4 ms·

And the central bank interest rate is at 1.25%. I think it is fair to say that the powers that be just don't care about inflation.

patrulek 4y ago
They care. They want it high.
mytailorisrich 4y ago
Actually, all the economists interviewed in the media warn against raising interest rates too aggressively. 1. They say that the bulk of inflation is imported (energy, food, etc) so raising interest rates makes no difference to inflation (and in fact can push cost of living further) 2. Demand is already crashing. 3. Economy is already contracting. 4. Effects of raisin rates can take 2 years to trickle down So their estimate is that raising rates too aggressively would make things worse, not better.
- throwaway4good 4y ago
  Most economists are employed in banking and real estate ... seems to cause them to forget what they once read in their textbooks ...
dazc 4y ago
Inflation has risen to 9.1%.... from 9% in April.
- mmarq 4y ago
  It’s supposed to go down and reset expectations. Instead the central banker goes on TV asking people to not request pay rises, which is equivalent to saying “the situation is totally out of control, the CB can’t and won’t do anything”. Which prompts everybody to ask for a pay rise because the central banker just told them to revise their inflation expectations upwards (hence strikes). Then he pretends to raise interest rates (he can’t really because it would upset Johnson’s main constituency) and nothing happens, apart from inflation going up. That was a majestic show of incompetence. Not the first one from the current breed of the British Conservative party, that appointed him. It’s not by chance that countries like Italy and Germany, that are way more reliant on gas than the UK, have a much lower inflation and still an almost normal core inflation. They have a central bank that, Lagarde aside, is not a clownish shitshow. It should be said that much of current inflation is due to the disruption of the British supply chains that was caused by Brexit. Short of re-joining the EU, that I’d vote against because we must stop putting up with the antics of the Englishman, the only way out I see, as a rando with some interest in economics, is a 1980-style recession.
  - mytailorisrich 4y ago
    > It should be said that much of current inflation is due to the disruption of the British supply chains that was caused by Brexit. Not really: "Euro area annual inflation was 8.1 % in May 2022, up from 7.4 % in April 2022" [1], and of course it is, I believe, also 8.5-9% in the US. [1] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Inflation_in_the_euro_area https://ec.europa.eu/eurostat/statistics-explained/index.php...
    - mmarq 4y ago
      Eurozone inflation: 8.1 UK inflation: 9.1 Eurozone core inflation: 3.8 UK core inflation: 5.9 Where would the price level increase caused by a labour shortage end up: core or non-core inflation? Besides the UK started having a significant inflation differential with the eurozone since mid 2016. https://www.newstatesman.com/business/2022/06/uk-inflation-brexit-blame-cost-economy https://www.newstatesman.com/business/2022/06/uk-inflation-b... You are welcome
      - mytailorisrich 4y ago
        You are not explaining your rather bold claim that "most of UK inflation" is due to Brexit... Also note that the UK and the Eurozone obviously have different currencies. At the moment we see a small difference in inflation rates, and?
        mmarq 4y ago
        - 2% in core inflation is not a small difference. It’s the average British worker losing 700£ a year more than the European - of course they have different currencies, that’s exactly what we are talking about, and also different governments. One busy sabotaging its supply chains and the other doing whatever - the UK has been having much more severe shortages than the rest of Europe (empty petrol stations everywhere bar NI?), that are having an impact on prices > You are not explaining your rather bold claim that "most of UK inflation" is due to Brexit... You are right, I should have said “much of the core inflation differential with the EU is due to Brexit” You are welcome
mvc 4y ago
If all you have is a screw and a hammer, it doesn't really matter how hard you hit it.
imtringued 4y ago
I too advocate for greater inequality by raising interest rates. The income share of capital must rise at the expense of the income share of labor. Actually, I don't. I would rather see the abolishment of quantitative easing and central bank controlled short term interest rates by eliminating the zero lower bound by introducing a demurrage fee on excessive amounts of liquidity. Nobody wants that. The latter is indispensable to allow interest rates to fall below zero to allow the economy to unwind when it doesn't want to grow. Secretly every single human on this planet prefers inflation over negative interest rates due to loss aversion. Everyone thinks they can save money by making negative interest rates illegal. The losses don't disappear, they hust leak into thr economy in the form of inflation. All hail the money illusion, in the money illusion we trust. Imagine if you were painfully aware of inflation every single year, that your bank account would literally tell you, you lost X dollars from inflation but your salary is automatically adjusted upwards to match inflation. That is what a negative interest rate does and nobody wants that, they want to stick their head into the sand, they want to use inflation as a political tool for their own cause. Instead, you get this nebulous, creeping feeling that something is going wrong but you don't know by how much. So you just assume the worst and think the government is conspiring against you.
- throwaway4good 4y ago
  Rising interest rates will bring down debt levels and asset prices in general ... I betcha that will lower inequality, not raise it.
- idlehand 4y ago
  Low interest rates benefit the wealthy, that's why they have been allowed to remain in place for a decade. Inequality accelerated during the 10s.
- cloutchaser 4y ago
  > Secretly every single human on this planet prefers inflation over negative interest rates due to loss aversion. Everyone thinks they can save money by making negative interest rates illegal. The losses don't disappear, they hust leak into thr economy in the form of inflation. All hail the money illusion, in the money illusion we trust. I think you are right. Yet pulling off the band aid would be much better. And it would be better for inequality, as asset prices would collapse if you raised interest rates (check the US stock market, real estate, and bitcoin), which is where most wealth is stored.

patrulek 4y ago

They care. They want it high.

mytailorisrich 4y ago

Actually, all the economists interviewed in the media warn against raising interest rates too aggressively. 1. They say that the bulk of inflation is imported (energy, food, etc) so raising interest rates makes no difference to inflation (and in fact can push cost of living further) 2. Demand is already crashing. 3. Economy is already contracting. 4. Effects of raisin rates can take 2 years to trickle down So their estimate is that raising rates too aggressively would make things worse, not better.

throwaway4good 4y ago
Most economists are employed in banking and real estate ... seems to cause them to forget what they once read in their textbooks ...

dazc 4y ago

Inflation has risen to 9.1%.... from 9% in April.

mmarq 4y ago
It’s supposed to go down and reset expectations. Instead the central banker goes on TV asking people to not request pay rises, which is equivalent to saying “the situation is totally out of control, the CB can’t and won’t do anything”. Which prompts everybody to ask for a pay rise because the central banker just told them to revise their inflation expectations upwards (hence strikes). Then he pretends to raise interest rates (he can’t really because it would upset Johnson’s main constituency) and nothing happens, apart from inflation going up. That was a majestic show of incompetence. Not the first one from the current breed of the British Conservative party, that appointed him. It’s not by chance that countries like Italy and Germany, that are way more reliant on gas than the UK, have a much lower inflation and still an almost normal core inflation. They have a central bank that, Lagarde aside, is not a clownish shitshow. It should be said that much of current inflation is due to the disruption of the British supply chains that was caused by Brexit. Short of re-joining the EU, that I’d vote against because we must stop putting up with the antics of the Englishman, the only way out I see, as a rando with some interest in economics, is a 1980-style recession.
- mytailorisrich 4y ago
  > It should be said that much of current inflation is due to the disruption of the British supply chains that was caused by Brexit. Not really: "Euro area annual inflation was 8.1 % in May 2022, up from 7.4 % in April 2022" [1], and of course it is, I believe, also 8.5-9% in the US. [1] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Inflation_in_the_euro_area https://ec.europa.eu/eurostat/statistics-explained/index.php...
  - mmarq 4y ago
    Eurozone inflation: 8.1 UK inflation: 9.1 Eurozone core inflation: 3.8 UK core inflation: 5.9 Where would the price level increase caused by a labour shortage end up: core or non-core inflation? Besides the UK started having a significant inflation differential with the eurozone since mid 2016. https://www.newstatesman.com/business/2022/06/uk-inflation-brexit-blame-cost-economy https://www.newstatesman.com/business/2022/06/uk-inflation-b... You are welcome
    - mytailorisrich 4y ago
      You are not explaining your rather bold claim that "most of UK inflation" is due to Brexit... Also note that the UK and the Eurozone obviously have different currencies. At the moment we see a small difference in inflation rates, and?
      - mmarq 4y ago
        - 2% in core inflation is not a small difference. It’s the average British worker losing 700£ a year more than the European - of course they have different currencies, that’s exactly what we are talking about, and also different governments. One busy sabotaging its supply chains and the other doing whatever - the UK has been having much more severe shortages than the rest of Europe (empty petrol stations everywhere bar NI?), that are having an impact on prices > You are not explaining your rather bold claim that "most of UK inflation" is due to Brexit... You are right, I should have said “much of the core inflation differential with the EU is due to Brexit” You are welcome

mvc 4y ago

If all you have is a screw and a hammer, it doesn't really matter how hard you hit it.

imtringued 4y ago

I too advocate for greater inequality by raising interest rates. The income share of capital must rise at the expense of the income share of labor. Actually, I don't. I would rather see the abolishment of quantitative easing and central bank controlled short term interest rates by eliminating the zero lower bound by introducing a demurrage fee on excessive amounts of liquidity. Nobody wants that. The latter is indispensable to allow interest rates to fall below zero to allow the economy to unwind when it doesn't want to grow. Secretly every single human on this planet prefers inflation over negative interest rates due to loss aversion. Everyone thinks they can save money by making negative interest rates illegal. The losses don't disappear, they hust leak into thr economy in the form of inflation. All hail the money illusion, in the money illusion we trust. Imagine if you were painfully aware of inflation every single year, that your bank account would literally tell you, you lost X dollars from inflation but your salary is automatically adjusted upwards to match inflation. That is what a negative interest rate does and nobody wants that, they want to stick their head into the sand, they want to use inflation as a political tool for their own cause. Instead, you get this nebulous, creeping feeling that something is going wrong but you don't know by how much. So you just assume the worst and think the government is conspiring against you.

throwaway4good 4y ago
Rising interest rates will bring down debt levels and asset prices in general ... I betcha that will lower inequality, not raise it.
idlehand 4y ago
Low interest rates benefit the wealthy, that's why they have been allowed to remain in place for a decade. Inequality accelerated during the 10s.
cloutchaser 4y ago
> Secretly every single human on this planet prefers inflation over negative interest rates due to loss aversion. Everyone thinks they can save money by making negative interest rates illegal. The losses don't disappear, they hust leak into thr economy in the form of inflation. All hail the money illusion, in the money illusion we trust. I think you are right. Yet pulling off the band aid would be much better. And it would be better for inequality, as asset prices would collapse if you raised interest rates (check the US stock market, real estate, and bitcoin), which is where most wealth is stored.