The vast majority of this sum has been paid, as will be noted, since the Bank of England decided, wholly unnecessarily, to increase the Bank of England base rate from 2022 onwards, with the supposed goal of tackling inflation in the UK economy, on which those interest rate increases did not, and could never have had, an impact, because the inflation in question was imported from international commodity markets, where prices were inflated as a consequence of the actions of financial speculators, some of them undoubtedly based in UK commercial banks, who artificially inflated commodity prices after the onset of war in Ukraine.
Must be the shortage of tin foil bringing that level of economic understanding on, no?
He seems ignorant of elementary logic: raising interest rates is intended to discourage borrowing to spend/spending with borrowed money and encourage saving (increasing future income from deferment of spending) – thus reducing the amount of money chasing an unchanged volume of goods and services [the volume of goods and services *may* increase as a result of increased demand but that increase will not be instantaneous] so slowing down inflation by shifting the demand element of the supply-demand curve. This effect will not be cancelled just because some of price rises are caused/stimulated by a rise in import prices for some goods – the importers’ profit margins will be reduced – maybe even the profit margins of the overseas suppliers if we’re lucky.
Why does he ridiculously say that the rate increases could not have had an impact on inflation? This is not just the economics lectures that he chose not to attend – it is ‘O’ level Economics and/or commonsense.
He seems ignorant of elementary logic
It’s not so much elementary logic of which he is ignorant but economics. Logic is a purely formal science. It concerns only the formal relations between propositions and concepts. Logic tells us nothing about what is the case in economics or anything else, which is why a false conclusion can be validly derived from false premises…
“could never have had an impact” because …
Yeah, we know Murphy is either ignorant of, or chooses to disregard, economics but he is saying Black is White because I’m adding Green to the tin of paint. It is NOT a logical conclusion that you cannot affect total/overall inflation by monetary means because *some* of the inflation is imported.
Spuddle’s reasoning often involves false or contradictory suppressed premises (from which false conclusions can be validly derived).So, for example, the valid syllogism:
all green is white
all black is green
all black is white.
Also, from a contradiction, anything follows…
You have overlooked “never”
Logic also tells us nothing about meaning. Imprisoned as he is in his absurd narrative he is obliged to abandon logic just as he ignores evidence, because both threaten his identity, sense of self, and ultimately his very existence. For him this is existential.
There’s a lesson there.
Kudos to the Murphologist for not using an LLM to write his column. No AI could have written that complex 103-word sentence, with adjectival clauses imbedded in adverbial clauses imbedded in noun clauses. Nevil Shute did slightly better, but only by cheating with colons and semi-colons. Well done.
That convoluted sentence reminds me of Ruskin’s late prose style when he was having psychotic episodes. Like Spuddle, Ruskin suffered from “chronic fury”…
The propensity to consume v the propensity to save.
Since the poor spend practically all their money on consumption the way to kill inflation stone dead is to cur welfare spending. Taxing the rich more will only reduce saving in the near or medium term so inflation will persist.
Tinfoil is actually made of aluminium, but of course the Aluminiarti don’t want you to know that.
No wonder my hat doesn’t work.
That’s just what they want you to think.
Totally OT, but this from the Telegraph made me howl with laughter:
In an unusual incident near Washington, DC’s Ronald Reagan airport (DCA), one pilot was heard saying “meow” before another responded with his own “meow”.
The air traffic controller at DCA, which has the busiest runway in the US and is among the country’s 25 busiest airports, then said: “Guys, you need to be professional,” a leaked recording published by atc.com shows.
But instead, the two pilots burst out in another series of meows and barking noises, with the exasperated controller saying: “This is why you still fly an RJ [regional jet].”
The incident, which allegedly took place on Sunday, is being investigated by the Federal Aviation Administration (FAA).
the inflation in question was imported from international commodity markets, where prices were inflated as a consequence of the actions of financial speculators, some of them undoubtedly based in UK commercial banks, who artificially inflated commodity prices after the onset of war in Ukraine.
He really doesn’t understand markets, does he? If you’ve pushed a commodity price artificially high you’re pushed it above the clearing price. So all of that commodity will not be sold & you’ve created a glut where you’re a holder of the commodity. So now you’re going to have to sell it at a price that’s artificially low to clear your position. You’re back where you started.
True, except that if you’ve fooled a few speculators who buy at the inflated price then your losses on selling your leftover stock are less than your excess profits at selling at inflated prices earlier.
See “pump and dump” which is now a criminal offence for stock market “investors”
Stock markets are not commodity markets. They’re a flow not a pool.
Sorry, that might be unclear. A commodity market is a flow from producer to consumer. Whatever, the flow has to continue. There is no flow with a stock/share market. It’s a circulating market.
Or another way to look at it: A stock market is a zero sum game. A commodity market very much isn’t
Yes, I get that. Well explained.
Either market, pump and dump surely leaves your associates out of pocket and surely leaves a trail. So it seems, in the end, a pretty stupid thing to do. it also seems that Murphy would be able to name names, if it were true!
Let’s look at the difference between the two markets. Stock market prices are opinions about earnings of companies some way off in the future. So they’re pretty well fantasy. The actual market in shares being bought & sold will always be a tiny proportion of the total issuance. So it really isn’t hard to move market prices. You just have to change people’s opinions. Very little actually has to happen.
A commodity market is a flow from producer to consumer & the market is all of that commodity. The flow is set by the clearing price. OK, so let’s try & fuck with that.
I’m a commodity trader & anticipate there’s going to be a shortage on the supply side. I divert some of that supply by buying & holding. That will cause the clearing price to rise. So I’ve moved the price rise forward in time. The new clearing price will incentivise changes at both ends of the production consumption flow. Producers may try to increase production. Consumers substitute or reduce consumption. If I’m canny I can feed my purchase back into the flow without moving the clearing price too much & make my profit. I made my profit by anticipating reality.
What happens if I get it wrong? The flow from the producer’s still the same or higher. Consumption at the consumption end is lower. So there’s going to be a glut forcing the clearing price back to where it was. If I try & unload my purchase into that market, it’s going to be at a price below what I paid.
To move a commodity market significantly you need a lot of “weight” to change people’s opinions & reality will reassert itself very quickly.
Nelson Bunker Hunt
Yeah but you’re referring to the silver market where it’s not only an industrial feedstock but also used as a store of value. So some portion of the silver price will always be pure opinion. So for short periods it can function similar to the fantasy of sharemarkets
You’re also demostrating why investment analysts get out of their depth in commodity markets. Commodity markets have teeth & bite.
You seem to have forgotten: Nelson Bunker Hunt *successfully* cornered the Silver market, so a group of the losers ganged up and retrospectively changed the rules.
Investment analysts do not get involved in commodity markets as investment analysts; some of them act as observers because the gyrations of commodity markets have an impact on the real world.
Commodity markets do not have teeth but they do have a significantly worse record for defaulting on contracts than stock markets.
Nelson Bunker Hunt *successfully* cornered the Silver market
Speculators fuck over the silver market, these days. For the industrial users of the metal the supply> demand should be a balanced flow. Why shouldn’t it be? It’s not as if it’s seasonal.at either the supply or the demand end. So the silver price should be stable. However the fluctuations caused by those using it as a store of value means the tail wags the dog. Use of the metal varies according to the price.
So it’s not actually behaving as a commodity. It’s off in the same fantasy world as stockmarkets. Price is driven by opinion not reality.
Commodity markets have a real effect on people’s lives. Far more than stockmarkets. Stock markets are a zero sum game. Largely irrelevant.
“…where prices were inflated as a consequence of the actions of financial speculators, some of them undoubtedly based in UK commercial banks, who artificially inflated commodity prices after the onset of war in Ukraine.”
OK. You name a name and we might listen to you. Given, however, that you’re a little toe-rag, who sails as close to the libel wind as you dare without sailing through it, I don’t believe you. And I don’t believe you believe you either. Generating cheap click bait is a poor substitute for selling out a tiny conference room in Sheffield!