Friday 7th March

The real meaning of inflation used to be the increase in the total amount of money, not just the increase in prices.  In fact the amount of Pounds sterling in circulation has risen by a staggering 67 times since 1971.  However the average wage in 1971 was about £2000 and now is about £25000 or a 12 and a half times increase.  By and large prices have gone up by a similar amount, with wages increasing by slightly more most years until 2010 when prices kept on rising but wages didn’t.

Suffice it to say that though the amount of money has increased by 67 times your wages and standard of living haven’t risen by anything like that amount.  People are better off, substantially so, even if in the last few years we have fallen back to about 2003 levels.  So if the amount of money has increased so much but it hasn’t gone into peoples wages, where has it gone?

Mostly into Property, Shares and Overseas Investments; that is why the rich are significantly richer than they were in 1971.  In fact since the war until about the mid-seventies the gap between rich and poor was shrinking, wages and ordinary peoples standards of living were increasing.  Since then the gap has widened inexorably with more and more money going to those who already had Assets such as houses and shares.

So, even though the government trumpets that inflation is only two percent the amount of money, largely because of Quantative Easing (another way of rewarding the rich) has increased by about 10% a year since 2010.    House prices in London are surging ahead, forcing more and more people into private rented accommodation, the footsie keeps on rising.  And none of that helps the poor….