Public Warned Against Inflation as a Means of Escaping Debt

According to recent word from the Bank of England, Britain will not be able to inflate itself out of its sprawling public debt burden. The BoE’s deputy governor wanted to be clear on this issue after speculation over what is being called ‘hyper inflation’ lead to theories that a rise in inflation, particularly a sharp one, might somehow help Britain get out of the dire situation it now faces in terms of debt. Prices rising, deputy governor Charles Bean was quoted as saying, will not help Britain’s debt reduce itself any faster. Many members of the public have begun to create conspiracy theories that politicians use inflation as a means of lowering the debts of their nations at the international level and reducing what is owed to the capital markets. This comes backed by the commenter’s in the blogosphere who raised quite a stir after a recent announcement from Riksbank, in Sweden, that it intends to adjust its inflation target.

Some say that Britain needs to look to China for its recovery and that public finances need to be placed on sustainable ground before any real debt clearing can possibly take place. In a recent opinion piece in the Telegraph, Charles Bean let the public know that inflation should not and, in fact, can not be a sound way to reduce national debt for any country, especially the UK. Those in private debt had hoped that the inflation might also help them and Bean was clear that it would not. He called the morality of shifting debt from the hands of those who save their money to those who borrow ‘dubious’ and pointed out that inflation itself, even in small amounts has a ‘nasty habit’ of turning into far more inflation than the public would appreciate dealing with. He felt strongly that Britain should stay the course with its current inflation plans.