Question: How can inflation reduce value of personal debt?

Readers Question: I understand that inflation can cut the value of debt for countries and companies, because higher prices mean more revenue for the same output therefore additional money to pay of debt. However, does this apply to personal debt? i.e. unless my wages are rising with inflation I have no extra revenue and therefore …

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Lowest Disposable Income Since 1921?

I saw this in the Telegraph. The Centre for Economics and Business Research (CEBR) said soaring inflation coupled with low pay rises means household peacetime disposable income is at its lowest since 1921. Rising food, clothing and energy prices mean the average British family will have £910 less to spend this year than they did …

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Swiss Franc Pegged Against the Euro

Switzerland has many envious economic data. It has low unemployment, low inflation, low government borrowing (budget surplus in 2010). It’s total national debt is a mere 38% of GDP.It has one of the highest GDP per Capita’s in the world $42,600 (2010 est.) CIA Switzerland. Switzerland is a landlocked country and virtually no mineral resources. …

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Spending Your Way to Full Employment

Readers Question: Can you Spend Your Way to Full Employment? Full employment implies. An economy without a significant negative output gap. Full employment requires positive economic growth, averaging close to the long run trend rate of economic growth. (in UK long run trend rate = 2.5%) Very low unemployment. Economists would say full employment is …

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International Minimum Wage Levels 2011

Statistics on different international minimum wage levels from the OECD. Minimum wage levels indicate how different countries have pursued alternative policies for labour markets. Minimum wages in selected countries The most generous minimum wage levels are in Western Europe. US has a relatively low minimum wage It is not surprising to find France has one …

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EU Money Supply Slowdown 2011

Money Supply is an important indicator of economic activity. A slowdown in money supply growth hints the EU is facing the prospect of very low inflation or even deflation. Since the start of 2010, the growth of M1 has fallen significantly for the Euro area. These figures show the whole Eurozone area, however, in the …

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Popularity of Rail Travel

Evesham

Different transport modes have a habit of being replaced. The horse and cart lasted uncontested for quite a few centuries. But, in the eighteenth century, the advent of the canal opened up a whole new mechanism for transporting large quantities of goods. It was the canals that helped Britain’s manufacturing base become a world leader. However, just as the canals were becoming worked to full capacity, along came a new rival, the railroad. The railway made quick long distance travel a reality for many people. Both goods and people could now be easily transported across the country. Now journeys were measured in hours rather than days. The train soon led to the demise of the stagecoaches and the slow canal system. In the nineteenth century, the railway was king and in the UK, we built railway lines to every small town big or small.

Yet, the railways monopoly was soon to be challenged by the internal combustion engine. Cars and buses proved to offer greater flexibility and, at least over shorter distances, greater speed. In the first half of the twentieth century, rails dominance gave way to the car, slowly at first and in the post war period with greater speed. In the 1960s, train-spotting may have been the most popular hobby for young school boys, but adults who could afford it wanted a car. Why be the slave of a train timetable, when you can get to work quicker and faster in the car?

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Unsterlised Bond Purchases

Sterlised Bond Purchases. This occurs when the Central Bank purchase government bonds without affecting the money supply, i.e there will be no inflationary impact of buying bonds from commercial banks.

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