It’s monetisation of fiscal policy – the Venezuela, Zimbabwe, Weimar pathway.
I have set out a comprehensive plan to address this in a report called ‘Surviving 2023’. It might cost at least £144 billion to get through this winter, which only quantitative easing can provide. Let’s not pretend otherwise.
What is the difference between the QE that happened in after the GFC, the QE that happened as a result of covid, and any further bursts of QE that could happen were someone as mad as Spud to get in charge? They are all exactly the same. The BoE electronically creates money, and goes out and buys government debt with it. This allows the government to issue as much debt as it likes, regardless of whether private lenders were actually there to lend or not. There is never a government funding crisis with QE. The government is enabled to spend more money than it otherwise would have had into the economy, and pay less for the privilege. After the GFC it spent it on keeping up spending generally while tax revenues cratered, during covid it spent it on buying loads of PPE from China, paying people to do nothing, and generally wasting it in a fit of hysterical mania. If it spent it all on making energy bills no higher than they used to be, it wouldn’t really be any different. In each case the government is enabled to spend more cash into the economy than it would otherwise be able to in the absence of QE. So QE = fiscal monetarisation, end of story. Anyone saying otherwise is a liar and a charlatan.
The difference in the effects are down to the state of the economy at the time of the spending – after the GFC the money supply was going down the tubes so printing and spending some extra wasn’t going to overly increase demand. Whereas printing and spending all the covid cash was into a relatively buoyant economy, so was bound to have inflationary impact, as it did, even prior to Uncle Vlads little trip. If we printed and spent even more now it would undoubtedly be inflationary too, as although the economy is slowing, supply issues left over from covid are still widespread, so all that cash would just bid up prices for the limited supplies.
How exactly will we perish without it? Are we about to be beset by White Walkers?
Anybody got any actual ideas on how to deal with this that don’t involve When Money Dies 2.0, Communism, WW3 and/or an excruciating – and permanent – reduction in UK and Western European living standards due to the brutal economic contraction the transition to eye-wateringly expensive energy is already creating?
No?
So… anybody got President Putin’s mobile number?
Because, pace Spud the Evil Accountant, if our focus is on ‘getting through the winter’, we’re going to soon stop tap-dancing on thin air, Wily E. Coyote style. This is not a temporary crisis, it won’t go away with the Spring. All indications are it’ll get worse in the Spring.
All the shit that is happening is not random or unfortunate but the result of deliberate decisions by people who have an exaggerated belief in their own omniscience. The answer to our problems is to stop doing stupid things.
And QE in orgiastic quantities over 20 years is totally fine, as proven by the fact that we have no inflation currently. Rolls eyes.
Some scary thoughts, because I’ve been subjected to state-sponsored anxiety terrorism since 2020 and misery loves company:
What if they decide it’s a clever idea to do furlough again?
An energy furlough – “temporarily” lay off, without technically laying off, all the people working in energy intensive and/or marginally profitable (in normal times) industries such as manufacturing, chemicals, retail, transport and hospitality.
Rather than accept, say, 3 million people joining the unemployment queues by Christmas, European and UK governments may well be tempted to hide the decline by going back to everybody’s favourite Covid measures.
It could include a return of lockdowns as a form of demand destruction, in preference to electricity rationing. Work from home and get your necessities delivered, to save fuel.
As we found out in 2020, once we start normalising this sort of thing, it becomes very difficult to stop government doing it again in future. Could the “success” of health fascism be dusted off and rebranded for the energy crisis years? Seems pretty likely it will be. Fascist accountants will be wanking themselves silly(er) at the prospect of permanent wartime control of the economy.
And while we’re all getting excited over the formation of a new, slimmed down, landlocked Ukraine that we’re on the hook to subsidise forevermore, Asia isn’t looking as stable as we’d like it to be. Ukraine 2.0 could break out in Taiwan or over China’s many border disputes with its neighbours, or India and Pakistan might invite each other to meet in the car park.
There’s an (excellent) movie that came out this year, EVERYTHING EVERYWHERE ALL AT ONCE. Sometimes (i.e. for most of recorded history), the human race just can’t catch a break, and we get decades or even centuries dominated by wars, famines, plagues and demographic collapses. The current energy crisis could instead be an Everything Crisis, where the economic, political, social and strategic architecture of the planet is subjected to a grim procession of rolling shocks with no obvious end in sight.
Anyway, I’m fine. How are you?
Fascinating how he doesn’t seem to understand that money has no intrinsic value in itself. It’s purely a token of value. Creating £144 billion isn’t going to make the slightest difference to the underlying problems. It will create no gas nor generate electricity. It will put no more food in the shops. It will create no more houses. All it will achieve is that there will be 144 billion more pounds going around the system.
Given that the situation we find ourselves in is largely the result of decisions taken by the Establishment, can we have any confidence at all that they’re capable of avoiding the Venezuela, Zimbabwe, Weimar pathway?
I wonder if he understands what will happen if what’s been going on goes beyond breaking point? One thing it won’t be is some sort of government of national unity rationing & allocating resources to the needy, with people like him doing the allocating. It’ll be what it always is. Might is right. And don’t think the UK’s Girl Guides of a Police Service or its powder puff of a military could do anything to prevent this. He wants to see the future it’s a bunch of big lads with heavy sticks deciding that his 4 bed end terrace is wasted on a retired accountant in a cardigan but would suit them just fine.
I’ve an idea based on Murphynomics. Instead of us using QE to conjure up 144 billion to buy gas why don’t the countries supplying the gas do their own QE, magic up their own share of the 144 billion, tell us to get stuffed and don’t bother doing that physical bit with the gas. Bonus it’s 100% carbon free too!
Quantitative easing sounds like temporary relief from constipation.
《It will create no gas nor generate electricity.》
Can you pay Putin for throttled supply, though?
@JK277 – “How exactly will we perish without it?”
Every winter some people die of hypothermia. If energy is too expensive, it seems reasonable to conclude that more will die. However, that does not necessarily mean that it will be in the large numbers some people imply. Those who are fit and healthy, and have suitable clothing only need quite a small amount of heating – as is proved by people surviving in hopelessly draughty and cold houses for most of human history. Equally, however, human life was reckoned to be “threescore years and ten”, which is only 70 and we now expect people to live a lot longer.
During Covid, there seemed to be quite a few people who felt that, since the risk was greatly skewed by age, we should do very little and let a large proportion of the elderly die off. I expect that the same people now think that the poor elderly should be left to die as well.
Charles: There was actually somebody on the radio today saying: I’ve got a baby, so I *have* to run the heating all night. Presumably, there were no such thing as babies before we had central heating.
Do all houses have fireplaces these days?
“Do all houses have fireplaces these days?”
No. They have been becoming ever rarer in housing built since about the 70’s. Anything bult recently will only have one if it’s a custom build for someone a bit eccentric.