recently.
I agree. That's why flooding the developed world with money hasn't led to labour price increases as the labour which produced the goods is in a different place. It has led to capital price inflation since, simplistically put, the capital is not in a different place.Globalisation and open borders mean labour shortages are a thing of the past.
Higher inflation will not be matched by increased labour rates for the foreseeable
Yes there was a bit of inflation in Ireland around 2007, but did the ECB come in with their fire hoses to quell Irish inflation rates then,? there was no inflation in Germany remember, the German banks were lending to Irish banks then. They came in way too late to stop the run away lending that was going on, but they also crystallized the collapse of the banking sector by raising those rates and preventing the banks from rolling over their bonds. If anything they were 5 years too late. Can't see them doing that again especially as this time the debt is mostly sovereign bonds.2008 for the ECB; 2007 for the Bank of England; 2019 for the FED.
The ECB responds to inflation in the eurozone. Inflation was at the 1% level in the 1990s; in the early 2000s it rose above the ECBs target rate of 2%. In 2008 it hit 3.28% so the ECB increased interest rates. Inflation fell to 0.29% in 2009. https://www.rateinflation.com/inflation-rate/euro-area-historical-inflation-rate/. So monetary policy (as per Paul Volker) works. What's not to like?Yes there was a bit of inflation in Ireland around 2007, but did the ECB come in with their fire hoses to quell Irish inflation rates then,? there was no inflation in Germany remember, the German banks were lending to Irish banks then. They came in way too late to stop the run away lending that was going on, but they also crystallized the collapse of the banking sector by raising those rates and preventing the banks from rolling over their bonds. If anything they were 5 years too late. Can't see them doing that again especially as this time the debt is mostly sovereign bonds.
The old Monetary union without Fiscal Union problem.What's not to like?
so the ECB increased interest rates
What's not to like?
It worked for Paul Volker alright but caused a recession in the US and a depression in Ireland throughout the 1980s. Jean Claude Trichet almost collapsed the euro a decade ago when he tried to stay rigidly to the inflation targets. I doubt they will risk that again, they will talk the talk alright , pretend inflation is not there by not putting their measuring probes into hot places. The main issue is not prices per se but production capacity they need to ensure that all hands are on deck in the factories and farms to keep stuff produced. The issue is no longer demand shock (solved by money printing) but supply shock ( unfortunately houses cannot be printed).In 2008 it hit 3.28% so the ECB increased interest rates. Inflation fell to 0.29% in 2009. https://www.rateinflation.com/inflation-rate/euro-area-historical-inflation-rate/. So monetary policy (as per Paul Volker) works. What's not to like?
The calamitous Irish property crash and sovereign debt crisis that ripped through the eurozone bankrupting nation states. Other than that, all good!
It worked for Paul Volker alright but caused a recession in the US and a depression in Ireland throughout the 1980s. Jean Claude Trichet almost collapsed the euro a decade ago when he tried to stay rigidly to the inflation targets. I doubt they will risk that again, they will talk the talk alright , pretend inflation is not there by not putting their measuring probes into hot places. The main issue is not prices per se but production capacity they need to ensure that all hands are on deck in the factories and farms to keep stuff produced. The issue is no longer demand shock (solved by money printing) but supply shock ( unfortunately houses cannot be printed).
to borrow euro on the cheap
Other banks and by issuing bank bonds, for example.From who?
Other banks and by issuing bank bonds, for example.
Just because someone does a job badly that doesn't mean the job shouldn't be done. If the argument is that the Euro/ECB/EU should be unwound because they blundered their way into the 2008 crash then by the same logic we should get rid of our public health system. Personally I'd like to see both remain but run properly.Yes, but all of it is under the aegis of the eurozone monetary system in which the ECB tasks itself with maintaining price stability.
This is from their website
"The ECB monitors developments in the banking sectors of the euro area and the EU as a whole, as well as other financial sectors, to identify any vulnerabilities and check the resilience of the financial system.
It carries out these tasks together with the other central banks of the Eurosystem and the European System of Central Banks.
The emergence of possible systemic risks in the financial system is addressed through macroprudential policies. The overarching goal of macroprudential policy is to preserve financial stability."
If the argument is
Yes, so improve it. I'm all in favour of that.That's not the argument at all.
I am in favour of a single currency, further integration with Europe.
However, it has to be on the basis of a system that is workable and accountable.
Yes, so improve it. I'm all in favour of that.
Hi Silvius
The CSO is excellent for answering questions from the public.
Give them a shout and ask them if your experience is correct.
Brendan
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