Oh Lord God Above

To be clear, when interest rates cannot be used to control inflation, as is the case in almost every developed country now (and many others as well) because official interest rates are at, or near zero, tax is the only tool available for this task.

Interest rates are at near zero as a method of controlling inflation twatto. You know, to stop inflation being too low? And if we find that inflation rises then we can, of course, raise interest rates to control it the other way around, to reduce it.

Seriously, why does he think interest rates are at zero if it’s not to control inflation?

9 thoughts on “Oh Lord God Above”

  1. “…tax is the only tool available for this task.”

    The Bank of England could reduce the money supply directly.

  2. Roue le Jour is correct. So polipigs can borrow until it hurts -us not them–and borrow some more. Without all their tax thieving being needed to pay the interest.

    And after borrowing comes printing. 150 billion so far by SpewKnack.

  3. The word “dementia” has been redefined to mean “loss of short-term memory” so I can precisely describe Mr Ecks as “demented”.
    “Real” interest rates are *less than* zero because Gordon Brown, having transferred Banking Supervision from the BoE to the FSA and ordered the BoE to cause inflation of c.2% pa, witnessed the first Run on a Bank in over a century (triggered by a plausibly inaccurate report by the son of a “New Labour” Life Peer) and a financial crisis; in an attempt to stave off a repeat of the mass unemployment created by the second Labour government in 1929-31 he ordered the BoE to reduce interest rates below the c.2% inflation rate.
    When Osborne picked up the poisoned chalice, he set out to gradually reduce the rate of borrowing towards zero *and stealthily increased taxation on higher earners* (his talk of “austerity” was just a con to persuade foreigners that they had a virtual cetrtainty of getting their money back if they lent to the UK instead of Argentina). His successors have, until Rishi Sunak responded to the Covid-19 crisis continued that programme.

  4. O% interest enables govt borrowing. It doesn’t compel them to borrow. Even the greediest cunts can show some self-control. Yes Osberk did reduce govt borrowing and Tory “austerity” took 10 years to get borrowing down to–70 billion a year was it?-its late and I cant be arsed looking it up- last year. Still a fortune but well down on what it was.

    Since then Blojob and his scummy little mate SpewKnack have spent/committed to spend pushing £400 billion–wartime spending. Of which 150 billion is via BoE buying govt “debt” with ?? resources ie printing it electronic age style.

    Since inflation = vouchers to claim wealth going up faster than actual goods/services–production of which have prob gone down this year–then inflation is on way. Bottler produced a lot of funny money back in 2008/9 but as Tim pointed out at the time most of this went into bank vaults as reserves and didn’t get to circulate much at all. Hence much lower inflation than might have been expected.

    That isn’t happening now–todays money is paying for Blojobs spending spree–inflation is set to rise . How much depends on how mental Johnson is going.

  5. @pjf Inflation is too low, when lots of people think “prices aren’t going up, there’s no hurry to go out and buy x” and then the people who make x find they’ve got a stockpile and reduce their capacity.

  6. Look, the government may soon be faced with a choice: raise interest rates and fuck up a large number of people with colossal mortgages, or let inflation rise which will mess up even more people. Which group do you think has more political clout?

    I think any modern government would prefer an enemy army to occupy parts of the country before they allowed house prices to fall in any appreciable way (especially in the South).

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