Ahh, economics, it’s all so complicated, isn’t it?

As the FT has reported the Office for National Statistics is revising a number of features of UK national income reporting from this month. One thing that will change as a result is the way that the UK current account deficit with the rest of the world is recorded (it’s always been a deficit in the chart that follows, so I only give it one sign in my description). This is what it will look like before and after revision.

OK, current account deficit, fine.

Now, let’s ask a simple question? Who has delivered the biggest run on the pound? I think the answer is obvious.

Err, sorry? I mean, sure, the value of the pound and the trade deficit are linked but not directly like that.

BTW, if you want to insist upon “run on the pound” then the answer is Gordon Brown.

Yep, even larger than John Major…..

16 thoughts on “Ahh, economics, it’s all so complicated, isn’t it?”

  1. If the value of the pound has dropped by say 10%, and this is a problem, why doesn’t Murphy suggest that the BoE arranges for a print of new £ to distribute to us as a 1/9 bonus issue of £s to put us back in the same wealth position we were in before?

  2. “distribute to us as a 1/9 bonus issue”

    Maybe we could subscribe for warrants and exercise them for new £…

  3. Senior Lecturer Dipstick may be arguing with his other face on the 29th when the latest figures are re-estimated.

    According to the previous calc Current Account deficit has halved since the impact of Brexit came through.

  4. Tim

    This is entertaining:

    Richard Murphy says:
    September 27 2017 at 6:53 am

    ‘When there is less than full employment there is no risk of creating inflation by using PQE

    And £435 billion shows that the risk is negligible – unless you also choose to exit the EU

    The counter argument is sound modern tax systems, better economic data, and no debt obligation in a foreign currency all mean there is no risk

    Germany collapsed under the burden of trying to pay an externally imposed debt due for no gain

    PQE makes its won means of generating return for the economy

    There is no comparison’

    Apparently there is mass unemployment in the UK. (Shome mishtake surely?) I can only presume the reference to the ‘won’ in the penultimate sentence is a reference to the North Korean won, which Murphy’s policies would put at parity with the pound within around a year.

  5. I still don’t understand what he is proposing. It seems that we will issue non-interest-bearing gilts to buy out the shareholders. However, many of these shareholders are pension funds and people saving for pensions who use these vehicles as a way of generating stable income – look at John Laing Infrastructure Fund for example. So he is claiming that there is huge demand for gilts because of the income they generate but he does not intend to pay any income.

    I confess that it is beyond my powers of comprehension.

    Is he actually saying that people park their cash in gilts not for the income but because they are a safe haven?

  6. If the government issued gilts based on specific projects and called them bonds they would be strong and stable and deliver a huge return but they could never be overvalued.

  7. @ Martin
    He spends the money instead. The latest accounts for Tax Research LLP to be filed at Companies House (for the year to March 2016) show that Murphy drew £50k out of the LLP during the year before the year-end, let alone before anyone calculated how much profit had been made and was available for distribution between the partners.

  8. That 50k figure is an interesting amount – it’s exactly the amount you would take out if you wanted to keep your child benefit. Is there some manipulation going on here, strictly legal of course?

  9. @ Bongo
    I had not thought of that!
    The drawings were 50,415 so if Richard drew 99% of that it would be 49,911.
    Could just be coincidence.

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