Borrowing Brown Blown Out Of The Water

Borrowing Brown's bonkers crusade for a painful cure-all fiscal stimulus has been blown out of the water after 'surprise' inflation figures left him at odds with the Bank of England boss, his chancellor and most of the world. 

Brown's hyped-up Save The World ego tour and London G20 plan is in tatters. 

In the economic La-La Land of making it up as you go along, today's widely predicted inflation figures were supposed to show the Retail Price Index (RPI) sinking into dangerous deflation while the government's much-loved Consumer Price Index (CPI) dropping like a lead balloon. 

Only they didn't. Headline RPI fell to 0 percent in February, its lowest since 1960, from 0.1 percent in January, while the CPI actually rose to 3.2 percent in February from 3 percent. 

But the government is a victim of its own spin and deserves all it gets. The neat trick of the CPI was brought in by Brown during the false boom years as the government's preferred spin to measure inflation. Now it's coming back to haunt them. 

That left Bank of England boss, Mervyn King, who prefers RPI, in a pickle, forced to drop a line to hapless Darling explaining why CPI inflation is more than a full percentage point above the official 2 percent target. 

Darling will be rubbing his hands with glee and then putting two fingers up to Brown who's still bent on a massive borrowing binge and spending spree. 


What is happening is plain to see. RPI is zero because mortgage costs and house prices have taken a dive. Take out housing and CPI, which measures the cost of what people are buying, has risen. 

Any fool can see inflation has increased. The devaluation of the pound in our pocket has made us poorer. Food bills are going up, water rates have risen, while savings interest has dropped.

The price of food and drink is soaring. Cigs are going up. Imported goods like clothing and footwear are now falling less fast because of the weakness of the pound, which has raised the price of imported goods. 

Inflation is the proverbial Monty Python parrot. It isn't dead, it's just resting. And could soon return.

The Orange Party has long warned the government's reckless fiscal stimulus, unprecedented borrowing and printing of money could unleash a huge inflationary hurricane leaving behind the debris of debt.
 

But a much-needed steady hand on the economic tiller isn't happening, as deluded Brown, obsessed with his multi-billion pounds borrowing stimulus is getting increasingly short shrift from many, apart from his new best friend Obama, who has the luxury of four years to run himself out of his economic hole. 

Ben Brogan reports, King dropped a bombshell in his evidence to the treasury select committee.  He doesn't think there is a case for another fiscal stimulus. 

And that's the very same economic stimulus on which Brown is pinning all his hopes at the G for Gordon 20 summit and in the very budget where he's been forcing a reluctant Darling to write his own political suicide note and pump-prime the economy with more of Brown's borrowed billions. 

The head of the European Central Bank, Sarkozy of France, Merkel of Germany, the boss of the IMF and now the Bank of England governor are all backing off from another bonkers borrowing boost, leaving an obsessive Brown increasingly alone in his own little world. 

Making sense of it all is a nightmare for sure but without that steady hand on the tiller, deflation or inflation are economic killers.  

Burning Our Money is, as usual, on the money: "Our currency is being systematically debauched. Interest rates have been slashed, the printing presses are roaring, and savers are being raped."

What's needed is a sound strategy - and a leader. Answers on a postcard to: G. Brown, the Bunker, Downing Street, for when the Supreme Leader gets back from his South American pre-election PR jolly. 

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Printing Money Is A Bad Roll Of The Dice

The government is pinning its hopes on a last, bad roll of the dice to dig itself out of its economic hell-hole, as the Bank of England starts the dangerous and disreputable gamble of 'printing money'. Spun as 'a good thing', this is a short term fix to get the government over the hill of the next election. The wheelbarrow of cash is teetering on a slippery slope. 

The Orange Party is in a long queue of people happy to give sound, realistic advice on how to get out of this hopeless mess without having to resort to borrowing billions and printing money, then spending it all like there is no tomorrow. But for the government of course, there is no tomorrow. 

Playing economic politics with the country and people's livelihoods is a despicable act, leaving others to pick up the tab and clear up the mess. 

The government is drinking at the last chance saloon. Printing money is an admission of failure which will get it off the hook, while a deluded Brown and his hapless chancellor lose control of the country's finances and their senses. 

Floundering in economic cloud cuckoo land, their only way out is a barrow full of banknotes, expanding the money supply with a boost of £75 billion now rising up to £150 billion later. 

The country is hopelessly in debt and borrowing is at a record high. But the government still wants to 'print money' to fund a reckless borrowing binge and ludicrous public spending spree. 

Any government which has to resort to 'printing money' is on its beam ends, with the threat of a new bout of inflation always lurking round the corner.

With the borrowing debt set to run into trillions of pounds, the abhorrent and disreputable 'printing money' option, euphemistically called 'quantitative easing'  is the only bullet left in its depleted armoury.   

Another last roll of the dice came from the Bank of England today with another cut in interest rates down to 0.5%, another blow for savers that won't make a jot of difference in the real world.

The Bank has already tried slashing the official rate with the most aggressive reduction in borrowing costs in 100 years to try to head off a full-blown economic depression.

Now the Bank is planning 'quantitative easing' but inflation will evaporate in coming months. In fact the new fear is deflation. The real economy in the real world of the RPI is already deflating. Printing wads of banknotes, though not literally, will just make matters worse. 

It is a short-sighted and short-term way to reflate but will help get the government of the hook until after the general election. 

In the last few months successive cuts to the bank rate failed to get the economy moving. For Brown and the government the solution is even more reckless, short-term fixes. 

It's clear the government hasn't a cat in hell's chance of funding its ridiculous borrowing binge but printing money is fraught with long-term dangers.

Anyone who takes a scant look at economic history can see that. 

Japan tried and failed. Printing money had disastrous effects in Weimar Germany in the Twenties, leading to rampant inflation, the Nazi Party and people needing wheelbarrows to carry the cash to buy a loaf of bread. 

In modern-day Zimbabwe, Mugabbe prints worthless banknotes. Debt ridden Latin-American countries became a laughing stock, as they tried the same trick. 

Brown's government will be the laughing stock of the world. 

Printing money is a recipe for disaster but it does boost the money supply and inject liquidity into the economy in the short-term. 

Slashing interest rates and printing more money is a quick fix which would release a flood of extra cash but there's no guarantee that would find its way through to the real economy as businesses and families tighten their belts and hang on to any cash to pay off debts.

Printing money is exactly the option used by Obama's new administration faced with a trillion dollar debt, to fool some of the people some of the time. The US Fed tried the trick but with little effect.

Even if it does do the job it could dilute the value of sterling and kick-off inflation, needing higher interest rates to control it. 

The hope is that when the Bank of England decides enough is enough, it can act independently from government interference to make the right decisions on economic not political grounds.

But the trick is knowing when enough is enough and that's a hopeless guessing game.

Lies, deceit and spin go hand in hand with the New Labour project but it's in the death throes of the disaster of the economy where the public feel it most. 

Soon a new government will have to confront the underlying problems in the economy. 

Even the combined might of ex-chancellor Ken Clarke and economic oracle Vince Cable will be hard-pressed to turn the country around.

Picture: Guys and Dolls, Luck Be A Lady Tonight. Illustration, Jody Hewgill

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Printing Money Is A Recipe For Disaster

Conflicting inflation figures left some confused. The borrowing debt is set to run into trillions of pounds. The government is set to start 'printing money'. Brown is a victim of his own economic spin. His past false boom years are coming back to haunt him. 

Lies, deceit and spin go hand in hand with the New Labour project but it's in the death throes of the disaster of the economy where the public feel it most. 

Brown and Downing Street have tried every trick in the book to play down the crisis because to admit the truth is to admit past mistakes. There are signs the 'narrative' is changing but it's too late for all that now. 

The real economy is already deflating. Printing money will just make matters worse.

The Retail Price Index (RPI) which includes housing costs is at a 49-year low of 0.1%. But the government's preferred Consumer Price Index (CPI) is stuck at 3%. The RPI has taken a dive because of falling property prices and sinking mortgage interest payments. 

Grave misjudgements were made in the past over which inflation figure to use. Now the Bank is being forced to target CPI to dig the country out of a hole. 

But CPI will catch up later in the year with heavy discounting which is likely to put both measures of inflation into negative deflation territory. 

Back in 2003 as chancellor, Brown switched the inflation target from RPI to the more accommodating CPI.

With house prices soaring, it made sense to spin a measure of inflation that excluded property. And that would allow the Bank of England to cut interest rates.

If the Bank had been allowed to target RPI then interest rates would have remained higher.

Either way, the inflation slump leaves the country dangerously close to outright deflation, with reports the Bank of England is to begin the abhorrent and disreputable method of 'printing money' within weeks, as a quick fix. 

Any government which has to resort to 'printing money' is on its beam ends, with the threat of a new bout of inflation always lurking round the corner.

Inflation will rise while the economy continues to stagnate. The toxic mix of high inflation and near-zero growth leads to 'stagflation'. Brown's government will be the laughing stock of the world. 

The country is hopelessly in debt and borrowing is at a record high. But the government still wants to 'print money' to fund a reckless borrowing binge and ludicrous public spending spree. Sooner or later a new government will have to confront the underlying problems in the economy.

The Orange Party believes the route out of this economic mess is easy to see but because of its past record, impossible for this government to follow. 

There's must be an end to reckless borrowing which will saddle people with debt for decades to come. Hugely expensive white elephants, vanity and legacy projects must be scrapped. UK manufacturing, which is the key survival, must be boosted and supported to kick start the economy, with proper jobs, not the New Deal sham. 

A recent C4 documentary, Dispatches, saw Brown's former trade minister, Lord Digby Jones, despair at the dire state of fiddled jobs figures and blatant, totally meaningless jobs propaganda, while the manufacturing heart of the country is being ripped out. 

Jones is in no doubt: "Brown borrows billions to bail out the banks, he is letting manufacturing fall into an abyss." 

While other countries were protecting their manufacturing skills base, here the New Labour project saw the future wealth in creative and emerging technologies - and the City. Oh dear. 

The recession depression will last for a decade or more. A government, any government, has to  take steps now to preserve jobs, skills and factories or, as Jones warns, "we could blight an entire generation with long-term unemployment and the economic balance of Britain will not be sustainable."

Instead, the government flounders and flannels around printing money and borrowing more as its only escape route, trying to make a shiny silk purse out of an old sow's ear.  

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Inflation Spin Masks Dire Deflation

Government inflation figures are masking the dire state of the economy as ministers have become victims of their own spin. Today's official figures hide what lies beneath, as the country spirals down into dangerous deflation. 

Even the government's own official and well-spun inflation figure has sunk to 3%, craftily hiding the true fall. Things must be really getting bad for the economy.

Inflation dropped to 3% in January, down from 3.1% in December, as measured by the government's consumer price index (CPI), already seized on some with a gleeful "it's not as bad as expected". But that cut no ice with the Times.

The better indicator, the Retail Price Index (RPI), which includes housing, is already falling into dangerous negative territory. It's at a scary 0.1% last month from December's 0.9%. 

And that will send a cold chill down the spine of those whose pay rises, pensions and savings are directly linked to the realistic RPI. 

The fall raises the spectre of deflation which will become negative this year. But the government continues to bury its head in the sand, preferring its own CPI which  kept them in good stead during the boom years. 

Deflation is the killer punch for any economy. Any hope of a boost by increasing consumer spending, is either short-lived or just doesn't happen. People shop around frantically looking for the cheapest deals and put off spending, preferring instead to try to clear a mountain of debt. 

The CPI is a neat little device used to set inflation. It works by carefully selecting what government wants to measure and then a cunning weighting is dropped in to make those final tweaks and adjustments.

Inflation used to be measured by the retail price index (RPI) but New Labour ditched that in 2003.

The CPI is a less effective measure of price falls than the old RPI, but it's much easier to manipulate. But even the spin cannot hide the downwards spiral. 

As the government and Bank of England run out of magic bullets for the economy, the next step has to be to print money, lovingly disguised as 'quantitative easing' and a barrow full of banknotes. 

It's clear the government hasn't a cat in hell's chance of funding its ridiculous borrowing binge but printing money is fraught with long-term dangers.

Brown has steadfastly buried his head in the sand, refusing to shoulder any blame for the current economic disaster. The Orange Party has warned time and again the government is in denial about the dire state of the economy. 

There are realistic ways out of the depression recession, apart from massive government borrowing and reckless spending and printing cash but that would mean the government would have to own up to past mistakes and stop believing in its own spin.

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Meanwhile, Back In The Real Economy...

Brown's big bank bail-out came down with a bump today as, back in the real world, inflation hit home at above the 5% mark. Bailing out banks with taxpayers cash keeps the stock market happy but people are asking, what's in it for us? For the moment, not a lot. 

As the focus switches to the fall-out from the bank bail-out, even the government's much loved and discredited Consumer Price Index (CIP) is now weighing in at a hefty 5.2%, up from 4.7% in August. Now the highest in 15 years.

A better indicator, the Retail Price Index (RPI), ditched by New Labour in 2003, was already at 5% last month. 

The CPI may be a less effective measure of price rises than the old RPI, but it's much easier to manipulate. But even the spin can't halt the upwards march.

Even these official figures mask what's happening in the real world and tell people what they know already. Food prices and, in particular those obscene gas and electricity bills, are going through the roof, while Brown borrows billions of pounds to pop up the banks and get us all deeper in debt. 

The UK's annual rate of inflation rose to 4.4% in July, up from 3.8% in June, as measured by the CPI. That was the biggest monthly change in the annual CPI rate since records began in 1997. And it's just getting worse. 

The annual rate of inflation for energy and other household bills has now reached 15%.

It will be this real economy of jobs, inflation, mortgages, small businesses and meagre wage rises which will determine Brown and the government's future.

The recriminations have already begun. Cameron and the Conservatives have started to focus on that real economy and at the same time hit home on the decade of Brown's incompetence and the false boom years which got us in this mess in the first place. 

Voters have short memories. Brown's bounce will be short-lived. It is inflation, unemployment and spiralling debt, trying to make ends meet, which is the bogyman for the government, not the banks. After the boom, the gloom.

The nitty gritty of life determines the success of governments and whether they survive, not hugely expensive quick fixes for the City.

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Inflation 'Spinning' Out Of Control

The government's own official and well-spun inflation figure is hitting 4.4%, craftily masking the true rise. Things must be really getting bad for the economy.

The UK's annual rate of inflation rose to 4.4% in July, up from 3.8% in June, as measured by the government's consumer price index (CPI).

The CPI is a neat little device used to set inflation at whatever the government wants it to be - usually around 3%.

It works by taking anything that's a huge inflation buster out of the equation - and then, a cunning weighting is dropped in to make those final tweaks and adjustments.

CPI inflation figures are kept artificially low by the government, because they fix public-sector pay rises, regardless of the obvious huge hike in food and fuel bills. 

Inflation used to be measured by the retail price index (RPI) - but New Labour ditched that in 2003.

The CPI may be a less effective measure of price rises than the old RPI, but it's much easier to manipulate. A point made repeatedly by the Conservatives.

The jump in inflation from 3.8% to 4.4% was the biggest monthly change in the annual CPI rate since records began in 1997.

More holiday reading for beleaguered Brown and his doomed chancellor, Alistair Darling. 

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