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Lordy Be, don’t potatoes have eyes?

The UK is heading for a recession. A cost of living crisis created by externally created inflation, whether it be Putin’s war or post-Covid supply chain disruption, is the primary cause of that recession. Almost none of it has been created domestically.

That inflation is a temporary phenomenon. Analysis published by the Bank of England suggests that to be the case. We might have inflation of 10% now, but that will fade rapidly.

Eyes to see what the BoE actually says?

The economy has been subject to a succession of very large shocks. Monetary policy will ensure that, as the adjustment to these shocks continues, CPI inflation will return to the 2% target sustainably in the medium term.

The rapid fade is a result of the monetary policy that the ‘Tater insists should not happen.

Sigh.

This isn’t true either:

Interest rate increases are an immensely crude measure, given the nice sounding description of monetary policy by economists. Their only use is to stop inflation created by excess wage increases in an economy that in turn drive up inflation.

It is presumed that they work by increasing the cost of borrowing which in turn reduces the amount people have to spend which then puts pressure on businesses to reduce prices as demand for their goods and services falls due to people having less to spend.

No. MV=PQ. Higher interest rates reduces V – because fewer people go out and borrow money – meaning that inflation falls as the wide money supply does.

He’s trying to do monetary policy without the money equation. That equation not being some recondite piece of Continuity Neoliberalism but an identity.

Sigh.

And this is joyous. The answer to inflation is:

So, first, you cut interest rates for all the reasons already noted and because doing so increases spending power, which is what we are short of.

Second, you cut taxes when facing a recession, and most especially do so for the lowest paid as they suffer most from any shortage of spending power that a recession creates.

Third, you increase government spending because that is the only component of national income that any government can control, and in any case all the others will be falling in a recession, so it is the only one that can turn the situation around.

Yep, let’s increase the deficit and cut interest rates to beat inflation.

Sigh.

The aim is the destruction of the state as we have known it. The goal is a fascist state. How else can policy so bad, and so deliberately so, be explained? Our government is at war with us. There must be a reason. It can only be for their gain at cost to the rest of us.

None of this need happen. I do not dispute that we are in an economic mess. But it is soluble. It is not hard to see how. And the government intends to make it very much worse.

My serious hope is that opposition politicians will see what is happening. If they don’t, our descent into fascism will happen. I am fearful. I can’t pretend otherwise. ENDS

Thank God people are opening lithium mines all over, eh? Might be enough for Norsey to administer some.

14 thoughts on “Lordy Be, don’t potatoes have eyes?”

  1. What’s with that conluding “ENDS” ?

    Does Captain Potato think that his blog is a newswire service, that editors with green eye-shades in dusty offices around the world are yelling “stop the presses” every time he thumps out some ex cathedra drivel.

  2. That’s interesting. Spud’s in favour of low interest rates is he? So he’s in favour of wealth transfer from the poor to the rich? Because that’s been the effect of artificially low interest rates. The less well off don’t have much in debt. But they do have their saving which they rely on. Pensions. It’s the wealthy who are stuffed with debt, using it to buy assets. It’s how to turn a modest amount of wealth into a larger amount of wealth. The wealthier you are the more you benefit from low interest rates.

  3. Have to agree with the government being at war with its subjects though. On many fronts. But the word he’s looking for isn’t fascist it’s feudal. Government’s recreating feudalism.

  4. ” How else can policy so bad, and so deliberately so, be explained? Our government is at war with us. There must be a reason. It can only be for their gain at cost to the rest of us.”

    He’s not wrong there. The only question is cockup vs conspiracy. My own necessary and sufficient hypothesis is they hate us and despise us. ‘They’ to be decided.

  5. In passing:
    Monetary policy will ensure that, as the adjustment to these shocks continues, CPI inflation will return to the 2% target sustainably in the medium term.
    And that statement was made with a straight face was it? They really are taking the piss aren’t they? In reality they haven’t the vaguest idea. We’re at the hit it with a hammer & pray stage.

  6. If they really were trying to create a fascist state, why would they first destroy the state? It makes even less sense than his usual shite.

  7. The aim is the destruction of the state as we have known it. The goal is a fascist state. How else can policy so bad, and so deliberately so, be explained?

    I do enjoy the Twitter streams of consciousness although my alter ego swells the number of his followers, my original Twitter ID having been one of the 20,000 banned by him over the years. But of the many topics on which he is ignorant is the nature of fascist economics. If you want to create a ‘fascist state’ you don’t cut expenditure – ergo they are not fascists in the accurate sense of the term. He is of course better defined as a fascist, and a particularly obnoxious one, as MMT’s consequences become painfully clear to people.

  8. Is Velocity just a math fudge factor?

    Has anyone ever actually observed Velocity or is it just a made-up variable inserted into the Quantity Theory equation to absorb its wildly wrong predictions?

  9. Has anyone ever actually observed Velocity or is it just a made-up variable inserted into the Quantity Theory equation to absorb its wildly wrong predictions?

    Where Spud’s involved, it’s the Insanity Theory of Quantity.

  10. Martin Near The M25

    He reminds me of an older and larger Rik from the Young Ones “Neil! The bathroom’s free! Unlike the country under the fascist oppression of the Sunak junta.”

  11. Actually this is probably the only relevant comment the tosser above has ever made. Sure, it’s a made up variable. As are all the values in macroeconomics equations. The equations themselves are a fiction devised to give what amounts to astrology some ill deserved dignity. They describe some general processes. Not accurate numbers you can base decisions on.

  12. He is exactly as deranged as the MAGA lot (who do get a rather more sympathetic hearing on these pages). No more deranged, no less deranged.. exactly as deranged. And he’s hitting all the keywords that would send him and his into a frenzy of outrage if the words came from a political wrong ‘un.

    Buy yeah.. if you can see how nuts he is, and how dangerous he would be if he had any power, but can’t see the same when you look at the Trumpists… well… that’s kinda fuckwitted.

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