The Most Important Article of the Day – Is the UK About to Engage in a Stealth Default?

If there was ever an article that should spark every British citizen to immediately shift their savings into physical gold this is it.  Basically, proposals are on the table to change the way inflation is calculated for bonds that payout based on the rate of change in prices.  Unsurprisingly, they are purposely attempting to use an alternative measure of inflation that allows substitution (so when people can no longer buy a steak and must spend the same amount of money on spam this shows up as no inflation)!  If this goes through, it is blatant theft.  This is why owning TIPS in the U.S. is a total fool’s game.  They will mark inflation to whatever level they want at the end of the day.  To whatever is most convenient at the moment.  You know, just like the banks mark their balance sheets.  But don’t take my word for it…

Key quotes from the FT article:
Holders of some UK index-linked gilts could see more than 40 per cent wiped off the value of their bonds, according to M&G Investments, as a result of technical changes to the way the retail price index, which underpins these “linkers”, is calculated.

The mooted changes are designed to eliminate “unjustified” causes of the persistent gap between inflation as measured by the RPI and the normally lower consumer price index, narrowing the “wedge” between the two measures by altering the way the RPI is calculated. Some industry figures believe the gap between the two measures could be eliminated entirely.

“To eradicate the wedge altogether would be tantamount to an event of default,” said Ben Lord, portfolio manager at M&G.

Full article here.

Advertisements

7 thoughts on “The Most Important Article of the Day – Is the UK About to Engage in a Stealth Default?

  1. Pingback: The Most Important Article of the Day – Is the UK About to Engage in a Stealth Default? « Silver For The People – The Blog

  2. god save the queen , she is our master and as mortal serfs we must toil the digital fields and battle the algo bots for what slim profits we can muster.. and pay our tithe to the throne, and if they want to change the inflation gauges in our retirement accounts bend over for the kinds bone!

  3. Pingback: Inflation WARNING: A surprising country could be on the verge of a “stealth” default « InvestmentWatch

  4. The ones who will suffer the most will be the 99%…We simply cannot trust the banks or the politicians, as none of them are interested in the welfare of the people. Paper stocks & Fiat cash is trash!

  5. Hedonistic Society… Hedonistic based economics… What a wonderful relation for how we do everything. From religion to our children’s education… Never proclaim, whisper or write the unpleasant. Mask it, fake it but do not admit a lie. For such is sin.

  6. Pingback: 华尔街新闻 6月6日全球要闻 : 吉他手的天空

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s