75 basis points is 0.75% in lay terms. That would mean that US rates would fall to a range between 4.5% and 4.75% next year.
That is better news than there being no planned rate cuts.
But as we also know, US inflation is now heading for target rates, and is only just over 3% now. Despite that, the oppressive interest rates are going to be maintained.
Real interest rates of 1.5% or so are oppressive? What actually is the time value of money then?
I’d also point out a number of ‘flaws’ in his hypothesis, akin to shooting fish in a barrel that it is.
– The declines in inflation are caused largely by a fall in oil prices. Given he supports the immediate stoppage of oil production and use and a switch to renewables immediately (he is a staunch partisan of Net Zero) he’d be responsible for a spike in inflation akin to that experienced by the West following the Yom Kippur war
– He ignores geopolitical instability likely to drive oil prices up. Israel is wiping out Hamas in Gaza which may preclude stoppages of sea routes from the Middle East. Iranian backed Houthi terrorists have begun attacking ships which will lead to supply shortages of many consumer goods, also driving back up inflation. As a Hamas backing anti-semite who, in his own words, ‘could easily see himself at Dachau’ he may not be bothered about such things, but the Markets may have more idea of the future trends than this ‘omniscient ignoramus’ does.
– Asset bubbles, directly caused by Murphy as an advocate of MMT are causing dislocation of a whole raft of assets. The fallout from is likely to dwarf the impact of the US property bubble inspired crash of 2008
– His policy of inviting the entire population of India, Bangladesh and Pakistan at a minimum (1.8 billion) and the rest of those on the boats over and decrying anyone who opposes it as a ‘racist’ or ‘fascist’ may not, at least from an economic viewpoint be the best way of quelling inflation
It still looks as if the world’s central banks are desperate for a recession and are going to hold out until they get one
Net Zero means permanent recession, no?
The economy cannot grow while it’s being shrunk.
Samantha Bracewell says:
December 14 2023 at 9:34 am
Core inflation in the USA remained at 4% in the stats published earlier this week.
The chances of inflation undershooting target in the USA are very slim in the next 12 months, but if you’d like to bet on your view, there’s someone at the IEA who would gladly make a wager with you.
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Reply
Richard Murphy says:
December 14 2023 at 10:10 am
Actually, it is 3.1%
Bit since when did a troll worry about facts?
https://www.theguardian.com/business/live/2023/dec/12/uk-wage-growth-slows-jobs-market-us-inflation-interest-rates-business-live
The professor publicly displaying he doesn’t know the difference between core and headline inflation.
One US economist I listen to who has been consistently in the right area of these things reckons inflation is going to be around 5% over the medium term. There’ll be ups and downs, probably more ups as V_P points out, but that looks like being the average.
Obviously not as bad as we saw in the 70s and 80s but a whole generation brought up on low interest rates is going to be learning a hard lesson called TANSTAAFL.
BiND
I would agree as ever although one of the issues with the response to COVID is that there is such a thing as a free lunch. Look at the current government spending money that we don’t have like drunken sailors. And Murphy will maintain that there is no ‘cost’ to this largesse. Enough people swallow this guff that the reckoning (which I agree will come) is going to be pretty ugly.
“Obviously not as bad as we saw in the 70s and 80s but a whole generation brought up on low interest rates is going to be learning a hard lesson called TANSTAAFL.”
I disagree. The history of monetary policy shows that the people in charge of it will do all sorts of desperate things in order to keep their rickety wagon on the road.
The main problem they come up against now is that they can’t control all 3 of interest rates, money supply and exchange rates. So whats the obvious solution? Abolish exchange rates.
Exchange rates only exist because there’s multiple currencies. If the whole world were one currency (the bits of paper might have different heads of state on but it would be a unified system) then there is no exchange rate to worry about. So you can print money and control interest rates as much as you like. As all currencies are fiat, and everyone is trying to spend more than they earn, who is going to argue?
My bet is that the Next Big Thing will be a Bretton Woods Mk2, only this time for a global currency in an electronic world. Thats how they are going to keep the show on the road. Probably allied to bans on private ownership of gold and crypto (to try and suppress the alternatives).
I’m not saying its a good idea, or that it would even work (it probably would in the short term) but if it allows the party to continue a bit longer you can bet politicians (and those at the top who will be able to front run it and make out like bandits) will go for it. They never met a short term easy fix (and screw the consequences)they didn’t like.
Jim – it seems to me that Western economies are the old lady who swallowed a fly back in 2001, and have been swallowing increasingly desperate medicine ever since.
Perhaps she’ll die.
O/T I see the terriblegraph reporting Aviva CEO as stating “White male recruits must get final sign off from me….”
That seems in practice a policy of “do not hire white males”, with exceptions requiring CEO sign off.
How does this not run smack into gender and race equality law?
Or is it just they’re confident enough nobody will be able to demonstrate that they specifically were discriminated against to the standard required to win a case?
LN – the new racial hierarchy they released in 2020 means white men have no rights and get no respect. If that’s not true, try spreading the word that it’s OK to be white and see how quickly you get arrested or sacked.
But after Aviva, and the Royal Air Force, and the BBC, and other institutions let it be known they despise white men, why are white men still funding or supporting these organisations?
We’re compelled to fund the Air Force, though I would never allow any child of mine to join the armed forces and do not wish them well in their wars. But nobody needs to send cash to Aviva or the BBC.
Just walk away.
LN
in the details of the case, it’s specific to Senior Management roles so I think it would be a difficult case for someone claiming discrimination to win. I’d also point out:
– Getting a UK lawyer to take up the case for a white man to sue for discrimination is I imagine going to become increasingly difficult. All contemporary law courses in Uk universities are 100% woke and most new lawyers are women, gay or Trans ( a reason why much new law is so poorly put together)
– In fairness to this women, however appalling she is, she is at least overt – covert discrimination against Whites started in the 1980s, and was overt certainly in the public sector as Steve says from the New Labour era at a minimum
– Employment tribunals tend to be staffed by people of a ‘different ethnic’ persuasion and of course many are automatically hostile to Whites.
– I think ‘DIE’ (Diversity, Inclusion and Equity) is baked into the fabric of a lot of recent employment legislation to specifically make it legal to discriminate against Men, Whites and heterosexuals, so avenues to sue or seek recourse are increasingly blocked off.
– Discrimination against Whites is absolutely endemic across all sectors and all industries and is baked into the culture and educational curriculum with a lot of White people colluding in their own extermination. Steve makes the point – if I said ‘it’s ok to be white’ in any context that could get me fired with loss of pension.
– The Great Replacement means a million non – whites have been imported (so that’s Birmingham) this year alone – and do you seriously think this Rwanda farce is going to stop those number climbing to a second London annually coming over within the next decade?
I’m a simple kind of guy. When people say overtly they despise you and want to take all your resources because you ‘stole’ it from them I don’t think they’re attempting satire. Especially if they have never shown even the slightest hint of laughing at anything in their entire lives and they take umbrage at the slightest perceived insult. The British Left (And that includes the Tories) wants all Whites exterminated and they are well on the way to achieving that goal. But hey, ho, let’s keep funding Ukraine as Putin clearly poses a greater threat to our survival than our own ‘woke’ ideology.
What amazes me, V-P, is you’ve ended up in this dystopia by your own choice. All along the way people have had the opportunity to say no. But few had the courage to do so. Those that did were denigrated by the majority. You’ve been complicit in your own downfall. The majority now behave like they’re a minority. A cowed minority at that. It could all be undone. But you lack the courage to do it. If someone had the courage they wouldn’t get any support.
BiS
I think you’re right in your diagnosis of the situation but not necessarily in apportioning blame.
All along the way people have had the opportunity to say no.
When was that? – Political correctness has had overwhelming force of law for three decades – you have the opportunity to say no but all the levers of power would be raised against you. Vast swathes of public sector people for whom time is no object as they are paid to pursue imaginary hobgoblins and whose funding is infinite would be mobilized and whilst they do nothing useful, fomenting grievance and hatred is their bread and butter – look at the Hamas marches
you’ve been complicit in your own downfall. The majority now behave like they’re a minority. A cowed minority at that. It could all be undone. But you lack the courage to do it.
but the point is it’s tough to stand up to it even when I was younger – with children and a family it’s nigh on impossible. What would you say to your children – by the way you won’t be able to eat – ever? The Hard Left has no compunction about killing children. Look at the Trans lobby, the activities of Jeffrey Epstein and others like him and the commitment to Net Zero. Look at the policies advocated by Richard Murphy, himself an anti-semite of unparalleled viciousness. Look upon evil in all its myriad forms and indeed it takes significant resources as well as courage to stand up to it….
Because it’s been incremental. Thirty years ago it would have been easy. Resistance on the small things. And it’s got progressively harder. Every inch given away is never taken back. And so with the next inch. And for them every inch gets easier & & for you gets harder.
Some of it makes no sense to me. What possible advantage could I derive from recognising a geezer wants to wear a frock as a woman? I can’t see any, so why would I do that? Why would anyone, apart from geezers want to wear frocks?
I suppose at the root of it all is the Christian notion that tolerance is a virtue. I can assure you. It isn’t. You’ve been sold a bummer. Intolerance is what societies are built on.
A single currency with a single interest rate. That’s the Euro then, isn’t it. How’s that panning out in Athens and Rome?
I suppose at the root of it all is the Christian notion that tolerance is a virtue
Why, do you think Cliff Richard did this?
Tolerance (in the sense you mean) is not a Christian virtue.
Deus vult.
OK, Steve, in what sense do you mean?
VP – People will be amazed at how quickly Clown World fades away.
It’s all based on lies, so it won’t endure.
Yet again the Spud shows that he doesn’t believe that money has a time value. Everything flows from that
I’m not saying its a good idea, or that it would even work
Just as well you’re not.
A single currency with a single interest rate. That’s the Euro then, isn’t it. How’s that panning out in Athens and Rome?
Yup and compare the long term sovreign bond yields among the EU member states.
Yet again the Spud shows that he doesn’t believe that money has a time value. Everything flows from that
This is because he doesn’t have any money and his time has no value.
Steve. The entire Christian religion is based on lies. 2023 years & still counting.
Steve
Let’s hope you’re right – I’m less
Convinced as if you look at North Korea or the USSR it can take decades.
TMB
Great stuff
The meek have inherited the world (just look at the rise of HR departments) and we are seeing why that’s historically not been the case
bloke in spain – I will pray for you my brother.
VP – Alanisally, North Korea is run by people with a much firmer grasp on reality than our Betters have.
I’d rather you didn’t
OT. Sad news Sir Les Patterson has died, aged 89. We won’t see his like again.
bloke in spain – too late x
Also, I was sorry to hear of his passing but wasn’t that earlier in the year?
Steve
I’d love to go for a pint one day (assuming such an experience isn’t only on tap in the Metaverse) – so true. I often say that the UK and US Hard Left are the least competent and most evil people in the world. Unlike North Korea they can’t get a populace that’s literate. They can’t keep the streets free from petty crime. In so many ways, they are actually worse, I simply use the me from Pyongyang as an example of tyranny that does endure. I sincerely hope you are right and your track record so far seems to be a good one…
VP – we shall drink to your health, and for England and St. George. Cheers, my friend.
“A single currency with a single interest rate. That’s the Euro then, isn’t it. How’s that panning out in Athens and Rome?”
I didn’t say it was a good idea, I said it was an idea that will allow them to kick the can down the road for a while. Any feet draggers will be bribed with printed money for long enough to get them to sign up. And lets face it, the Euro exists doesn’t it? Something being a bad idea isn’t enough to stop a global elite when its got its mind set on doing it anyway.
Something being a bad idea isn’t enough to stop a global elite when its got its mind set on doing it anyway.
+1 – see Nut Zero (everywhere in the west) or HS2 (in the UK).