Taxing wealth isnt going to reduce demand in the economy.
Demand in the economy is not the driver of this inflation. It's energy prices mainly, with a bit of brexit to amplify the impact. If you hadn't noticed, demand is in freefall, yet prices are still rising. What we need to be doing is taxing wealth and using that money to put a ceiling on energy prices. This idea that people have too much money is nonsense.
The only people being hurt are those who have borrowed in excess of their means.
And why has that happened? Because asset prices have been protected at the cost of everything else. People haven't borrowed what they have to buy luxuries, they've done it to keep a roof over their heads and to pay the bills. This isn't a case of a few reckless people borrowing too much, it's millions of people who face bankruptcy as a result of property prices and energy prices being allowed to rise, and then having the boot put in by rising interest rates.
I'd watch the full Jon Stewart piece on apple about inflation. Economists like Larry Summers are responsible for this situation.
Taster
You are swapping a resource for foreign money. Is the distinction between foreign money and “money the gov can print” relevant?
The foreign money has to be converted to pounds for them to purchase UK products. The BoE and its agents create all the pounds.
In the USA the Chinese exporters have to transact in dollars and have a US based account. The US creates all the dollars.
But how do you propose to use fiscal policy to control inflation?
Surely it depends on what is causing the inflationary pressure? There has to be an agreement/admission that the Fossil Fuel (which includes automotive and aircraft industries), Real Estate, Finance, and (to a lesser extent than in the USA) the Arms Industry are all too out of control, all too dirty and take up waaay too much of our resources, they must be tackled (made smaller or come under steadily increasing regulation to make them cleaner) one way or another. And that's probably true of many other industries who are using their greater purchasing power to increase profits at the expense of the public.
And why has that happened?
Because interest rates were lowered meaning debt became cheap and people could borrow a higher percentage of their earnings to spend on housing.
Which lead to people outbidding each other pushing up prices.
Energy prices are falling. The wholesale market is roughly where it was 12 months ago and thats now starting to feed into the domestic market. You'll be seeing deals below the Energy Guarantee soon.
According to Rone, we should have done nothing, left it 2-3 years for the market to sort out itself.
Energy is at the root of most inflation as I have been led to understand.
You can't do anything without it.
Imagine if we put that state money to work in the UK for energy solutions?
According to Rone, we should have done nothing, left it 2-3 years for the market to sort out itself.
Inflation is not falling as a result of interest changes. It takes 2 years for that to work according to them.
In fact didn't inflation (CPI) go up last month?
Because interest rates were lowered meaning debt became cheap and people could borrow a higher percentage of their earnings to spend on housing.
Which lead to people outbidding each other pushing up prices.
And hey ho this is the economy that the Tories and the BoE created! That is the whole point of MMT - you monetise personal debt if the government doesn't spend its own money.
So you've basically observed monterism doesn't work then.
Fine by me.
According to Rone, we should have done nothing, left it 2-3 years for the market to sort out itself.
Nope. In the short term the government should subsidise bills. That's what MMT says. And it partly did.
The state did its job and did we all get excited about the national debt when you got your £66 a month?
Lol.
It’s energy prices mainly, with a bit of brexit to amplify the impact.
And climate change hitting Southern Europe and beyond.
War, nationalism & burning the planet.
The expected further interest rate increases will be counter productive, but ultimately a decision made in another country (USA)... the UK is but flotsam on the waves generated by bigger countries and political/trading blocks (I exaggerate, but we do not exist in isolation).
I've never said that one solution is perfect.
You need to adjust your approach based on the circumstances.
MMT works for one off situations, War/Pandemic/Investment
But not to patch over day-to-day issues within the economy.
And hey ho this is the economy that the Tories and the BoE created!
Lets not forget that this started in 2008
Labour started it, and the Tories have continued it (along with most western governments)
MMT works for one off situations, War/Pandemic/Investment
But not to patch over day-to-day issues within the economy
MMT describes all government spending day to day (and black swan interventions which tend to highlight that the government controls the purse) - with central banks. For the last 45+ years.
There is no working or not working in that sense.
You're conflating Q/E and MMT.
Lets not forget that this started in 2008
Labour started it, and the Tories have continued it (along with most western governments)
I agree the big parties of the West tend to be market driven. They all drank the cool aid.
Because it appeared to work throughout the 80s/90s but we were just transferring state asset created wealth to a few lucky people.
We are paying now.
Lets not forget that this started in 2008
Labour started it
You say that as if it was a party political thing done just to keep people happy? Lets not forget that in 2008 we came close to the entire banking system collapsing. The only thing that prevented that, and the resultant economic collapse/depression was the bank bailouts, zero interest rates, QE etc. The govt of the day in 2008 deserve a huge amount of credit for preventing what would have been a catastrophe. Or presumably you'd have been happy for your savings and pensions to be wiped out, your bank account to be frozen and your salary not to be paid just to keep to the status quo on interest rates?
This is why Chew is mixing stuff up.
2008 is known due to its large Q/E operation.
MMT started in the early 70s.
They're related - but he needs to know the difference from a technical point of view.
Most people think Q/E is money printing. It's not.
There's a great podcast on Q/E here.
You say that as if it was a party political thing done just to keep people happy?
I didn’t say that at all
You’ve just half quoted me to make a point.
If you’re going to quote me, at least quote me in full.
Rone said it was a Tory policy.
It was a policy implemented by the government in power at the time. Which in 2008 was Labour.
And I agree it was the write thing to do.
But what was the root cause of the issue?
People where lent money they couldn’t afford to pay back. Everyone new that, but failed to act and have been propping up that system ever since.
People where lent money they couldn’t afford to pay back. Everyone new that, but failed to act and have been propping up that system ever since.
Not because interest rates were too low. People were lent sub-prime loans because a bunch of fraudsters in the banking system saw a way to make a quick buck. The reason people have to borrow too much is because asset prices are inflated as a matter of government policy. That's what monetarism is, protect asset holders, punish everyone else. Your solution of hiking interest rates does nothing but punish the victims.
People where lent money they couldn’t afford to pay back.
People who shouldn't have been; were offered loans that they couldn't pay back by businesses that knew that but took a gamble on it anyway hoping that it would all work out in the end, and were subsequently bailed out by the rest of us. So they were proved right.
Like I said, the finance industry needs it's wings clipped for sake of the rest of us.
Rone said it was a Tory policy.
It was a policy implemented by the government in power at the time. Which in 2008 was Labour.
I think things are getting mixed up.
I wasn't referring to the GFC - although what is being said here is correct.
I was saying it was Tory policy (and Labour in recent times) - for consumers to benefit from low interest rates. It underpins the idea of monetarism and encourages people to borrow. That's the economy they delivered. Debt based.
So when interest rates go up (by deliberate BoE choices) - it seems a bit rich to say - people are living beyond their means - when they were encouraged to take on cheap debt, as that's what out economy was built around.
*Especially* when wages have lagged too.
And ultimately not much choice if you wanted to buy a property.
Latest news inflation is barely shifting.
That's because inflation is partly being topped up by income interest - by raising rates, and profit gouging.
Interest rises are a effectively a tax on people with debt - and a payment to people with assets.
Richard Murphy on LBC shortly.
*Especially* when wages have lagged too.
If we want to go to the root it was the abandonment of the policy of pegging wages to productivity back in the 60s/70s. As referenced in that David Graeber talk I posted, western economies, driven by neo-liberal ideologues fearing the expansion of socialist policies, decided to replace good wages with accessible credit, and replaced the right to economic security with political rights. Then the debt bubble blew up in 2008 and they have no idea what to do other than to paper over the cracks. Neo-liberal monetarism has had its day. MMT-based government interventionism is probably going to be the next phase in western economic policy (at least it should be).
Interest rises are a effectively a tax on people with debt – and a payment to people with assets.
This is the crux of it. You'd think the labour party would recognise the open goal staring them in the face, but instead they prattle on about balance budgets and not being able to afford to pay doctors and nurses.
And sorry to mention it again, but in that Graeber video he talks about the morality of debt and how those who are in debt are seen as inferior to those who aren't. That is our economic system in a nutshell, and something that is amply demonstrated by Chew's comments about people borrowing 'beyond their means'.
This is the crux of it. You’d think the labour party would recognise the open goal staring them in the face, but instead they prattle on about balance budgets and not being able to afford to pay doctors and nurses.
Yeah - I despair with that bit.
The only person who wanted to make substantitive change was ousted by the right-wingers, centrists, and their media pals. I can't see that opportunity arising again in our lifetime.
But here we are.
It's hard to believe how we've ended up with all the worst possible options.
Communist broadband FFS.
Communist broadband FFS.
It was wildly unpopular on the doorstep for canvassers.( I know, I was one of them)
but instead they prattle on about balance budgets and not being able to afford to pay doctors and nurses.
Because politicians have largely painted themselves into a corner about it. If Labour start to talk about the economy in a different way the Tories will pounce on it, It's a traditional attack line for them every election (that works on the doorstep) and they'll accuse Labour of "fantasy" economics or "magic money trees" or whatever. Plus from their side it sounds to the electorate like you take the economy seriously, that you wont spend frivolously, that you'll take care of folks money, you might scoff, but lots of folks don't trust Labour with taxation.
It was wildly unpopular on the doorstep for canvassers.( I know, I was one of them)
Voters get what they deserve. 🙄
Plus from their side it sounds to the electorate like you take the economy seriously, that you wont spend frivolously, that you’ll take care of folks money, you might scoff, but lots of folks don’t trust Labour with taxation.
See above.
Voters get what they deserve.
You can’t ignore them though.
That broadband policy… made perfect sense economically and socially… I was one of the few praising it on this forum… but people don’t trust the state or politicians when they present policies like that which are good for all of us. They only see costs not benefits, especially indirect ones. Whatyagonnado?!
It was wildly unpopular on the doorstep for canvassers.( I know, I was one of them)
Interesting. What was methodology and how many did you ask?
A YouGov poll, consisting of 3,653 British adults, found six in 10 (62%) supported such a move, almost three times as many people as were opposed (22%).
Whatyagonnado?!
Well you see that's the legacy form the idea that they're paying for it with taxes.
It's funny how they hardly believe anything that benefits them and then believe all the stuff that doesn't benefit them.
Super clear article about Government 'debt'.
https://twitter.com/robert19pearson/status/1648630083857395713?t=0jLZ3xatVbxMjSQkv7m1YA&s=19
Interesting. What was methodology and how many did you ask?
I didn't need to ask! as soon as they realised I was canvassing for Labour they'd let me know!
"d'you think we're too poor for sky?"
"we've got broadband thanks, we don't need the govt using it to spy on us looking at porn"
"d'you think we need handouts?"
and many variants of that.
Ah, you were canvassing in somewhere like Windsor. It must have been proper posh as it was quite popular with Tory voters according to YouGov, in fact more Tory voters supported it than opposed it.
"Among Conservative voters the proposal received a mixed reaction, with 45% pro and 41% against."
That's a really good thread from Verity. The BBC will probably sack him for it.
It was Margaret Thatcher who particularly popularised the myth that running a country was very similar to looking after a household budget.
Misinformation and myth creation has always served the the Tories well, and generally speaking the Labour Party has gone along with them.
An obvious recent exception was Jeremy Corbyn's successful political campaign as leader to expose austerity as a false solution.
"Any woman who understands the problems of running a home will be nearer to understanding the problems of running a country."
- Margaret Thatcher
.
the delusion that financial choices are the same for a government as they are for households or firms
Yup, the same with regards to firms.
https://hbr.org/1996/01/a-country-is-not-a-company
Lol and here is what the BoE think of you asking for better wages. Again we didn't cause this mess.
But you can suck it up.
It's time the BoE was put under direct fire from the government.
Verity is on his own with all this.
Here's the BBC editorial line.
https://www.bbc.co.uk/news/business-50504151
What's even stranger is the BBC only recently conducted an investigation into the way their journalists assume the regular household narratives and were encouraged instructed to look beyond it.
"we’re all worse off, and we all have to take our share.”
Oh why doesn't he just regurgitate the Tory-LibDem austerity slogan "we're all in this together"?
It's interesting btw how in the entire article the word austerity doesn't appear at all, even though that is exactly what is being talked about.
It's almost as if "austerity" has become an unmentionable word. I wonder why.
Good summary from Richard Murphy on his blog.
The BBC should, in the interests of objective reporting, present a balanced view on the national debt https://www.taxresearch.org.uk/Blog/2023/04/25/the-bbc-should-in-the-interests-of-objective-reporting-present-a-balanced-view-on-the-national-debt/
Andy Verity in a good tussle with pro monetarist worm head Ex Chief Of Staff - Rupert Harrison. (under Osborne)
https://twitter.com/andyverity/status/1650817730621087747?t=-pAb8x7l2OAnN6YkX9l8Rg&s=19
Some good info.
Lol and here is what the BoE think of you asking for better wages. Again we didn’t cause this mess.
But you can suck it up.
The BOE are just playing the hand they were dealt and telling the cold hard truth... If you want to blame someone, blame people who voted for brexit.
The BOE are just playing the hand they were dealt and telling the cold hard truth… If you want to blame someone, blame people who voted for brexit
Brexit is not the issue specifically.
And that is not a hand that has been dealt them. Wages are not driving inflation.
The BoE are adding to inflation with interest rate rises. So they've got a nerve taking this stand. The BoE are operating a one trick pony approach - blame people needing more money to live.
That's a disgrace and a limit of monetarism's a ability to solve problems. So no I don't accept your view - raising interest rates is a choice.
This is not a Brexit issue - this is a culmination of 40 years of right-wing policy choices that causes more problems than it solves.
(I'm not disputing Brexit isn't in there somewhere but low wages are a product of neoliberalism which features under EU membership too.)
It's beyond ironic that it's Harrisons policies that have been shown to be incredibly stupid and damaging. How do idiots get into such positions of power?
UK is the worst performing G7 country, and worst performing European country... there's a common denominator here, brexit, with the side effect of enabling 'Tory extreme: turbo edition'.
The Governor of the BoE is also a chief Brexiteer so a double whammy then according to your logic.
The Governor of the BoE is also a chief Brexiteer so a double whammy then according to your logic.
Since 2020... So a Tory stooge then?
Asked whether Brexit was contributing to the country’s underperformance, he said that “there is an effect” from leaving the EU, including a “long-run downshift” in the level of productivity.
“It’s not [an impact] we’ve been surprised by. As a public official I’m neutral on Brexit per se, but I’m not neutral in saying these are what we think are the most likely economic effects of it,” he said.
UK is the worst performing G7 country, and worst performing European country… theres a common denominator here, brexit.
The common denominator is the UK being a total **** up when it comes to making good political choices.
It wasn't good before Brexit you know.
(GDP is also not the best metric for assessing a country's success and well-being.)
