His remarks came as he made the case for raising the UK’s inflation target to 4pc from the current level of 2pc. Mr Haldane said that a trend towards low interest rates across the globe has made it increasingly difficult to fight off recessions.
So, if we don’t know how to generate 2% inflation then having a target of 4% will make it so much better and easier to hit!
Reminds me of the student who when retaking his economics exam pointed out that the questions were the same as previous year. Yes said the examiner it’s the answers that have changed
Well this is where I agree with Richie. Or at least with one thing he sonetimes says. If we are having trouble with inflation below target then why not try some money financed public spending? Of course I still think it would probably be debt financed in long run as BoE sells bonds, but whilst that negates some of the claims RM makes for PQE it doesn’t turn it into a bad idea
Never misunderestimate the ability of clever people to think themselves into window-slurping stupidity:
Andy Haldane, one of the Bank’s nine interest rate setters, made the case for the “radical” option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished
We have to abolish the economy to save it.
He said that the “the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside”.
End of the world, cats and dogs getting married, Jeremy Corbyn and Diane Abbott going on “Sex Box”, etc.
Traditionally policymakers have resisted cutting rates below zero because when the returns on savings fall into negative territory, it encourages people to take their savings out of the bank and hoard them in cash.
This could slow, rather than boost, the economy. It would be possible to get around the problem of hoarding by abolishing cash, Mr Haldane said, adding: “What I think is now reasonably clear is that the payment technology embodied in [digital currency] Bitcoin has real potential.”
Sometimes you really do have to be thankful that our Prime Minister, despite being an Oxford PPE grad, is not a complete maroon. Any politician who tries to take the pound coins out of granny’s purse and replace them with Bitcoins is going to find himself meeting Old Nick far sooner than planned.
Mr Haldane needs a long holiday.
The bit I am struggling with here is that he’s the BoE’s Chief Economist (and one of their nine interest rate setters), not one of Prof Murf’s 40?
“However Mr Haldane said that “there was little evidence to suggest these [welfare] costs would be large”.”
Not to Mr Haldane and his class, no. Trebles all round for them!
“a savings glut in emerging markets have all contributed to a generational decline in interest rates”
More evidence, if any were needed, of neo-liberalism continuing to find the faces of the world’s poor into the dirt. Forcing people to save increased income!
Slightly off topic but as good a place as any – someone called Neil Wilson made what I thought was a perfectly good (and obvious) point over at Murph’s.
I’m paraphrasing, but it was along the lines of forget PQE on infrastructure (too long term, skills issues etc) or helicopter drops (forcing money to pursue activity where skills may not be available).
Simply focus additional money and resources towards further education and training. ie, whenever there is slack or downturn, use that slack to educate and train people. Which is then useful both in helping the economy to recover and in providing additional capacity once it does recover.
And which is sort of obvious and is something that some of us will do naturally. For example, if less busy, I research stuff?
Yeah, PF, but it’ll all be courses on making buggy whips.
Mr Haldane’s comment is a symptom of the fact that the monetary powers that be are stuck for any ideas of what to do next.
PF, haven’t we been doing that since Blair’s big education, education, education splurge?
And while we haven’t trained many buggy whip makers, we have trained an awful lot of diversity co-ordinators, five-a-day advisors and outreach specialists.
Yep, it will be wall to wall film studies, politics and journalism degrees. Plus some “political economy” ones for the less able.
A better idea would be free or subsidised training to become electricians, mechanics, plumbers etc.
Or do something really crazy like build a national network of cycle paths. By cycle paths I don’t mean one foot wide strips of the road painted green.
Buggy whips and diversity out-reachers – yes sure I agree but that’s how it’s implemented, not the concept, and for which the obvious solution is that we put Rob in charge.
Just suggesting that it’s a better concept to deal specifically with slack or a downturn than Murph’s “infrastructure” wheeze, and for the reasons that have been highlighted on here (skills, time lags etc)?
The trouble with “training” is that very soon, no-one can be employed without an additional piece of paper, making the unemployed more unemployable. The “qualification” is more a restriction than an increase in skill levels.
Is a third class degree better than no degree? Possibly not.
“use that slack to educate and train people. ”
Education is a role for the State so fair enough, but training is the job of employers. If anyone doesn’t know the difference:
Imagine your 15-yo daughter comes home from school and says today we had sex education.
Now imagine she comes home and says today we had sex training.
Or put another way, we could argue that the State should educate people on how the internal combustion engine works, however its not the State’s job to teach them how to strip down a Mercedes Benz engine and change a connecting rod.
“we could argue that the State should educate people on how the internal combustion engine works”: we could indeed. But in my day it didn’t. I assume that it assumed we’d all have picked it up somewhere.
BiND
The state itself doesn’t have to “do or manage” anything, just fund it? I am sure Rob (above) would get the implementation right so that no one here would cry “media studies”, “trans gender” or “parrots” or whatever.
This was nothing more than someone over at Murph’s saying, if PQE, then infrastructure isn’t so good (as also agreed here). OK, repairs and maintenance might not have the time lags but might still have skills gaps.
Hence, they suggested that training might address those issues, with some obvious longer term benefits?
You can borrow to fund this (in the market, ie increase the deficit as normal) – isn’t Osborne already doing this with apprentices (?) – or QE it in addition to that.
If you QE it, it’s because you deem the circumstances to be exceptional (as we did with £375 bn) but you also then need to be able to reverse it.
It might be better (for credibility) if it’s going to be reversed / cancelled on some pre-determined schedule – I don’t know, maybe on a set schedule over a period of 2-4 years after being issued, through general taxation (ie increased deficit), or whatever?
I accept, the QE part, however well intended. probably doesn’t work, because once you start doing it, the buggers (ie the left) will find a way to not follow through and carry out the cancellation bit, or otherwise be tempted to use it a precedent to debase the currency.
Nick
I agree but the left don’t really need “extra training” as an excuse to control or own people, they manage perfectly well without that?
On the basis that knowledge is generally a good thing, what would you suggest?
The distinction between education and training is a good one. There are a million different jobs to be done, and it’s ludicrous to think that schools can provide suitable employees for all but a few of these.
The main criticism of hugely expanded university access seems to be that millions will simply spend 3 years behaving badly before gaining a pointless degree. This may actually be the one point in its favour. Your a long time dead after all.
Most jobs absolutely do not require a degree. Some do, that is those that require comprehensive in-depth knowledge, such as Law, Medicine and Civil Engineering. Here, “book learning” is appropriate.
For most others, entrepreneurs and sales people being particular examples, studying for a degree is probably a handicap.
The truth is that, almost always, experience trumps knowledge (indeed, the experienced will have more practical knowledge).
Better that industry provides training, perhaps encouraged by state bungs. Schools would be better off promoting participation in sport, alongside the three R’s.
Actually the biggest savings glut is not in emerging markets but in Germany.