The book review

Spud reviews the new BoE book:

My initial review can be reduced to two words: conceited and patronising.

And sometime they’ll get through their egotism

Err, yes……

10 thoughts on “The book review”

  1. Worth memorializing the Stump Thinking of the Great Tuber from today’s Daily Mirror – clearly they’re willing to hire him as an ‘Expert’ – I’ll pick the bones out of it but to echo Captain Oates – ‘I may be some time’

    Here’s where they are getting it wrong:
    1) They’ve got the cause of inflation wrong
    Inflation is a general increase in the level of prices. Electricity, gas, diesel and petrol, food and other basics are all going up in price. The government thinks that we have 1970s type inflation. However, that inflation was fuelled by pay rises bigger than growth in the economy so people had too much to spend. We have the exact opposite now though. People haven’t got the money to pay for the basics needed to live.
    Despite this, the Bank of England is raising interest rates to try to push net wages down – because that’s what Tory ideology tells them they must do. And the Bank follows the government line on this – because if they don’t the Chancellor has the power to overrule them.
    Interest rate rises make life for many much harder. That’s what happens when you put up the price of money. We need interest rate cuts instead, now.

    2) They won’t spend to help out
    The government could help by increasing benefits and pensions. They could also increase the pay of their own lowest paid employees. And they need not wait. They could do this now. But they won’t. They’re ideologically opposed to benefits, including pensions. Cutting government spending is all they believe in.
    And how could they pay for this? Actually, this policy would pretty much pay for itself because every penny spent on these extra benefits and pay would go straight back into the economy as those receiving them spend all the money they get to survive. That would support businesses, jobs and taxes paid. But this might also create government short-term government debt and they’d rather those with low incomes suffer than ever take the risk of creating a penny more of government debt. They don’t care if a pensioner freezes or starves if government spending is saved as a result. We need those increases and that logic out of politics for good.

    3) They won’t tackle price increases
    The government could tackle some of the big price rises we’re facing right now if it wanted to stop inflation. 20p or more out of every £1 spent on gas, electricity, diesel and petrol goes to the government. As their prices have risen so has the amount the government gets from them in tax, so they’re profiting as people struggle to pay their bills. If the government simply fixed the actual amount they get from each unit of energy sold at their 2020 rate by cutting VAT and duties they could cut prices right now.
    But they won’t because they want to pay off the government’s debts and pass the burden on to the public. People are losing so the government can balance its books. That’s the price of ideology. We need them to cut fuel and energy prices now.

    4) They won’t help people back to work after Covid
    According to the government we have had a labour crisis in the UK since the end of the Covid epidemic. That’s because the number of people working since Covid began is down 482,000 whilst vacancies have increased by 427,000. The Bank of England say we need interest rate rises to tackle this to force wages down. I say we need decent ventilation, workplace protection and support for older people to get them back into the workforce after Covid. But the government says that Covid is over, and this is more important than helping real people get jobs. We need those Covid protections

    5) They aren’t helping people get pay rises
    The real problem we have is that millions of people in the UK don’t have enough to live on. The so-called national living wage is useful, but it’s not enough to really live on and it’s become a base level pay rate that far too many employers now choose to pay. The government ideologically wants to keep it that way because this maximises employer’s profits. But what the government should be doing is pushing up wages.
    Until the 1990s there were pay boards in the UK that set the wage rates for about 20 industries from construction, to agriculture, to hairdressing. Their job was to make sure that when unions could not protect people’s pay they still got a fair deal. We need those boards back, now. We’d have more, better paid jobs – and less zero hour, gig economy jobs – as a result and what is more, employers would have to train their staff to get value for money from them, which would be a real bonus. But the government hates such interventions, thinking them left-wing. Their ideology is costing the country fair pay that we need now.

    6) They won’t impose windfall taxes
    It goes without saying that if people are paying more for the electricity, gas, diesel, petrol, food and other things they’re buying and those things cost no more to make (and so far, they, by and large, don’t) then someone, somewhere is making a lot more profit as a result. The oil companies are. So too are the banks because of interest rate rises. But the government is objecting to taxing them more because their ideology is that all profit is good, even if it comes from forcing people into poverty. They even voted against a Labour plan for windfall taxes, but we need them now.

  2. Reminds me of my favourite Colemanballs in Private Eye ever:

    Only one word for that: Magic Darts!

  3. Psychological projection – Wikipedia:

    Psychological projection is the process of misinterpreting what is “inside” as coming from “outside”.

  4. “However, that inflation was fuelled by pay rises bigger than growth in the economy”

    And that’s why the Prices and Incomes Policy had everything sorted out by 1974.

  5. Bloke in North Dorset

    Raising interest rates isn’t just about reducing the money supply.

    The last time inflation was this high and real interest rates this negative there were more people (voters) living off their savings than people with mortgages and other debts who would suffer from higher rates. Since then the gap has probably widened as people now take out fixed mortgages for 5 or more years and baby boomers have moved from mortgage payer to pensioner living off their savings. It will be a while before mortgage payers are affected and it will be a slow burn.

    Some those most affected will also be some of those living off their savings so an increase will benefit the higher interest rates. The rest of those most affected aren’t likely to be directly affected by the rising interests, at least in the short term, so probably won’t even care.

    Yes, I am aware that there are other debtors who will be seriously affected, not least the government’s own debt repayments will sky rocket, but the last time I checked they didn’t get a vote.

  6. “Van_Patten
    May 19, 2022 at 10:23 am”

    How does he think, without a shortage of goods, that *too little money* is causing prices to rise?

    If there is too little money then people don’t have the money to bid up prices.

  7. When he was 64 Muhammad ibn Abdullah of Arabia had found peace in heaven after unifying Arabia and writing a total solution to how to live your life righteously on earth.
    Murphy is 62.

  8. Inflation is a general increase in the level of prices. Electricity, gas, diesel and petrol, food and other basics are all going up in price. The government thinks that we have 1970s type inflation. However, that inflation was fuelled by pay rises bigger than growth in the economy so people had too much to spend. We have the exact opposite now though. People haven’t got the money to pay for the basics needed to live.

    I hold no brief for this most wretched of administrations but how delusional do you have to be to think that this government thinks ‘wage rises’ are driving inflation. Every time I read the guy’s utterances I think ‘could anyone possibly be this stupid?’ – he seems oblivious to the fact that the Uk operates in international markets or that goods can move cross border. I honestly don’t think I have ever seen a more ludicrous interpretation of the situation.

    Despite this, the Bank of England is raising interest rates to try to push net wages down – because that’s what Tory ideology tells them they must do. And the Bank follows the government line on this – because if they don’t the Chancellor has the power to overrule them.
    Interest rate rises make life for many much harder. That’s what happens when you put up the price of money. We need interest rate cuts instead, now.

    I think interest rate rises will bite and cause some hardship but the reason for that is QE- which Murphy is in favour of. MMT is, probably after Net Zero and the Ukraine War the key reason why we are in the state we are in. Too much money chasing too few resources and an elevated money supply…

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