Is the government expecting rampant inflation?

For some years now I have predicting high inflation coming to the UK. For most of that time I have been ridiculed by friends and colleagues. Now they are less certain that I am an absolute fool!
One interesting fact is that the ultimate protection from rising prices that has been available for most of the past 30 years has been National Savings & Investments' (NS&I) tax-free, index-linked savings certificates.

These certificates have guaranteed to beat inflation, and your entire deposit was protected by the Government. Oddly (or not) the state-owned savings bank has withdrawn these products twice in the past few years and they're currently not on sale at all. There is plenty of demand, the latest issue sold out after just a few months in 2011.

NS&I recently stated that it is unlikely to bring the savings certificates back before April 2013. That doesn't mean that they will return in 2013, it's just that NS&I don't plan that far ahead.

It would seem that the Government, which decides how much savings NS&I is allowed to accept in any given financial year, doesn't want any more of our money to finance its massive borrowing needs.
Now why might that be? Is it because it's currently cheaper for the Government to borrow from elsewhere than for it to pay us more than inflation? Does that not point to higher inflation coming?

It would seem that inflation is not an accident it's a deliberate policy

Further to this morning's piece about the Bank of England's Deputy Governor, Charlie Bean, telling us to "go out and spend to help invigorate the UK's economic recovery" because "I think it needs to be said that savers shouldn't necessarily expect to be able to live just off their income in times when interest rates are low. It may make sense for them to eat into their capital a bit."

The more I think about this advice the more angry I get. There are many anger making points arising from Mr Bean's advice, here's a few:
1) If people have put money aside for a rainy day, something the last Labour government singly failed to do, why should they be punished whilst the feckless find the amount of their debts reduced?

2) If the current economic recession was caused largely by excessive spending, why does Mr Bean want us to repeat the mistakes?

3) Inflation is just another stealth tax, maybe the most effective one. It is a tax imposed by governments on those holding its debt and anyone whose savings are not index-linked (and by the correct index) is paying towards that tax.

4) In Feb 2009, just before the Labour Government & Bank of England turned on the banknote printing presses, the Bank of England predicted that inflation in late 2010 would be between 0% and 1%. A year later in Feb 2010 they predicted it would be between 1% and 2%. Now in September 2010 it's 3.1%. So why hould anyone believe a Bank of England who still claim that inflation is not a real worry, deflation is?

5) OK so we are not alone, the US Federal has said it is willing 'to provide additional accommodation if needed to … return inflation, over time, to levels consistent with its mandate' - More deliberate inflation...

6) Back to the value in property point. Yes my house has gone up in value and yes that is nice (on paper) but it gives me no income and I can only release that increase in value when I sell it. But at that point I will need to buy another house so how does that help. As I see it the only time the 'profit' in my house will be realised is when I die and the beneficiaries of my will pay inheritance tax. Hold on is that the real plan? Force old age pensioners and other savers with no real income to starve so that they die and then the government gets a percentage of the rise in house prices in the form of inheritance tax? Surely no government could be that cruel...

In bust Britain is saving 'wrong'?

No I won't spend all my income, isn't tht how Britain got into this mess; a labour government incapable of living within its means and a populace driven to have the latest of everything and buy it on credit if they haven't the money. What ever happened to prudence?

Ready for inflation? NS&I are.

News that National Savings & Investments have withdrawn their index linked products leaves me wondering if 'the real fear is deflation' as we are constantly told or if the real worry is actually inflation. Time to buy more gold?

Gordon Brown's record

Edward Heathcoat Amory in The Mail points out the truth about "What has Gordon Brown got to show for 12 years in power?". Here's an extract:

"Twelve years ago, Gordon Brown rose, brimming with self-confidence, to deliver his first Budget speech to the Commons as New Labour's Chancellor of the
Exchequer.

Today, as he fights for his political life with a make-or-break speech to the Labour Conference, we look back at what Mr Brown said ... and whether he delivered.

THEN: 'The Chancellor is first and foremost the guardian of the public finances – the people's money ... Public finances must be sustainable over the long term ... I will ensure an historic break from the short-termism and expediency that have characterised the recent fiscal policies of our country.'

NOW: This year Britain will borrow £225billion, and Labour plans to increase the national debt to £1.4trillion by 2013. It has yet to set out proposals for cutting spending.

THEN: 'The objective behind our two-year-long corporate tax review has been to develop a tax system that encourages personal savings.'

NOW: The savings ratio – the percentage of our income that Britons save for the future - fell from often over 10 per cent under the Tories to 2 per cent and lower during the last few years of Labour government as ministers destroyed all the Tory tax incentives for saving.

THEN: 'Many pension funds are in substantial surplus ... so this is the right time to undertake a long-needed reform ... with immediate effect I propose to abolish tax credits paid to pension funds and companies.'

NOW: This reckless pensions tax grab is calculated to have knocked £100billion off
the value of British pensions and contributed to death of the final-salary scheme – in the private sector at least."

Read the whole piece and have it to hand when Gordon Brown gets up to deliver his speech to Conference, full of the usual 'brownies' and unsubstantiated attacks on Conservative policy.

Is it class war?

Gordon Brown sneered when he was questioned as to whether the £50,000 saving protection limit per banking institution was enough; the limit was "perfectly adequate", or so he said. Gordon Brown knows that 97% of savers have savings of less than £50,000, he also knows that the other 3% have savings that represent around 50% of bank deposits. If the banking system were ever to fail then it would wipe out the, as Gordon Brown sees it, "wealthy". Have the former class warriors Gordon Brown and Alistair Darling been planning this for a while? Is it beyond the realm of possibility that Gordon Brown is indulging in clandestine class-warfare?