A picture is worth 10,000 words : CPI shows failed policies

July 9, 2008

Despite changing the definition, reporting it differently, keeping monetary liquidity constant, intervening massively in the parallel market and otherwise attempting to show that inflation is down, the results are not great as shown in the chart above, where I plot the 12-month accumulated inflation for each of the last twelve months. Inflation for the last twelve months has been running at over 30%, about the worst possible thing that can happen to the less well to do. Note the perverse effect last November of the financial transaction tax, as predicted here in an article called “The new magical transaction tax“. The only good news is that the CPI should slow its growth since that tax was finally eliminated. It only took the Government eight months to realize what a stupid idea it was!!!

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