As Stephanie Kelton noted on her blog yesterday, the United Nations Conference on Trade and Development (UNCTAD) has issued a report in which they argue:
The world is headed towards a global recession and prolonged stagnation unless we quickly change the current policy course of monetary and fiscal tightening in advanced economies.
As Stephanie adds:
To steer the global economy away from this looming catastrophe, the report calls on governments in advanced economies to “avoid austerity,” both for their individual sake and for the sake of the global economy as a whole. It also urges “central banks in developed economies to revert course and avoid the temptation to try to bring down prices by relying on ever higher interest rates.”
I very strongly agree. UNCTAD is dominated by countries that have to borrow in currencies other than their own. The consequence is that if countries like the US (predominantly) but also the UK and EU raise their rates to supposedly fight inflation (which is, anyway, a policy doomed to failure in the current circumstances), then those countries are doomed to a situation like a mortgagee in the UK economy. Through no fault of their own, their costs will increase enormously, and they will have no extra income with which to pay. As a result the economic madness of the Fed, which is being copied by the Bank of England and others, is creating a worldwide economic shock that has all the potential to be a catastrophe, and all for no gain.
The obvious answer to this is to stop the madness of interest rate rises. This would work domestically, and it would work internationally. It's either do that, or the wholly mistaken policy of central bank independence will create a worldwide economic disaster.
I can only hope that neoliberalism is in its death throes. The world cannot survive it for much longer.
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Totally share this sentiment.
The death throes have been too protracted if only because the ultra rich zombies have made sure that they are too close to power in order to stop change.
Hopefully the stench of zombie Neo-liberalism will become too much to bear and democracies will put it where it should be – deep in the ground – or even better, incinerated by reality.
Surely austerity is a decline in public spending? Pretending that increasing public spending that doesn’t always keep up with inflation is ‘austerity’ is an abuse of the economics.
The last 40 years have seen the biggest fall in poverty globally in the world’s history, so I’m not sure we should be writing off ‘neoliberalism’ just yet, although clearly it’s not perfect.
Tell that to the millions facing homelessness this winter
Politely, I suggest you open your eyes
Millions facing homelessness?
Source?
Me
Just think about what a 6% mortgage rate means
It is true that there has been a reduction in poverty numbers, predominantly driven by big reductions in China that obscure continuing problems elsewhere.
However that has reversed more recently for a variety of reasons including accelerating climate change, a worst famine in 40 years in the Horn of Africa and of course the ripple effects on energy and food prices of Russia’s assault on Ukraine. I was at a meeting of Oxfam managers from around the world earlier this week. The numbers living in extreme poverty have increased by 260m in the last year alone. At the same time UK aid has been brutally cut with no consideration of the consequences or ant attempt to phase in the cuts.
Unfortunately, Neoliberalism isn’t going anywhere anytime soon.
We may well have repackaged versions of that and consumerism though.
Human nature will see to that.
“You can take my rights and freedoms, but you can’t take my iPhone”
Maybe I’m being naive but I would prefer an independent central bank to truss (or trump or whoever, depending on your country) making these decisions for potential political advantage. Surely the problem isn’t their independence, but their objective (eg. Keep Inflation at 2%)
To follow up – I guess that politicians are also making fiscal decisions for political advantage, and the central banks are reacting with the only tools they have ie. Interest rates or quantities easing in order to attain THEIR objective. So the answer is being able to hold politicians accountable. Maybe we should have in indépendant fiscal policy committee… technocracy anyone ? 😉
No thank you
I want a better democracy
Is it really neoliberalism that’s the problem here or is it the central banks, led by the boys from Basel, trying to crash much of the global economy so they can replace fiat currencies with their own CBDCs? These would be programmable tokens as opposed to currency, granting the issuers a great deal of control over the spending habits and so the lives of the general population.
Isn’t the West pushing Neoliberalism [Heist, by any other name] as the price for ‘support’ in Ukraine. A time when the population of Ukraine is savagely vulnerable. So is Neoliberalism dead?
Not yet
Richard
I have previously commented here to say that after Boris things would get much much worse and really bad as the true forces of misery would be unleashed. I fear that I could be right.
I have also said on here before that I really do despair, struggle so much and find it hard to be hopeful and optimistic about the future. You replied that that way of thinking is unhelpful, self-defeating and not an appropriate response to the crises we face.
However, there is nothing/nobody (including yourself – but pls dont take offence as I know you are trying and busting your gut here) that can provide me with even the slightest glimmer of hope. For me the future is looking very dark, belak and frightening. I know that with this kind of attitude its a fait accompli but I cannot shrug it off and I failt to see any light out of this very long and very dark tunnel we are in.
You can tweet/blogg/write and argue all you want and I am not saying you should stop, but I am not sure if I share your enthusiasm for bringing about a revolution, change and realisation to the masses that will then produce the change that is so desperately needed. I can’t see anything even remotely like that ever happening now or at any time in the near future.
I think many many people around the country are of the same opinion and are just going about their daily business knowing that they are getting screwed left, right and centre but cannot afford or be bothered to do anything about it because they dont have the time, energy, resources, and quite frankly they need to focus on getting through each day as it comes and channel their energies into making do and battling with whatever challenges comes their way.
For me its just getting worse and the misery is piling on thick and fast and evidently getting even more unbearable, but with no sign of improvement.
You now have the Home Secretary talking about a ‘Benefits Street Culture’ (typical tory banging on about that old chesnut) and blaming the needy, poor and destitute for scrounging and relying on the govt handouts.
This could not be further from the truth I will let you in on how the Universal Credit actually works in practice. If anyone here can give me any hints/tips/advice or leads as to what can be done to help the individual concerned, I would be much obliged and grateful.
To cut a very long and convulted history short, an individual who has zero savings/income , is unable to work due to very limited mobility and chronic back and nerve pain (caused by a car accident many years ago) is now on the verge of being made homeless as he cannot afford to pay rent which has been caused directly by the DWP’s actions/ineptitude and sheer madness.
Individual is British national (living here over 35 years and was previouslyemployed and paying taxes etc). Command of English is very poor and is computer illeterate (all of which work against him).
The Universal Credit processes and procedures are so complicated and are not fit for purpose (I accept that’s nothing new) but the way that the claim, application, enquiries and responses to formal request for mandatory reconsideration has been handled is utterly and totally dispicable, appalling and downright disgusting.
The DWP officers over the phone and online are very abrupt, rude, unhelpful and plainly just get things wrong and are not botheredi/inclined to help in any way shape of form to rectify and get a grasp of the facts and circumstances. Even after receiving crystal clear facts, documentation, infomation and medical records, etc etc they continue to refuse the claimants request and ruthlessly refuse to apply simple logic/rational, due process and are being incredibly obstructive. It seems that they treat every claimant suspiciously and as a fraud.
The individual has now been told that the avergae wait to get a date for tribunal hearing is 35 weeks. That is absolutely crazy and insane. The individual cannot afford to wait that long and is on the brink of a total meltdown financially, mentally and physically. He has lost all hope and is now wondering around aimlessly wating to be kicked out by landlord and feels completely/utterly rejected and is unsure what the future will bring. In the meantime his debt (mainly made of rent arrears) keeps on growing.
Try calling the housing dept of local council, Citizens Advice Bureau, UC, other help lines and organisations and my experience is that you are left waiting and waiting and there is no offer of real help at all out there.
The ‘mile end’ crowd are suffering bigtime due to the increase in interest rates/house prices, rents etc etc and because their benefits will not increase in line with inflation, and due to the poor/inadequate public services, NHS, refuge collection etc that they have no choice but to use/receive and rely upon and because of the corrupt/inept/ineffective local councils, lack of social services, mental helath/child care.
The guardian reports ‘Over 330,000 excess deaths in Great Britain linked to austerity, finds study’. The actual figure is probably much much higher.
So all in all what do you say to the ‘ordinary person in the street’ and the ‘ordinary people of this country’ the vast of majority of whom do not read blogs/tweets/papers etc etc?
Ordinary people are seriously struggling to make ends meet, have to work most hours just to get by, dont have any safety net or support and its just getting worse under this govt and BoE and all the machinery that comes along with the neo-liberal dogma and brigade.
Seriously Richard what does one say to the ordinary people?
Telling them to have hope and that they should remain optimistic (otherswise they have no choice and will begin to believe in their own demise and just go along/accept what is happening) is not going to cut it I’m afraid.
The opposition is an absolute joke and it is doubtful they will get into power anytime soon anyway.
What can you say? What Danny Blanchflower and I put out last week
And that we need a government that does things very differently
Can I promise they will get it?
No
Can I say they should note for it?
Yes
Do I despair? Often, and admit I face none of the issues your friend does
Do I have friends / relatives who struggle? Yes
Is there an answer in this horrid system?
No
Can I hope Labour might be just a bit better? Yes
Will they be? I do not know
But I have to keep trying. What else can I do?
Do they, the FED, BoE, ECB, various governments believe that all inflation is monetary? And so interest rates are used to somehow quell this inflation? Is there absolute, concrete proof that raising interest rates works to quell inflation? Please help educate me.
By way of a little game, I looked at historical UK inflation rates;
https://iamkate.com/data/uk-inflation/
Between 1800 and 1900 inflation didn’t seem to be a problem when £1 in 1800 was equivalent to .88p in 1900
Between 1900 and 2000 £1 was equivalent to £74.29
For those with mortgages and not on a current fixed rate, it must be horrifying to watch as the money controllers decide on their future prosperity based on what I believe is a questionable ideology.
Infaltion driven by their excess momney chasing too few goods can be tackled by interest increases
But we do not have that situation and so interest rate rises cannot solve our current inflation problem
A time for bold new ideas.
It seems others are joining you.
https://www.chathamhouse.org/2022/10/why-it-time-change-narrative-around-growth
Good news
Though neo-liberalism in its different forms – and there are different forms – there is not yet a coherent alternative narrative. Tax and spend, balanced budgets, leave it to the markets, private better than state are all embedded in the minds of many of the public and reinforced by what they hear from most of the media. They might recognise the negative symptoms such as inequality, failure to tackle climate change, lack of investment both public and private but they do not yet link them to the underlying economic model.
There are those who are fully anti-capitalist, and who still promote a version of a statist ‘Soviet’ model. Thats equally discredited and is certainly not going to fly with the British voter. Elements of a fresh approach are there whether its the Green New Deal, Well Being and alternatives to GDP, MMT and of course Richard’s writing and thinking. (Its been encouraging to see Richard getting much more visibility, seemingly in the last month or so). None of the parties seem yet to have tried to fully take these ideas on board. I don’t accept the idea that somehow Labour are just Tory lite – they are miles away from today’s Tories. They are far more committed to public services and tackling climate change for starters. However, I don’t yet see the kind of more progressive economic narrative that will be needed to build a truly sustainable economy – sustainable for me encompassing environmental, social and economic sustainability.
At the same time I sympathise with a potential concern that voters will be frightened off by a leap away from what in their minds still seems to be the ‘norm’ – Thatchers household budget. The neo-Liberal Right have spent decades embedding that narrative. Its not going to disappear overnight. So developing and delivering a consistent alternative is critical. Pessimistically I fear the progressive centre and left will as traditional spend more time squabbling over the alternatives as either not radical enough or a step too far. If we are going to get rid of this dangerous government, we dont have time for that
Thanks Robin
Andover my exposure – it seems to have been directly related to my Twitter threads
Journalists and others read them
Given the number of people with fixed rate mortgages, the number of people with mortgages from pre-crisis when mortgage rates were much higher than currently and the stress testing that has taken place to determine affordability for new mortgages in changing economic circumstances, I’m interested in your workings that suggest that ‘millions are facing homelessness’ because of the higher mortgage rates.
Surely you must have something to back up your claims?
Sure
2 million people in the next year or less moving from 2% to 6% and the 20% or so already on variable rates
It really is not rocket science
Why am I wrong?
So 2 million people changing rates and none of them can afford to pay those higher rates, despite having been stress tested when taking out the mortgage fairly recently?
I’m not sure that stacks up.
That were stress texted for 2%
You clearly completely understand bank stress testing for individuals and banks as a whole
You clearly don’t!
I think I do
And what I also know is that individual level stress testing has clearly not been doing properly
If it was we would not face the crisis that we do
And that crisis undounbtedly exists
One of us is right and the other is peddling a myth. I know I’m right