Bank of England chief economist Huw Pill said yesterday that we all need to get used to the idea of being poorer.
At one level, Pill is right. It is absolutely true that as a country, and as a world, we need to get used to consuming less of our planet. If that means we are poorer (and I am not convinced that need be the case, because most of the things that we need are additional services with relatively low material input) then Pill would be right.
But that, of course, was not what Pull was saying. His argument is that people in the UK should not be expecting pay rises now even though the impact of inflation - which is result of the increase in prices by companies in the UK - is continuing and will for a long time to come.
Pill did not, of course, mention greedflation. That is the fact, now evidenced, that companies are using this period of inflation to increase prices in real terms relative to their costs, increasing their profits at cost to their employees as a result.
He did suggest that we in the UK do need to feel relatively worse off because the cost driven inflation we are suffering comes from outside the UK. He forgot to mention that most energy prices have fallen considerably now, but we are not seeing the benefit.
He also failed to mention Brexit, which was very odd.
And he did not mention the distribution impact of the acceptance he was demanding, which will have a considerably greater impact on lower income households because of the effect of high interest rates on housing costs, the impact of the ineptitude on energy cost control on them and the particular impact of Brexit on food costs on them.
Nor did he mention anything on asset price inflation, which only really advantages the top 20% in the economy.
Even more strangely, he failed to mention that the reason why so many are poor is because he and Andrew Bailey, the Bank's governor, have quite deliberately set out to make them so. That has been their intention when increasing interest rates. In fact, it is their only intention when raising rates because we know rate rises can have no impact on inflation that has been imported.
So, what Pill was really saying was four things.
First, he was saying people should accept and not challenge the redistribution of wealth inherent in greedflation, with the large corporate sector being the main winners.
Then he was saying that people should accept that the Bank of England had the right to redistribute income from those with least to those with most and people should not complain.
Third, he was saying people should accept policy on Brexit, energy pricing and even tax, which is also making the poorest poorer, because incompetence in government is the best they should hope for.
And fourth he was saying that we should abandon hope of any alternative thinking on how to manage the situation we are in.
The wealthy and their interests have won, in other words, is what Pill was saying, because inflation is largely a zero sum game. And, he says, we should live with that and not complain.
From Pill's well paid position inside the City walls I am sure his comments make perfectly good sense to him. That reveals the poverty of his thinking.
Unfortunately, that poverty of thinking is shared by the entire Oxford PPE educated political class.
But Pill should note, doctors, nurses and many others have yet to accept the instruction to pipe down and accept their fate that he is seeking to send. The rebellion is happening. And I suspect there is little he can do to stop it.
Pill should enjoy this moment. He might not be able to pontificate as he does forever. People unable to pay their bills will not put up with being told to accept their fate forever. Pill clearly cannot imagine what that feels like. Millions do not have to imagine it. They know. And that is why his message will not be heard.
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The Bank of England is suggesting we accept austerity, a policy that is shown not to work, as is evident from the comparison of the UK with the rest of Europe.
I say that we don’t accept a crap government and Central Bank, and implement policies that do work, and have been shown to work in the past.
Agreed
I read this…. Shocking! Someone should make him repeat that speech on any small town High Street on a Saturday morning…. not sure I would fancy his chances of getting out unscathed.
A modern day Marie Antoinette telling us to put up and shut up. The government and indeed Labour are about to learn the lesson of just how powerful grassroots reaction can become. I sense this really is just the start of a fundamental change, a repoliticization and activism.
‘Let them eat cake!’
…. just saw this “below the line” in the FT
From an article published on Huw Pill’s appointmet…..
“Pill, an Oxbridge graduate who worked for Goldman Sachs, will report to the deputy governor for monetary policy, Ben Broadbent, an Oxbridge graduate who worked for Goldman Sachs. Broadbent also sits on the Financial Policy Committee with Jonathan Hall, an Oxbridge graduate who worked for Goldman Sachs. And while the Bank is technically independent of the government, Pill and Broadbent will work closely with the Treasury and its Chancellor, Rishi Sunak (an Oxbridge graduate who worked for Goldman Sachs).”
Need I say more?
‘Nuff said
“The Oxford PPE educated political class’.
I saw that in your post yesterday about Andrew Verity, his critic Rupert Harrison is Eton (Head Boy) Oxford, then IFS and now BlackRock portfolio manager. Oh, and now CBE.
(I often wonder why the British Empire awards have not been replaced. You would think someone on the Left would support it publicly )
“The State alone is resposible for inflation. inflation without government or indeed against government is impossible”
Felix Somary The Raven of Zurich
To the extent that there is no money without government that is true
Beyond that, no it is not
Thanks for your reply on this, I felt that inflation can indeed come from outside forces aswell as internal ones….
I presume that the desired 2% inflation rate is for stability and it is the job of the central bank to act and cushion inflation spikes where it can to stop instability occuring?
I saw this quote banded about and I thought to myself “not sure if it makes sense” . I am very worried though about more and more money printing unless it is well measured.
What does your last comment mean?
We don’t print money: it is created, and it is always created for a reason. Are you staying you want cuts, more taxes, or what?
I am worried because I think they printed or created a lot of money in very unusual circumstances and in a panic and the adverse affects of this are very much lead to the situation we are in today.
I recieved a SEISS grant to pay my landlord and bills but my Landlord could take a mortgadge holiday for instance not sure what his terms would have been if the landlord did that I myself did not wish to widthold money as I was living there still. If a Landlord get’s a Mortgadge holiday though why was that not passed on to any tenant? but after 6 months of not having any hope of what I normally did as it was shut down I took a job on a building site for 8 months then another for 4 months which helped my mental health a bit but then eventually eroded it into a worse state as I was doing something I hated and just wanted to go back to what I do normally as a job as that is a valid job and far more productive just shut down.
Never again will I do a job that I hate as a trade off for what I normally do being shut down by a government policy I want to work to pay my way with something I am willing to do for money but eventually we are travelling back to where we were gradually basically starving the work out again in a gradual way this time. And although happy to be back doing what I normally do It is getting tiresome all the problems and crisis.
I am not against the banks creating money for good reasons but not when the economy can not keep up with it or in fact taking it away just as fast as people earning can keep up with also.
The whole “you need to retrain” argument spouting off to people because jobs were detroyed when the people on the news channels talk of a totally different world to the one the population live in and their whole hypocricy reading from a script because they have been told and paid what to say by the destroyer of those jobs.
Sometimes it is perhaps better to just watch on at the disaster unfolding and just decide that if that’s what they indeed want then I am well aware that I will steer clear of any further bad advice coming from the manufacturing of crisis and pleading incompetence, creating the experience known as Chaos.
I don’t think people can take much more and now is not a time to create money for the ones whom hold most of it.
You do know that the only way for the government to create money is by spending, don’t you?
So, I ask again, what don’t you want spent?
@Paul “I am worried because I think they printed or created a lot of money in very unusual circumstances and in a panic and the adverse affects of this are very much lead to the situation we are in today.”
I think he is describing quantitative easing, but Bank of England Deputy Governor Ben Broadbent said “claims that their huge bond-buying programmes stoked the global surge in inflation are not backed up by evidence.”
In other words, printing money in recent times, did not cause inflation.
For once I agree with the BoE
That Harrison went on to the IFS might explain the IFS position that taxes raise government revenue, the source used by the BBC.
“Unfortunately, that poverty of thinking is shared by the entire Oxford PPE educated political class”
This needs to be re-expressed: “the poverty of thinking is a consequence of having a Ox(bridge) PPE educated political class”.
(I have no doubt Cambridge produces a similar class of imbecile).
For the avoidance of doubt, this pathology i.e. the dominance of a system by a particular religious belief often inculcated at an early age into already priviledged people, is typical of the so-called elites of the modern world.
My own area of particular interest is electricity markets. It turns out that most of the people concerned with this area in the European Commission have been to courses held by “The Florence School of Regulation” – which tells them how to think – thus they come out of the course believing that markets are perfect and marginal markets are sacred & ordained by God. Hampsters (we have two) have a higher level of curiosity & are more capable of original thought that FSR-educated (or PPE-educated) imbeciles.
The PPE cretins, like the Commission imbeciles, are insulated from the financial vagries of life & thus their actions (or lack thereof) carry zero consequence for them. Gidiot Osborne continues to float through life rich, well off and respected – leaving behind 130k dead due to his austerity but with his cognitive dissonace sub-routine fully engaged – doubtless he and people like Harrison sleep well at night……..& think, nay know that they did “a good job”. Pill-ock will know that he is doing a good job (he is a self-doubt free zone).
This leaves the question of: so what to do? The current “educational”(??) system delivers what the current power structures need & current “democratic” structures are designed to maintain this self-perpetuating system. Furthermore, this situation has been in place since the tumour-like growth of public-schools in the 19th century. The UK is in a pitiful place with those at the top disinclined to do anything that would endanger… what exactly? Their position? their wealth? or the fantasy land they live in?
This is what happens when the Central Bank is independent. You might as well sell it to Goldman Sachs; except they already seem to be running it.
The trouble with people like Pill is that they say things that are BS with such a straight face that the only conclusion you can come to is that either they are liars or dumb. For instance, he said this.
“And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share.”
All?
Really?
He gets paid £190 grand a year. If there is one thing that is absolutely certain about times like now it is that those at the top of the money tree never share in the austerity that they inflict on the majority.
At what point should someone be sacked for incompetence?
Andrew Bailey has been Governor of the Bank of England since 16 March 2020 – he’s been at the BoE since 1985, a year after completing his PhD, so no other work experience.
The BoE has one defining mission and that is to keep CPI at 2%. In the three years that Bailey has been Governor, in only one month (July 2021) has the CPI been at 2% and in only five out of his 36 months tenure (July 2020 and April to July 2021, ranging from 1.0% to 2.5%) has inflation been within the permitted 1% deviation above or below the inflation target.
Huw Pill’s tenure as Chief Economist began in September 2021, having shuttled between Harvard University, the ECB and Goldman Sachs since his PhD. He has overseen the inexorable rise of CPI from 3.1% in the month he joined to 10.1% in March this year.
The BoE’s serial, abject failure to achieve its remit has been on both Bailey’s and Pill’s watch. Isn’t it about time they both got booted out?
It is frankly bizarre that in a world in which we believe that taxes pay for things, that the increased take in taxation from less austerity is not even considered.
It’s intellectual laziness at its worst or just simply the usual negation of anything factual about government and the true nature of tax in a modern society.
So, it proves to me that austerity has nothing to do with curbing inflation – it’s as Mattei has pointed out – it is a false flag operation whose real purpose is to increase the wealth of the ‘deserving rich’ at the expense of greater society and control its ability to organise for a fairer share of economic output.
Swallowing Pill’s bullshit is not only bitter but outrageous.
Isn’t this an admission that they, the BOE and Politicians, have no clue how to run a successful economy??
If I were as bad at plumbing and gas fitting I would be expelled from gassafe, why are they still in their jobs?
Or they know exactly what they are doing because it fits their agenda to break and privatise everything.
At one level Pill’s comment was just a statement of fact: most people are poorer in real terms than they were. I don’t recall of reading of any collective bargaining settlement (one that covers a significant number of people) recently that has led to a pay rise exceeding inflation over the relevant period, i.e. one which has the potential to drive an inflationary spiral.
And he didn’t give the same advice to businesses whose profits have increased by more than inflation.
He just stopped short of explicitly saying it was the government’s (and hence the Bank’s) policy to make the poor poorer and the rich richer.
Pill – it’s hard to resist Pillock – does an on-line Q&A every month or so which you can sign up to. I’ve listened to a couple and they were dreadful. Complacent, patronising and pretty much ignored the questions. ChatGPT would have been better. With the algorithm and datasets provided by Goldmans of course.
Precisely because they are so bad I cannot be bothered
If I wanted to be patronised I could go on GB News
New article on BBC News: Bank of England: ‘Accept’ you are poorer remark sparks backlash
https://www.bbc.co.uk/news/business-65397276
Weird I did not get a mention….
“The Bank of England is wrong again: workers aren’t to blame for inflation”, by James Meadway
The Guardian, Wed 26 Apr 2023 14.38 BST
https://www.theguardian.com/commentisfree/2023/apr/26/bank-of-england-huw-pill-inflation-wages-prices
There is a very simple question to ask Mr Pill. To this day, how much of the inflation we currently face can accurately be identified as directly and exclusively caused by wage increases? Then he can tellus how much can be explained by interest rate increases? That would be a much better use of his time; and, more important – ours
It is almost as if he wants the Tories to lose the next election! Maybe he is a covert snowflake working for the leftie liberal elite! NOT.