This was posted this morning by Markit Economics based on Bank of England and ONS data:
The inflation trend my be upwards.
The pay rate trend is markedly downwards.
Hope goes out of the window for most people in this country as a result.
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Richard you know this can be turned round with a little imagination. Why not think positive & join our Party Alliance for change on a massive scale.
And yet you’d propose massively increased government borrowing funded by printing money…
That’s how to deliver hope
It’s certainly how to deliver inflation.
That is an absurd comment
The real risk right now is deflation
To say otherwise is just nonsense
Private debt is going through the roof. That does not cause inflation? Strange how the tories only seem to worry about inflation when it is perceived wage inflation, isn’t it?
The ‘inconvenient truth’ is merely peddling the old Tory lie (not that he is lying, for he may well believe it to be the truth – nevertheless, it IS a lie, and the upper echelons of the Tory Party know it): that Government borrowing, paid for by expansion of the money supply (‘money printing’) is a ‘bad thing’, a cause of inflation. But inflation isn’t always a bad thing. Indeed, it can quite frequently be a good one.
What an expansionary fiscal and monetary policy does is increase demand for goods and services in the economy. This automatically entails rising prices, but that means rising revenues and profits for firms, more orders on their order books, which they can’t meet with existing staff levels – so they hire more staff, taking people off the dole. Those people then spend a high percentage of the wages they receive (they have, in the jargon, a ‘high propensity to consume’) and this means yet more demand, which leads to the creation of yet more jobs (a ‘multiplier effect’). The firms, with their greater revenues and profits, pay more tax, and the newly hired workers are paying tax & National Insurance, rather than being a charge on the Government’s social security budget.
So what’s to complain about there? Oh, yes. The erosion of the real value of financial assets. Can’t have that, now can we?
Expansionary policy need not necessarily cause a high rise in inflation. If production rises with inflation, there should be little or no inflation.
The expansionary policies of the 50s and 60s did not produce high inflation.
If this multiplier existed any fool could run a successful economy. Pressing print and handing out money is every politician’s dream scenario. Unfortunately it never works out like this because the model of the economy which predicts such a catch free outcome is simply wrong. In particular this consumption money circle model doesn’t understand the non homogeneous capital structure underpinning production or understand how the price system is all about relative prices, or how once you use monetary stimulus like a drug it becomes painful to stop it. That’s what’s not to like about it. It is fantasy and doesn’t work in the real world. It is too good to be true.
I’m sorry – but you are dedicated to models of economics that are wrong
As the Bank of England said earlier this year, economics text books have money wrong and it really does grow on trees
In the right circumstances (now ) we can and should print money because banjos aren’t and in good times that is where money comes from
It is the economists who have not understood money
I like the banjo’s reference Richard! (smiley emoticon) -clearly our present Government’s economic ideas are the equivalent of not being able to hit a barn door with a banjo!
Banks do print money as loans, and rent it out to the rest of us debt slaves.
I think this is a little OTT. I spend quite a bit of time in France and Spain
where the economic regimes are somewhat more socialistic. I can tell you that hope there, especially for the young unemployed, is dire compared to the UK.
Try blaming the Euro
Stephen, you say “Spain where the economic regimes are somewhat more socialistic”. What planet have you been on these past two years? Spain’s economy is “socialistic”? Good grief, it’s suffered the worst excesses of the austerian nonsense since Mariano Roy’s neo-liberal Right-wing “£cut everything in sight” Government took over in December 2011, dedicated to “solving” the Spanish Euro-crisis by digging an ever deeper hole to get out of the one the Euro had plunged his country into. “Socialistic” – hah! If that’s Socialism, give me something else!
Well said