Erm well, mebbe

They also give no hint as to why rates will be rising in the next few years, when there seems little chance of that around the world with Fed, ECB and Bank of Japan policy as it is, so why they think the UK will be so out of line is hard to imagine.

Mebbe that MMT insistence that inflation only arrives with full employment isn’t quite as secure as some think?

Even, that the definition of full employment changes according to the underlying microeconomic structure of the economy?

That is, inflation comes back when recovery is less than complete and we face a choice of raising interest rates orm instead, increasing taxation, to stop the inflation. Which should we choose?

This report from the IFS is not objective in that case. Nor is it fair comment: it is simply a reflection of the obsession fo a bank with increasing interest rates, for which there is no justification, or need. And it is a reflection of the desire of that bank to suggest that bond markets are still in charge of those rates, when they are not. And it is a reflection of the desire of that bank to suggest that what we need is independent control of monetary policy, irrespective of fiscal policy, so that bankers have the best chance of delivering those increases in rates in the interests of bankers but not the economy as a whole.

This report has, then, to be read not as any form of objective review, bit simply as a manifesto for neoliberal policies that maintain the status quo in the interests of the banking community of the UK. The fall of the Institute for Fiscal Studies from any sort of credibility is just about complete. They are instead simply a cover for the wealthy to demand the policies that they desire.

Oh, apparently not then.

8 thoughts on “Erm well, mebbe”

  1. In a globalized economy, what matters is global slack, not domestic slack. This is known as the Global Slack Hypothesis.

    [quote]
    The competing explanation is the Global Slack Hypothesis which says that due to the integration of global markets, what now drives inflation is not domestic slack but rather global slack. Due to competition from global rivals, domestic producers in the tradable sector cannot raise prices when the domestic labor market tightens and wage pressures build. Instead, they either rebalance their global supply chains and off-shore production; or they lose business to their foreign rivals. In either case, domestic inflation is determined as much by global slack as by domestic slack.

    The evidence is mounting that the second explanation is the right one. What is especially compelling is the evidence that global slack is statistically significant in ALL countries for which data is available while domestic slack is significant is NONE since 2000. See Figure 3. The last column corresponds to global slack (“foreign gap”); no stars means the variable is not significant; three means it is significant at the 1 percent level.
    [end quote]

    source: Global Slack, US Inflation and the Fed’s Policy Error
    link: https://policytensor.com/2016/12/17/global-slack-us-inflation-and-the-feds-policy-error/

  2. Dennis, On The Front Lines Fightin' Them Chlorinated Chickens

    The fall of the Institute for Fiscal Studies from any sort of credibility is just about complete.

    According to Spud about half the institutions in Christendom have fallen from any sort of credibility. Strangely enough, it’s only the ones he disagrees with that fall. Quite the coincidence, don’t you think. I mean, seriously, what are the odds?

  3. Hello All,

    If Biden wins, all will change – for the worse. This is scary for USA and World

    Biden commits more gaffes on the campaign trail
    Yesterday: “I’m running for Senator”
    https://www.youtube.com/watch?v=pCAiwDo-P_s

    ‘Lacklustre Biden event’ saw 30 attendees sit in their cars
    https://www.youtube.com/watch?v=bgbCT7UIf08

    For UK: If he wins Brexit is gone

    I watched this message of hope again yesterday.
    https://www.youtube.com/watch?v=gWAgIVNzHKs
    Depressing: establishment, Left and msm around world have stifled it and now using Covid-19 to nail coffin shut and burn it

    Weep

  4. Mebbe that MMT insistence that inflation only arrives with full employment isn’t quite as secure as some think?

    I’ve never got this. I grew up in an era of high unemployment and high inflation. Unemployment peaked at 8% in NZ around 1997. Interest rates were at 10% then.

    How can they think inflation only comes with full employment when we have recent contrary evidence?

  5. @CD
    Likewise, but an earlier era of stagflation. Caused, not to a small degree, by a massive increase in energy costs, and restrictions in supply, which fed throughout the entire product chain and impoverished everyone.
    Not that a major increase in energy cost and restrictions in supply could ever happen again. Oh.

  6. @Evident
    For UK: If he wins Brexit is gone

    I assume they/you mean a US trade deal. Which (although it would look good) isn’t likely to be all that significant in the post-Brexit trade world. The UK is not yet the 51st state and needs no permission from whatever bozo happens to be temporarily occupying the Oval Office to do WTF it likes.

  7. @Mr Chris,

    USA is country we do most trade with. However, Not trade deal. Dems and establishment GoP want UK in EU.

    That’s why they’re angry we’re altering WA which is Brino.

    Remember, if no EU deal, the WA is enacted. EU has no incentive to do a deal despite all the theatrics

    Weep

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