Mark Carney appears to have taken leave of his senses. According to the FT:
Mark Carney sought to clarify his position on UK interest rates on Wednesday, setting out his view that he would vote to tighten monetary policy if business investment begins to rise offsetting weaker consumption.
This is utterly bizarre. What Carney is saying is that if business tries to improve UK productivity, or if it tries to increase employment, or if it tries to deliver growth then he will snub it out. The economic idiocy of making inflation the highest economic priority is apparent again. And remember, the greatest beneficiary of this policy are the best off because low inflation preserves the real value of the debts the wealthiest are owed by the very many who owe them.
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What senses?
His economic senses
He doesn’t have any economic senses
Meanwhike in my ancestral Land of the Eagle,,…….
https://youtu.be/Po-a73drswk
Sound banking principles. As it was in 1931. But not sound economics.
It was wrong then and is wrong now.
I agree Richard, but it’s not bizarre if you’re a Goldman Alumni – remember he spent thirteen years there. He can feel the wind of change coming, but he doesn’t wan to think about it, or at least acknowledge it because this status quo has been his whole working life and whatever is coming next – and it’s coming – is a potential threat.
Even from his isolated rock pool he can sense the tide coming in, ready to wash away all he knows. Perhaps his middle name’s Canute.
This is where the wheels fall off. Brexit *and* this.
Among other failures, Brexitstan will have no capacity for ‘import substitution’ whatsoever: all currency devaluations will be a permanent economic contraction.
Disgusting but above all disappointing for a man I had grown to like and (dare I say it) trust.
The Goldman Sachs brainwashing strikes again. Poor Mark. Once an investment *anker, always an investment *anker it seems.
So, it is the same old same old but I cannot be surprised.
On Channel 4 News last night they had a young brainwashed bloke from the Adam Smith Institute (poor Adam – so misrepresented by his ‘heirs’) debating with 2 female commentators about social mobility telling us that the latest school cuts and the free schools it generated would increase social mobility!
He also earnestly rolled out (in that prep school type way) the old chestnut about how raising corporation taxes would put up costs for the JAMs which would just hurt social mobility? Testicular material basically.
As for the BBC, I heard one of their ‘correspondents’ talking about the ending of the 1% pay cap (So Letwin and Maude are still there huh?) on the public sector describing it as a ‘curb’ on pay?
Hang on a minute. When we talk of ‘curbing’ something it is usually when that something has got out of control isn’t it? With the exception of some chief executive functions, when has public sector pay ever got out of control?
Here we are in a supposedly post neo-liberal world and the neo-lib zombie refuses to die – living on in words and ideas. Bad ones.
I’m running out of patience with all of this to be honest. We must keep plugging away at PR.
Also there’s the possibility Carney doesn’t work for us, but actually for the BIS and seeks to implement not what’s best for the UK (which is becoming increasingly obvious) but what’s best for the global central banking network in terms of cementing their authority over us. Consider this from Ellen Brown where she details how the BoJ is simply making much of Japan’s national debt effectively go away http://www.truthdig.com/report/item/japan_write_off_nearly_half_national_debt_inflation_20170628
Thank you Bill, sometimes us ‘commentators’ lose sight of the obvious. This neo-liberal nonsense isn’t going to go easy, we have a generation coming to the fore that have known nothing else.
Insanity all around at the moment with the news Osborne is being made an honorary Professor of Economics at Manchester University.
I’m currently wondering just when I slipped down the rabbit hole, because I don’t remember doing it.
I final insult.
Indeed.. I thought it was a joke especially given that Manchester is well known for its economics students protesting against mainstream neoliberal economics dominating the curriculum. The whole thing sounds like a grotesque piss-take (which is what Osborne essentially is):
‘Starting in July, he will give a few lectures and masterclasses (sic!!!) a year, building on his work on the “northern powerhouse” — a project to devolve the economy away from London to Manchester and the surrounding area that he initiated as chancellor three years ago.
Fellow project figureheads Lord O’Neill, the former Goldman Sachs economist, and Sir Howard Bernstein, former Manchester city council boss, are also honorary professors.
As well as running the London daily newspaper, Osborne remains chair of the Northern Powerhouse Partnership (NPP), a business lobby group he set up in September to boost the northern economy.
The former MP for Tatton is also an advisor to Blackrock, the American fund management firm, where he works one day a week for £650,000 per year.
I think bein taught by people with experience is useful
I think Osborne could obviously do that in politics with real value added
But economics?
I remember you saying that QE wouldn’t be reversed but now I’m not so sure. They’re mad enough to believe that things need to be ‘normalised’ no matter what the cost.
They’ve got far too much currently made debt to sell to do that
Richard,
On a slightly different topic. Rises in interest rates and tax are said to control inflation by curbing demand. Can you give me a short summary on the causes of stagflation, high unemployment and inflation at the same time? In discussions I’ve had, a criticism levelled at Keynesian type Economics, that I try to argue for badly, is that it was discredited in the 1970s because of stagflation. I would like to be able to counter that argument.
Michael
I’d love to
But I fear I have not got time
TBH I don;t think this is fair. To view it in context the BoE is required to keep inflation at below 2% & it is, at present, way above 2%. The question raised by many people including several members of the monetary committee is why, therefore, we don’t raise interest rates.
MC’s reply has been that whilst the fall in the £ has caused inflationary pressures the overall economy remains weak. BUT “if business investment begins to rise offsetting weaker consumption” then he would have no excuse to delay raising interest rates.
So you’re a bit out of order here imo. If you don’t think the BoE should be targeted to keep inflation below 2% then please say so, but that isn’t MC’s decision. He can only play by the rules.
He has previously chosen to ignore inflation for the sake of the greater economy
So he can
And isn’t now
It’s completely fair to ask why not
Especially in view of today’s economic data
2 thoughts:
If Carney is responding to inflation with contractionary measures he is wrongheaded because “weaker consumption” clearly indicates that this is not demand-pull inflation that he is seeing but cost-push inflation that is most probably resulting from a weaker pound (Brexit). Higher rates would do little if anything to change that.
On the other hand, he sees rising asset markets that bear no relation to the real economy and may be of the view that “business investment”, as we currently know it, has little to do with rising productivity, increased employment or growth. That, on the contrary, it increasingly represents asset-price inflation and non-productive speculation.
To illustrate what I mean it is worth noting that the Reserve Bank of Australia has been quite open about the fact that its interest rate decisions have been torn between a concern about weak consumer demand and a desire to reign in Australia’s housing price bubble:
http://www.abc.net.au/news/2017-03-21/reserve-bank-warns-housing-bubble-in-sydney-and-melbourne/8372856
Thanks
Sound reasoning