The road to Harare ...

... is paved with freshly printed bank notes.

Monetary growth is already at a scarily high 16% pa and they want to print money! Money is a store of value. Increase the number of crisp twenties floating around and the value that each represents has to fall, so stagflation here we come. Rather like the last Labour government.

Inflation is above target by the government's preferred measure (CPI) and the only reason that RPI isn't is the reduction in housing costs due to the slashing of interest rates that has happened, RPIX (which is RPI inflation without housing costs) is still up there. The independent consensus is that CPI inflation will probably drop below the bank of Englands 2% target, but it will not fall below 0%.

All of these forecasts are from before the Bank of England started dropping bundles of fivers from helicopters. OK actually it isn't dropping bundles of fivers from helicopters. If it did that some of this extra money might end up in the hands of somebody that isn't part of Labour's payroll vote. What they are actually going to do is buy up government bonds, nobody else is going to, with freshly printed money and make them disappear. That way the first people to get their hands on the cash, before the inflationary effects ripple through the economy, are the fat cat bureaucrats of the public sector. They may not add anything of value to the economy, but they do vote Labour and so have to be protected.

Deflation, which we get along quite happily with in many areas of the economy, is not a big risk. High inflation on the other hand is beginning to look inevitable. This inflation will act as yet another stealth tax on anybody silly enough to try to be self reliant under a Labour government as that government devalues the currency to write off the massive debts it has built up.