The Bank of England’s 14 interest rate hikes since Dec 2021 have had the desired effect: rising numbers of business failures, job losses and inflation at 4%….twice the Bank’s target. According to insolvency practitioners “Tough trading conditions have seen the number of company insolvencies in February shoot up to 2,102, 17% higher than a year ago and nearly double pre-pandemic figures..” Accountancy Daily
Austerity is always and everywhere a tool of class war/social control rather than economic tool. A few companies going bankrupt is deemed a 'price worth paying' for that. Sucks to be an employee or owner of one of those businesses though. This is why we need a new 'anti-austerity' force that represents the interests of workers and 'small-to-medium size' business owners in the non-finance sector who rely on the discretionary spending power of workers for their survival. The fact that these business owners are wedded to the pro-corporate finance Tory party is as much of an abberation as workers being wedded to the pro-PMC labour party.
That the BoE went to such pains to avoid the supply side explanation speaks volumes about their investment (in both senses) in the Neo Liberal paradigm.
And so, the debate over what would constitute a just and stable system of monetary creation, banking and credit continues. Where is the logic in allowing a central bank to issue/create money out of thin air, then use that new money to purchase government securities that require the government to tax its citizens in order to service the debt and (on rare occasion) actually repay the principal. Let us figure out what measures are needed to transfer money creation to the national treasury without causing hyper-inflation.
Ann, we don't seem to know how to tackle inflation. Fed Res, BoE etc have pursued trying to get their old interest rate weapon back whether the evidence supports its effectiveness or not. We have monetarists believing that the BoE needs to control Money Supply to calm inflation. We have MMTers who are more relaxed about govt debt and we have many mainstream economists who seem to support use of interest rates. There some like Weber who believe inflation is basically supplyside driven with a dose of corporate profiteering! What is a ordinary concerned member of the public supposed to think given this diversity of opinion?
Today's Guardian editorial, reflecting the work of Ms Izabella Weber and Prof. Daniela Gabor, reflects many themes raised in my System Change post: The Bank of England vs The People. You will find the Guardian piece here: https://www.theguardian.com/commentisfree/2024/mar/17/the-guardian-view-on-the-bank-of-englands-week-ahead-its-time-to-start-cutting-rates
Austerity is always and everywhere a tool of class war/social control rather than economic tool. A few companies going bankrupt is deemed a 'price worth paying' for that. Sucks to be an employee or owner of one of those businesses though. This is why we need a new 'anti-austerity' force that represents the interests of workers and 'small-to-medium size' business owners in the non-finance sector who rely on the discretionary spending power of workers for their survival. The fact that these business owners are wedded to the pro-corporate finance Tory party is as much of an abberation as workers being wedded to the pro-PMC labour party.
That the BoE went to such pains to avoid the supply side explanation speaks volumes about their investment (in both senses) in the Neo Liberal paradigm.
And so, the debate over what would constitute a just and stable system of monetary creation, banking and credit continues. Where is the logic in allowing a central bank to issue/create money out of thin air, then use that new money to purchase government securities that require the government to tax its citizens in order to service the debt and (on rare occasion) actually repay the principal. Let us figure out what measures are needed to transfer money creation to the national treasury without causing hyper-inflation.
Ann, we don't seem to know how to tackle inflation. Fed Res, BoE etc have pursued trying to get their old interest rate weapon back whether the evidence supports its effectiveness or not. We have monetarists believing that the BoE needs to control Money Supply to calm inflation. We have MMTers who are more relaxed about govt debt and we have many mainstream economists who seem to support use of interest rates. There some like Weber who believe inflation is basically supplyside driven with a dose of corporate profiteering! What is a ordinary concerned member of the public supposed to think given this diversity of opinion?