I was trying to explain to my son, who is taking Economics at 'A' level that economics is in theory historical. So we get a load of historical data over the past 1 month or so and then we know how the economy has performed.
I then explained that eventhough Economics may be based on historical performance and data, how it can be also predictive or forecasted.
Here is one way: Stagflation
In economics, stagflation, a portmanteau of stagnation and inflation, is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
I can see this happening for some time now. Manufacturers, retailers etc are putting prices up by upto 30%. In many cases they are using the blame of the Brexit to justify this rise, even before we have announce it.
The rises are based on 8 years of deflation and consolidation and lack of profits by these companies.
Some financial institutions are making record gross profits, but hiding this, by blaming Brexit, offloading debt from international decisions and making errors in other areas. I know one financial institution wants to lay off 10,000 staff ( decision made last October) to make even more savings, so their news release of lower profits, based on the above, is to hide the fact of layoffs. Yet they want to start to charge for accounts.
Raw materials are rising by 30%. This is both the fact that China has taken at least a 30% ownership in producers or such as rare earth products 95% ownership.
So we are now seeing:
I then explained that eventhough Economics may be based on historical performance and data, how it can be also predictive or forecasted.
Here is one way: Stagflation
In economics, stagflation, a portmanteau of stagnation and inflation, is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
I can see this happening for some time now. Manufacturers, retailers etc are putting prices up by upto 30%. In many cases they are using the blame of the Brexit to justify this rise, even before we have announce it.
The rises are based on 8 years of deflation and consolidation and lack of profits by these companies.
Some financial institutions are making record gross profits, but hiding this, by blaming Brexit, offloading debt from international decisions and making errors in other areas. I know one financial institution wants to lay off 10,000 staff ( decision made last October) to make even more savings, so their news release of lower profits, based on the above, is to hide the fact of layoffs. Yet they want to start to charge for accounts.
Raw materials are rising by 30%. This is both the fact that China has taken at least a 30% ownership in producers or such as rare earth products 95% ownership.
So we are now seeing:
- Huge increases which in turn raises Inflation.
- Higher inflation means higher interest rates.
- Higher interest rates means more companies go bust.
- Companies go bust or cut costs by higher unemployment.
- Higher unemployment means more benefits cost
- More Benefits cost means the government needs more taxes
- Higher inflation means poor stock markets.
- Poor stock markets means less investment opportunities.
- Poor investment means poor economical data.
I think thats enough to show how I am predicting things to go.
How can we abate Stagflation. That's difficult and I am not sure this government will have a clue!
You can bet your life though that the IMF will blame Brexit!!
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