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Politics, politics, politics (so long and thanks for all the fish)

Rorschach said:
That is my answer to the recession being caused by the interest rate hikes which should not have happened. The BOE fudged up by increasing the rates to dampen inflation. That was the wrong lever to pull.
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5% now.

what other levers are there? Increase taxes? Reduce money in circulation?

High inflation is obviously a bad thing and spirals with increased costs meaning increased wages which increases costs etc But wages never go up as much as the costs of things, so everyone becomes poorer in the end. There are so many studies and case studies of this. Can see an excellent video posted a few pages back - Milton Freedman visiting the gold rush towns and outlining the effects of all that gold entering the economy and more modern inflation. High inflation is worse than a short term recession, I think that is clear.

How you tackle or better preempt high inflation that is another question. Quantitate Easing aka printing money must play a big part in why we have such high inflation. I think we printed or digitised the best part of a trillion pounds of money that did not exist before! No surprise that with more cash sloshing around our economy + Brexit + Ukraine we have inflation.

I think it be probably was the right decision to raise rates by a half a percentage today. So that later they don’t need to go up again, that is the hope.
 
SpurMeUp said:
I think it be probably was the right decision to raise rates by a half a percentage today. So that later they don’t need to go up again, that is the hope.
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Plenty forecasting that they'll hit 6% and possibly higher. Truss and Kwarteng completely blew up an already struggling economy.
 
Mikey10 said:
Plenty forecasting that they'll hit 6% and possibly higher. Truss and Kwarteng completely blew up an already struggling economy.
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I remember having a tiny savings account as a kid, and there being something like 13% interest rates. Probably in the 80s or early 90s. So it may well go much higher before they get ontop of the spiraling costs. No one really knows.

Most other countries have leveled out a bit more than us now. We are still getting over Johnson's spaffing cash campaign, including Brexit, and almost a decade of rudderless government. The UK has stood still, not really making improvements to its infrastructures (NHS, Education etc etc). And in economic terms we've actually gone backwards. London is no longer as esteemed as a finance capital. It's relinquished the fight with New York for global finance kingpin, and lost quite a few jobs to Amsterdam, Paris, Franfurt. Serious companies no longer seek listings in London on our stock exchange as they did. The gloss has worn off.

The government has something like £20b a month deficit! They are spending 20b more a month than they take in. That is mainly a consequence of Brexit imo. Though of course, other factors contribute - covid costs, energy subsidies etc. The lost tax revenue from all those fiance jobs and others who had to setup distribution centres in the EU, that will take its toll.

In short, the UK is re-adjusting. We are not quite as wealthy as we were. We are pretending to continue on as though everything is the same. Actually, it is not. We voted to be a little poorer (tho of course no one did), and that adjustment is taking place.
 
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SpurMeUp said:
I remember having a tiny savings account as a kid, and there being something like 13% interest rates. Probably in the 80s or early 90s. So it may well go much higher before they get ontop of the spiraling costs. No one really knows.

Most other countries have leveled out a bit more than us now. We are still getting over Johnson's spaffing cash campaign, including Brexit, and almost a decade of rudderless government. The UK has stood still, not really making improvements to its infrastructures (NHS, Education etc etc). And in economic terms we've actually gone backwards. London is no longer as esteemed as a finance capital. It's relinquished the fight with New York for global finance king, and lost quite a few jobs to Amsterdam, Paris, Franfurt. Serious companies no longer seek listings in London on our stock exchange as they did. The gloss has worn off.

The government has something like £20b a month deficit! They are spending 20b more a month than they take in. That is mainly a consequence of Brexit imo. Though of course, other factors contribute - covid costs, energy subsidies etc. The lost tax revenue from all those fiance jobs and others who had to setup distribution centres in the EU, that will take its toll.

In short, the UK is re-adjusting. We are not quite as wealthy as we were. We are pretending to continue on as though everything is the same. Actually, it is not. We voted to be a little poorer (tho of course no one did), and that adjustment is taking place.
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Assuming you know how inflation works, and taking the (false) stance that Brexit has made a measurable difference to the UK economy, care to explain how Brexit is affecting current inflation?
 
scaramanga said:
Assuming you know how inflation works, and taking the (false) stance that Brexit has made a measurable difference to the UK economy, care to explain how Brexit is affecting current inflation?
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Food inflation is 18-19% even higher than RPI. Some of that is Ukraine and getting fertilisers that were manufactured in Russia/Ukaraine etc and disruption to grain exports etc. But it is also that food costs more to transport to and from the EU because there is a lot more red tape and time needed to complete the trade. That pushes up prices....also known as inflation.

If you can not access a labor pool of 500m people in the EU, for example taking on people for the catering industry, chefs, waiters or nurses...etc. it pushes up wages because businesses become desperate to recruit people from the smaller available pool of people. Wage increases are the businesses' only option to attract staff in many instances, so this adds to inflation.
 
SpurMeUp said:
5% now.

what other levers are there? Increase taxes? Reduce money in circulation?

High inflation is obviously a bad thing and spirals with increased costs meaning increased wages which increases costs etc But wages never go up as much as the costs of things, so everyone becomes poorer in the end. There are so many studies and case studies of this. Can see an excellent video posted a few pages back - Milton Freedman visiting the gold rush towns and outlining the effects of all that gold entering the economy and more modern inflation. High inflation is worse than a short term recession, I think that is clear.

How you tackle or better preempt high inflation that is another question. Quantitate Easing aka printing money must play a big part in why we have such high inflation. I think we printed or digitised the best part of a trillion pounds of money that did not exist before! No surprise that with more cash sloshing around our economy + Brexit + Ukraine we have inflation.

I think it be probably was the right decision to raise rates by a half a percentage today. So that later they don’t need to go up again, that is the hope.
Click to expand...
Raising interest rates again is to condemn millions in the UK to poverty and misery. You understand that I assume? So doing the same thing that has failed over and over is only going to produce the same or maybe worse outcomes. And that outcome is the funneling of wealth upwards. This is not by accident, needless to say.

Raising rates in the current situation will have a inflationary effect in itself as the cost of money will be passed down to the price of services.

The orthodoxy of Milton Freidman has brought us to this jucture. There is really no future for this thinking if we want to survice as a species. We've hit the limit the the planet can support. This is not the way.
 
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Rorschach said:
Raising interest rates again is to condemn millions in the UK to poverty and misery. You understand that I assume? So doing the same thing that has failed over and over is only going to produce the same or maybe worse outcomes. And that outcome is the funneling of wealth upwards. This is not by accident, needless to say.

Raising rates in the current situation will have a inflationary effect in itself as the cost of money will be passed down to the price of services.

The orthodoxy of Milton Freidman has brought us to this jucture. There is really no future for this thinking if we want to survice as a species. We've hit the limit the the planet can support. This is not the way.
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What alternate do you suggest? You do not want to be like some failed economy where you need a wheelbarrow of notes to buy a loaf of bread.

High inflation hurts the poor pretty ubiquitously as they can’t afford things they could yesterday. Higher interest rates hurts the property owners, the middle classes who borrow to buy. In that sense higher rates is kinda Marxist - attacking the aspiring owners of property. And we all know property is theft!

Some kind of tax on pensions or baby boomer spending could be more effective to cool the economy. It is retired people with disposable cash, and higher rates only gives them more money/savings as they don’t have debt now.

Whatever the solution it is better to act than to do nothing and have spiralling inflation.
 
SpurMeUp said:
What alternate do you suggest? You do not want to be like some failed economy where you need a wheelbarrow of notes to buy a loaf of bread.

High inflation hurts the poor pretty ubiquitously as they can’t afford things they could yesterday. Higher interest rates hurts the property owners, the middle classes who borrow to buy. In that sense higher rates is kinda Marxist - attacking the aspiring owners of property. And we all know property is theft!

Some kind of tax on pensions or baby boomer spending could be more effective to cool the economy. It is retired people with disposable cash, and higher rates only gives them more money/savings as they don’t have debt now.

Whatever the solution it is better to act than to do nothing and have spiralling inflation.
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I've spoken about it at lenght in this thread before so old ground really. We (globally) need to consign capitalism to the dustbin and move to a new framework for economic development that takes into account social and environmental concerns. Economic models focused on GDP growth will never ever achive that by their nature.
 
SpurMeUp said:
Food inflation is 18-19% even higher than RPI. Some of that is Ukraine and getting fertilisers that were manufactured in Russia/Ukaraine etc and disruption to grain exports etc. But it is also that food costs more to transport to and from the EU because there is a lot more red tape and time needed to complete the trade. That pushes up prices....also known as inflation.

If you can not access a labor pool of 500m people in the EU, for example taking on people for the catering industry, chefs, waiters or nurses...etc. it pushes up wages because businesses become desperate to recruit people from the smaller available pool of people. Wage increases are the businesses' only option to attract staff in many instances, so this adds to inflation.
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Brexit was over 3 years ago. The inflation rate is a rolling comparison to 1year ago.

You're right that wage costs are too high, but we wouldn't be able to employ (that was originally "enjoy" - is there such thing as a Freudian typo?) cheap labour with such an excessive minimum wage anyway.
 
Rorschach said:
I've spoken about it at lenght in this thread before so old ground really. We (globally) need to consign capitalism to the dustbin and move to a new framework for economic development that takes into account social and environmental concerns. Economic models focused on GDP growth will never ever achive that by their nature.
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Bartering? Some organic apples in return for a ride to the farmers market? Sounds dreamy.

The fundamentals of a functioning economy are not a dichotomy of "capitalism" vs.... environmentalism or socialism. You need a functioning economy as a platform for people to work, interact and exchange things. Bartering doesn't work becuase what you have to exchange might not match what another person has so you need an intermediary - money - to set values. Without a functioning economy, no one can afford to buy solar panels and no one bothers making them (just look at Cuba or other poorer nations with abundant sun but no money or functioning economy). So you need some aspects of "capitalism" for environmentalism to flourish (without abject poverty). The alternative is a government bureaucracy running everything and we've seen how that plays. No one has got that right so far, and China has exploded by letting a market exist outside of government.

We have plenty of examples of economic collapse. Cuba now, sadly is worse than it was when I studied there 20 years ago. Its economy is shot and people are worse off, not better. Things were actually better under full-blown Soviet-subsidised communism, but the fundamentals of the economic setup have left the nation broke. We saw with communism in Russia that imposing a brand new economic model onto societies is highly problematic. Especially if you take away the agency and efficiency of entrepreneurialism and a free market. There is no reason socialism can not co-exist with capitalist fundamentals such as a free market and people setting up businesses. Just look at China. The government can affect changes - including environmental - with much greater speed and if they have socialist or environmental principles they can impose them upon the free market.

We were talking about inflation. GDP is separate but it is just a metric, blaming GDP it is like blaming Celcius or Farrenhight for global warming. I know you weren't doing that. You were criticising a model that places importance on growth. Which is what Marx said almost 300 years ago. He identified a cycle of boom and bust. You have growth, then inevitable resets. What western governments have done for the last 100 years or more is prod economies so that growth is kept stable and low, as is inflation. This does have logic. And it is not to keep growing, so much as to stop recession. The inflation target is what 2%? And the reason it is not 0% is you don't want to walk too close to the cliff edge. Deflation and recession are much too close then and potentially hard to stop if they take hold. So you accept some inflation and some growth to give a buffer.
 
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Baleforce said:
This is 13 raises in a row, this lever seems to be broken.
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i am fixed until October 2026 on a decent rate, so it wont affect people like me in similar circumstances.

One option (not saying i desire it) is to push VAT to 25% to curb spending. wouldn't surprise me to see that as an option.

but yeh, banter that peoples 2% payrise is causing inflation 8.7%
 
SpurMeUp said:
Bartering? Some organic apples in return for a ride to the farmers market? Sounds dreamy.

The fundamentals of a functioning economy are not a dichotomy of "capitalism" vs.... environmentalism or socialism. You need a functioning economy as a platform for people to work, interact and exchange things. Bartering doesn't work becuase what you have to exchange might not match what another person has so you need an intermediary - money - to set values. Without a functioning economy, no one can afford to buy solar panels and no one bothers making them (just look at Cuba or other poorer nations with abundant sun but no money or functioning economy). So you need some aspects of "capitalism" for environmentalism to flourish (without abject poverty). The alternative is a government bureaucracy running everything and we've seen how that plays. No one has got that right so far, and China has exploded by letting a market exist outside of government.

We have plenty of examples of economic collapse. Cuba now, sadly is worse than it was when I studied there 20 years ago. Its economy is shot and people are worse off, not better. Things were actually better under full-blown Soviet-subsidised communism, but the fundamentals of the economic setup have left the nation broke. We saw with communism in Russia that imposing a brand new economic model onto societies is highly problematic. Especially if you take away the agency and efficiency of entrepreneurialism and a free market. There is no reason socialism can not co-exist with capitalist fundamentals such as a free market and people setting up businesses. Just look at China. The government can affect changes - including environmental - with much greater speed and if they have socialist or environmental principles they can impose them upon the free market.

We were talking about inflation. GDP is separate but it is just a metric, blaming GDP it is like blaming Celcius or Farrenhight for global warming. I know you weren't doing that. You were criticising a model that places importance on growth. Which is what Marx said almost 300 years ago. He identified a cycle of boom and bust. You have growth, then inevitable resets. What western governments have done for the last 100 years or more is prod economies so that growth is kept stable and low, as is inflation. This does have logic. And it is not to keep growing, so much as to stop recession. The inflation target is what 2%? And the reason it is not 0% is you don't want to walk too close to the cliff edge. Deflation and recession are much too close then and potentially hard to stop if they take hold. So you accept some inflation and some growth to give a buffer.
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You are just arguing against your perception of what I said. I don't really have time to correct all this but quickly to say there was money before captialism and they will be money after it.
 
Rorschach said:
You are just arguing against your perception of what I said. I don't really have time to correct all this but quickly to say there was money before captialism and they will be money after it.
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You haven’t actually suggested an alternative though. Just criticised what you don’t like. I’m all for new ideas, but where are they!?
 
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