The problem is inflation (maybe hyper-inflation) not deflation

I have been explaining for quite some time now that despite the claims of this most discredited Labour government and their propaganda arm, the BBC, deflation is no more than a short-term issue, the real problem is inflation.

Today Guido Fawkes reveals that the Bank of England pension fund which "is managed on behalf of a very select and savvy group of people with access to a lot of market insight - the employees of the central bank" sold of equities entirely at the end of 2006 "cutting a 21.6% holding down to 0.1%, thus avoiding a 35% drop in UK equities since that time." Over the same period the "fund’s holding of Index Linked Gilts has shot up from 25.6% of assets to a 70.7% proportion of assets" As Guido explains "Index Linked Gilts are linked to RPI - the inflation rate - you buy them if you are worried about inflation. They are a hedge against inflation."

Maybe David Cameron, George Osborne etc. could ask the pertinent question which is "if deflation is (as the political elite and the BBC continually claim) the big threat, why is the Bank of England’s pension fund betting 3/5 of the £2.2 billion pot on hedging against inflation?


Liam Halligan has similar views, do read his article.


By the way not a word about the very real prospects for inflation on the BBC, they have a Labour party line to push.