This is by Larry Elliott, in a good analysis of the current state of play in the economy published in The Guardian this lunchtime
The idea that the MPC needs to raise rates and that Hammond should be cutting public spending - especially when it is so cheap to borrow - in order to stockpile ammunition to deal with the next recession is daft. The point of economic policy is to prevent recessions, not to cause them by tightening policy when it is unnecessary. That's not prudence. Its self-flagellation.
I can but agree: Larry is right. An interest rate rise this Weal would be crazy. A cut may be a better idea.
Or People's QE......
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You and Larry are undoubtedly right, but I get the impression Larry still struggles with ‘ spend and tax ‘ and having read the NIESR article he refers to where they use the term ‘ sustainable borrowing ‘ without defining it because they can’t because ‘ sustainable ‘ like its previous incarnation ‘ viable ‘ is a weasel word intended to brook no argument , but it is quite clear they have no idea how money is created and thus can only sustain the fiction of tax and spend . And then they follow this with this notion that people have got ‘ austerity fatigue ‘ They haven’ t. What they know in their guts is that they’ve been conned . They know it’s a con they just don’t know how the con is played so they shrug their shoulders and get on with their life. But like all cons eventually the trickster eventually gets found out at the point when the pressure becomes just too much to bear ( Think Bernie Madoff ) and the con collapses. If people simply understood that the government was quite prepared to create ample money for the rich because they demanded it and if the
same demand is made by the less well off then the government will create it , or be overthrown, but it will concede nothing without a demand, because that’s the way power works.
Larry has a problem: he has to write for an audience that can only slowly be acclimatised to new ideas
I think he gets it….
But I will know better for sure soon
” A cut may be a better idea”
There’s not much left to cut.