In another age the meteorite strike on Yekaterinburg might have been regarded as a more reliable omen, portent or prediction than most of our earthly calculations. It is the place where the last Tsar of All The Russia’s was murdered with his family.
Given some of the features of the present Russian economy whilst it should be a robust and promising land of potential plenty there are enough bad things to worry about. It may not be as stable or as rich as we think with the current scale of criminality and huge capital outflows.
Money out in one direction means money in somewhere else. Places the money has gone into are many of the off shore locations linked to the City of
London around which money
has flowed generating putative wealth and the associated property market. London
The Russian money flows are not the only ones swishing around the back offices of so many financial corporations there are others as well. Many are to do with oil and major commodities, others official money made unofficial and necessarily large sums of criminal gains from a variety of sources.
Our much maligned bankers are mostly simply innocents at large, like the one time bookie’s runners that used to stand on street corners receiving bets and sometimes even paying out to the winners. They just accepted the bits of paper with scrawled words with cash and quickly paid them in to the bookie’s.
What happened then was beyond their understanding and that of few others, notably the punters.. New laws on gambling took the runners off the streets and their children and grand children were forced into menial financial services.
Our Office of National Statistics (ONS) in the
is tasked with reducing all the
economic activity as money flows together will other recorded transmissions. This, along with many other things, is turned
into to some sort of rational collection of figures that is said to tell us
what it all might mean. UK
Fine minds struggle with the nature of date and its gathering to reduce it all to figures that are easy enough for the media and government to understand. They make great efforts to tell us what they think. The devil lurking in the detail is what is known to some as “garbage in garbage out”.
This is nowhere more evident that all the tales told, spin, explanations, calculations etc. on the subject of “Inflation”. In this we should not forget “Deflation” nor all those contingent sets of figures that support or are necessary to what is defined as this or that.
“Alice In Wonderland” tells us that the more deeply you look into something then the more complicated, unstable and unpredictable it becomes. The Treasury becomes The Red Queen, the Prime Minister the Mad Hatter and the Chancellor of the Exchequer the Dormouse. The Governor of the Bank of England is, of course, the Cheshire Cat.
It was considered trying in this item to explain all the necessary complexities of statistics, the gathering of data, the problems of reducing the recent past to sets of figures and the many and various pitfalls of analysing all this to give a reliable picture of the present or the immediate past.
This would be too much for a basic post. The great issue in reducing the financial economy to a small set of guideline figures is who they are intended for and for what purpose. If it a government then it is subject to politics and in turn what this is subject to.
One problem immediately is that the figures should fit the images to be presented and to match up with both conventional wisdom and the expectations of the past.
If there are complications and some reduction is required this can be forced in one direction or another.
Today, however, this means in the whirlwinds of economic activity which no government can control or hope to control this can mean that the attempt to reduce facts to explanation and target settings can result in convenient fictions set in a framework of conventional thinking.
This is where we are in terms of what we think “Inflation” is at present because of the limitations and restrictions on the content and analysis of the present constituent elements in the relevant indices. There is a lot out of the figures that bear on the realities of the functioning of the economy.
Quite simply, there are a number of areas of the economy where the
has had gross
inflation in the last decade or more. In
some areas prices have fallen, or at least have not relatively risen much. There are the cases, notably with technical
goods where you get more for your money.
But the figures are loaded to not take account of many of the rapidly rising elements where costs, prices and charges have risen sharply and there are a lot of them that affect very many people. These are often the same ones who have taken the bad hits on incomes.
Sooner or later all the fiat, funny and solely financial money was going to begin to impact on the more general economy and then bear on the indices. These will be slow to respond at first, but if history is a guide upward movement will happen very quickly and in unexpected fields and maybe impossible to control or check.
We are all making bets but the winners will be few and far between and even for those the reality may be that the bookie’s have done a runner with the money.