Bill Mitchell — The case of the financial commentator who turned into a banana

On June 2010, Halligan gave an – Interview – to CNBC about the impact of : “If this policy isn’t inflationary, I’m a banana!” 

During that interview he claimed the combination of “a big budget deficit and the Bank of England’s quantitative easing policy” would cause inflation to get get worse.

He said:

This really is economics 101 … We’re running a budget deficit of 12-13 percent of GDP, if that’s not inflationary I am a banana … 

Inflationary expectations start to spiral once inflation is above a significant level
He also claimed that the bond market would see the higher deficit and eventually stop funding the government. This is a government that issues its own currency. 

The following graph (courtesy of the BBC) shows the evolution of the Consumer Price Index and the Retail Price Index in the UK since 2000.
Britain is now heading towards very low inflation.

Bill Mitchell – billy blog
The case of the financial commentator who turned into a banana
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia