Can someone please explain this to me? I hear many austrian school economists claiming that the UK is 5-10 years ahead of us in a very similar cycle. So, why is the pound still amongst the strongest currency and has not experienced any serious inflation?
Thanks…
If they are printing money, then they have already experienced inflation.
Technically correct using the Austrian definition of inflation, but it is obvious the OP is referring to price inflation.
This isn’t the Austrian definition. It’s the original definition of the word.
The inflation has already taken place and the central bank continues to create more of it. So all things being equal, the previous inflation will cause prices to rise. But that is all things being equal. There are a lot of reasons that prices have not risen. The first and most significant is that banks are sitting on this inflation and not lending it out. The second is that liquidations from malinvestments are still not complete as government has moved to prop up failed investments. Because government can not save an investment and only prolong the liquidation, these liquidations will continue to occur into the future. Of course banks seeing the slow liquidations become even more timid about lending.
I’m not sure that’s true. I remember the pound buying over 210yen some time before the crash, right now it buys 145.
these two things need clarification, otherwise there is no hope having a sensible discussion about the OP’s question.
Which of the M’s counts as the “Austrian definition of inflation” this must be clarified because you can have one of the M’s going up while another goes down.
w.r.t. price inflation - you must be clear about what it is you are measuring… if there is a boom in lending for houses then the price of houses may go up without a corresponding rise in the price of consumer goods… and vice versa.
The original definition is the Austrian definition.
You must have missed the entire thread on this.
The definition was being used before the Austrian school of thought.
http://www.clevelandfed.org/Research/Commentary/1997/1015.pdf
Bogart, thanks for the reply. However, I am still a bit confused. Is the pound inflation being pushed aside via govt and bank policy to result in inflation down the road or has the risk aversion of UK banks kept inflation at bay for the long term?
Whatever. You’re still arguing semantics and totally missing the point of the question.
Duh. What you don’t seem to get is that AS uses that.
I never suggested that Austrians don’t use the term in that manor, just that they didn’t coin the definition, as Adam suggests. But whatever, I’m out of the thread since it seems to be upsetting a few. I just figured, with my initial post, that I’d clear that up for the OP.
What do you mean they don’t have inflation? The pound has fallen, and continues to fall like rock. It becomes less visible when compared to the other falling currencies such as the dollar, or Euro, but when compared to gold, or a commodity currency, the inflation becomes extremely obvious. England is on the brink of collapse, and it’s entirely due to their inflationary/deficit spending policies. The Pound (as well as the dollar, but more so for the pound) is on the brink of a currency crises (balance of payment crises).