Just sat and watched Mervyn King explaining that the CPI (now at 2.9% or possibly slightly above according to him) does not pose a threat to the upside and that the rise in commodity prices is just a temporary phenomenon. This implies that no rate hikes are necessary. The CB interest rate stands at 0.5%.

Isn't it unbelievable that we now live in a world where substantial negative real interest rates are accepted for a considerable period of time under the excuse that we are still close to a deflationary collapse? And is it strange that pension funds and household savings are evaporating in such an environment?

I wouldn't be surprised if the continuous 10-15% up and down movement in oil is artificially created by the banksters not just to make awsome profits, but also to help the major deficit Governments to mask real inflationary trends and maintain the deflation ghost on the forefront.

How long can a financial system keep on functioning when real interest rates are (substantially) negative?