Every now and again a comment turns up on the blog that I hang on to because I feel unable to answer it at the time I first read it. This one, from John D was one of those. I owe him an apology: it has been around for a couple weeks:
Richard — a general question not specifically related to this particular topic.
For the past several years, your overall analysis of the various component parts of the UK economy (and from other informed contributors) has been highly critical, and rightfully so. Pretty much all the indicators are relentlessly heading in the wrong direction. So how long do you think this can continue before we experience a total melt-down?
The government will of course take short-term measures in an attempt to maintain a semblance of stability but, as it appears to have no in-depth understanding of the underlying fault-lines, the wheels should start falling off the cart sooner rather than later — accelerated by the rocky road to Brexit. If the analyses articulated here are in the main correct, then logically and inevitably the house of cards will collapse any time soon (apologies for the mixed metaphors).
Yet, similar to the run-up to the last GFC, the markets are fairly buoyant, oil prices are rising, unemployment is ‘relatively' stable (albeit the official stats are misleading) and there's effectively zero inflation, etc.
Taking into account the myriad variables against a back-drop of international political uncertainty, with the possible exception of China, one wonders how long this scenario can be sustained? It seems to be defying the law of gravity.
And if so, the next question is — what can the general population do to protect itself? One's general observation suggests that most people (i.e. those fortunate enough to be in work and/or with some savings/assets) aren't the least bit concerned and continue to go about their daily business as if everything is hunky-dory. Are they sleep-walking into a nightmare scenario?
Just asking!
The answer to the qeustion can be made in a number of ways. One is to simply say John is right: we are indeed sleep-walking to the next Global Financial Crisis (GFC) and that this is bound to happen. Since the history of capitalism is a series of such shocks there is nothing surprising or contentious about saying this: it is a simple fact that it is true.
The second thing to observe is that people must know this: the pattern is far too ingrained for those with any experience not to have noticed it. What is more, we have always sleep-walked into these things. We have simply not learned how to avoid them. That said, human beings, who are at the same time capable of being both deeply fatalistic (‘there is nothing we can do about it') and optimistic (‘this time it will be different') appear able to live with the reality of this cycle and the pain it causes.
I suggest there are two reasons for that. Most live with the hope that those who suffer most will not be them, and statistically that will be true: the hope is not entirely irrational. Second, the reality is that most people live much more in the moment than economics, with its obsession with time, appreciates. Whether that be by suppressing the reality beyond the moment (as many do) or because we actually enjoy those real moments of pleasure that are capable of punctuating most of our days if we are willing to look for and count them in ways that an economics obsessed with money does not, then they also survive. This is in our nature: let's not ignore it.
Third the real question is, of course, not the inevitability of the next GFC, but when it will happen. The honest answer is I know this no better than anyone else. I am also aware that there are those who think I have forecast eleven of the last three downturns. I accept that because I believe that the current structures of our economy, and the beliefs that underpin it, are systemically flawed I tend to read coming crises into situations more readily than I would if I believed that prevailing mainstream economics did actually have something useful to say on how to manage our situation and if I believed the structures we have in place might work. In fact even that is a statement of optimism: I should say that given that the only structure we have in place is an independent central bank that has one tool, which is management of the interest rate that is wholly inoperative, and another in the form of QE that it can no longer use because of its destructive impact on inequality, that we have no structures in place that can work to manage the situation we are in. Accumulating debt is driving us to a bubble. We have no apparent way to stop it. And the bubble will burst.
Can ordinary people do anything about it? Yes, they can. They can move savings out of stock markets and corporate bonds. They can save in traditional safe assets, although I have no love of gold. They could clear short-term debts that could be recalled. Long term ones might as well be left in place: I am not expecting serious deflation. And they may want to think about taking any measures that they can to survive periods of instability. I did have a stockpile of food in the summer of 2008 because of what I thought was coming and because I thought there was a real risk of cash point machines not working. Going hungry is daft when some things do have very long sell-by dates.
Beyond that, what can be done? Practically at an individual level, remarkably little. I have to be honest about that. By definition that has to be true when systemic failure is likely. Even though it is obvious that we face multiple crises (trade war; Trump; Brexit; inflated stock markets; over-extended and still vulnerable banks; excessive personal debt levels; migration; continued global warming; inequality; a skills shortage, and more) nothing an individual can do can change that. And there appears to be nothing that our governments appear willing or able to do to address the issues either. They have neither the intellectual firepower or the will to seek to change the direction of the global political economy. Another GFC is, then, inevitable. The only questions are when and what triggers it? I don't know for sure but I suspect that the answer is a market crash and soon. I suspect the trigger will be small. It could be the final withdrawal of QE stimulus, or an attempt to reverse it. It could be the impact of net share buybacks reducing in the US. It could be trade. It is unlikely to be Brexit, but it does not help. The real crisis such as migration and warming will not be the cause: markets exist in the moment and ignore such things.
All of that could make anyone feel powerless. At some levels that is exactly what I feel. And I promise you there are mornings when I feel just like that. Then the coffee kicks in and I become like everyone else; a person living in the moment. I've not got into mindfulness precisely because I have always been into mindfulness. I value enormously the swift I saw last night, because they are so rare this summer. And the unexpected and warm hug with a friend recently, which is still leaving a glow. Or just the sparrow sitting in my garden at this moment drinking from the dog's bowl that is out there because he's spending half his day lazing in the sun right now. These things matter.
But so too does writing matter for me. If we're going to have a crisis, and by now you will realise I think we will, then preparing for it seems pretty important as far as I am concerned. Physically little may be possible. That may be true financially as well, for many. But what we have to recall is that in 2008 the crisis went to waste. After a brief Keynesian moment when there was a real prospect of the impact of October 2008 being contained almost the whole world turned to austerity, and a wanton tale of destruction of value ensued. If there is one thing we can do it is to say ‘never again'.
Having meta-narratives that explain why we do not need to suffer this again is vital this time. This is why modern monetary understanding is so important: it explains economics the way it actually is and if it is understood that takes the fear out of a crisis.
But modern monetary understanding is not enough. We need to say that this time we will not increase inequality and act only to save the interests of those with most wealth. This time we will act for all. That's what my message in the Joy of Tax was: we can reorganise the economy for the sake of all people and tax is one of the best ways of doing that. And this time (genuinely in contrast to the last, and I will say largely because of the work of tax justice campaigners) we can achieve that goal because we can now track income and wealth in tax havens and we do know that country-by-country reporting can make global corporations accountable locally if only we have the will to deliver it. Neither was available a decade ago. This time, then, the money cannot run away.
What is more, now we know that we have to do a Green New Deal. It is not just the only way anyone in this country still knows of to create jobs in every constituency simultaneously, it is also what the planet needs.
And by exporting that idea one of the aims should be to create jobs where people are, and want to be, in the world. Almost no one really wants to permanently migrate in the world. Place is inherently important to us humans. It is why so many of us die within relatively few miles of where we were born. And most of us are entirely happy about that. So creating jobs where people are has to be the way to solve the world's migration crisis.
But these things require big thinking.
The remarkable thing about big thinking is that anyone can do it. Anyone can partake in it. Anyone can discuss it. Anyone can find some aspect of it that they can make their own. And no one will know it all, so we are all in the same boat of not knowing everything. Of not understanding it all. Of not being able to articulate every aspect of it. But still sharing the common aim of aspiring to something better, and believing that possible.
What is more, this is the only way change happens.
On Saturday I was talking to a friend about an amazing man called Jack Ray. Jack was my mentor as a teenager. I won't bore you with the whole story. But Jack saw in me a boy who wanted to change the world, even then. He told me to be a poet. He gave me a liking for poetry that I still have. And then he told me if I could not be a poet (and I don't think I'll ever succeed at that) that I should write. He warned me against being a politician, although he was well aware of my interest in the subject. He made a simple observation: he said that politicians follow other people's ideas. Poets, he thought, summarised people's visions better than anyone else. But, he said, writers came next. He put novelists ahead of applied writers, like me. But he still told me to write. And write I have. That's Jack's fault. He died in 2013, aged 95, but I'll never forget him. We last spoke three weeks before he passed away.
So let me offer my advice. I'm now older than Jack was when I first met him. My suggestion is read, write, think, and act on what you learn. That is how we get ready for the next time. And that is how next time does not go to waste.
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You are indeed right that under the capitalist system we are sleep-walking into a shock, and just as we start to wake up, we nod off again and start sleep-walking into the next one.
Even the most ardent neoliberals claim that under the various not-capitalist systems that have been tried and resulted in crises that led to the replacement of their rulers, we have at least been awake all the time, and I would agree.
Richard, thank you so much for this beautiful, poetic meditation – a wonderful way to prepare for my Sunday church service.
We Christians have a test phrase “What would Jesus do?”. Here, you’ve offered another: “What would Jack say?”
Thank you
Jack worked it out on a keyboard
So do I
Have a good day
“Most live with the hope that those who suffer most will not be them, and statistically that will be true: the hope is not entirely irrational.”
A classic description of ‘the herd instinct’. It works for herbivores on the Serengeti and elsewhere.
“I should say that given that the only structure we have in place is an independent central bank that has one tool, which is management of the interest rate that is wholly inoperative, and another in the form of QE that it can no longer use because of its destructive impact on inequality”
That of course is not so as an economic reality, but as a consequence of a polity that either doesn’t accept the concept of PQE, doesn’t understand it, or chooses to ignore the potential alternative ways in which the mechanism can be employed. (You suck eggs from this end, grandma)
“They could clear short-term debts that could be recalled.” Hmmm….. Why bother if the entire edifice is going to collapse anyway ? Why not do as the bankers do and just max out all credit sources and rely on default to save the day. ? Sure it’s a high risk strategy, but what isn’t high risk in this stage of the cycle ?
But I prefer where yo get to, with the positive aspects of how you cope with this potential economic Armageddon with a bit of positivity. (Besides which, I’m fireproof; I have no financial assets to lose and that’s extremely liberating.)
My new friend says he’s a nihilist and persists in trying to tell me I should come round to his view that ‘there is nothing’.
Bugger that ! It isn’t making him happy and I persist in doing the things that make my life feel worthwhile even if they are pointless (not going to ‘change the world’, or ‘save humanity’) I guess I’ve come to terms that there is no meaning to life, but while I’m here it might aswell be pleasant.
I simply refuse to accept this old world of suffering and vale of tears narrative which seems to pervade so much orthodox thinking. Sure as hell money doesn’t buy a get out of jail card. Quite the contrary.
Security is a double edged sword,; think ‘Maximum Security…..prison’ and you get my drift.
Being able to let go of monetary assets is key to happiness
Being able to let go of swifts, hugs and the moment is not
I am not for a moment saying money has no value: it would be hypocritical of me to do so. But understanding what really matters is key to finding meaning in life. And Thorsten Veblen got this right. Still a much-undervalued economist.
“Being able to let go of monetary assets is key to happiness”
Hmmm…. I didn’t exactly ‘let them go’….not willingly anyway.
But emotionally I’ve let them go now. I don’t mourn them. I think I’ve come through the financial bereavement process. 🙂
Maybe there’s a new career awaiting me after the next crash, in Financial Bereavement Counselling 🙂
Richard,
Love your work. I’m genuinely not qualified to comment, but know enough that economics is nothing like a household budget and balancing the books that the Tories have sold to the country.
Anyway, I think Jack would like me to point out that he died in 2013 and does not approve of your shabby proof reading team
Jack knew all about my proofreading – at one point when I was a teenager I was editing a weekly magazine for the club he ran
He saw plenty of my typos in the days when they meant tippex
I’m old enough to remember Tppex, Copywrite, Liquid Paper and many others long forgotten.
How the world has changed since I started work in 1982!
You’re a mere youngster
Andy i got my first PC in 84 – a beautiful Apricot
Good morning and thank you so much for this wise, considered and inspirational reply to a question I thought had been lost in cyberspace. Hugely appreciated. And a posthumous ‘thank you’ to Jack Ray for having lit the candle that brings light to the darkness. May it continue to do so for many years to come 🙂
Jack’s biggest legacy was, however, my love of railways
And building large scale model railways in gardens
I am doing that again, right now. The foundations for a new line are under way
I agree reading thinking and writing about ideas are necessary. However, acting is going to be the key next time. Most of us are invisible as individuals so we need to join together. This means organizing and there are number of options open to us all – join a political party, a trade union, a campaigning group. And join now, get out of the house and meet people. Be prepared to sacrifice time and resources. This is going to be a fight. Change is coming either way – but if we don’t stand collectively and fight for our ideals, we have recent history as a guide on how bad it can get.
I absolutely agree that will be essential
But we have to know what we are asking for or we get the fiasco of left wing parties still supporting fundamentally neoliberal thinking – as I am afraid the left of Labour is with its adherence to balanced budgets, independent central banks, etc
A philosophical postscript – “As nightfall does not come all at once, neither does oppression. In both instances, there is a twilight when everything remains seemingly unchanged. And it is in such twilight that we all must be most aware of change in the air – however slight – lest we become unwitting victims of the darkness.” – William O. Douglas (1898 — 1980)
Indeed
I might call that a variation on Gramsci
I agree Richard. Members of my union are currently engaged in a battle with an out of touch leadership. I feel that this is part of the process of shifting old patterns of behaviour and becoming political engaged citizens. The current strife will battle-harden us.
“…. no one will know it all, so we are all in the same boat of not knowing everything. Of not understanding it all. Of not being able to articulate every aspect of it. But still sharing the common aim of aspiring to something better, and believing that possible.”
Now that, it seems to me is ‘on the money’.
Hi Richard. In the same way that there is more than one way to build a model railway in your back garden there is more than one way to rebuild the economy when it collapses. As we know there is a tide in the affairs of men, and when it all goes pear shaped at the flood you can bet there will be rapid realignment of views and engagement in action.
The green new deal will look pretty tempting at that point especially given the impact of declining energy return on energy invested, the proverbial limit to growth that none of our leaders want to acknowledge to the public at the moment.
Lots of people will be worse off after the next step down, but as you helpfully and correctly point out, living in the moment allows us to find happiness in any situation. We are going to need that facility because when the economy comes back it may not be as financially good as the past but it just might be more sustainable.
I am not going to proselytise to those who do not have enough at the end of the week – because I know far too many live without quite literally enough in this country
But some of us have more than enough. As my son said to me the other day, we’re not rich as far as he can see, but we are well off in that as far as he knows we’ve never gone without anything we really need. He’ll go a long way if he remembers that as his life progresses. So too would others.
I am determined all should be in that situation
It is possible
Thanks for that. I’ve just returned from a lovely shaded 2-1/2 hour walk with the dog in the woods. I know it’s done nothing to stave of the next GFC but it clears my head and allows me to ponder on what I can do. In truth, at my age I have no levers to pull but I do talk to my two beautiful grand daughters every day and try to set an example of how to live. I can only influence their future a little but I hope they see someone who cares and loves them, who is generous and not accumulative and greedy. All I hear is praise for their balanced attitudes so I feel the future is in their hands. I talk of MMT when the opportunity arises but it’s usually met with the same old, same old. Anyway, I think my wife is a convert having heard so many YouTube lectures from Stephanie Kelton (most impressive) and the other MMT proponents while we drink our first cuppa in the bed in the morning. As far as the green new deal is concerned, I was most impressed by David McKay’s book of a few years back – Sustainable Energy without the Hot Air. Sadly, DM died too young. But my grief recently has been the announced closure of the Halden Reactor in Norway. I was involved with Halden for many years and it was the best research reactor on the planet bar none. There is now a gaping hole and the decision to close was taken for all the wrong reasons particularly at this time. I know more than I can say without implicating others. So once again thank you for that shaft of intelligent light this beautiful Sunday morning.
Rod
Have a good day
And keep talking to those grandchildren
There is little more important than that
Richard
Perhaps in the interest of increasing modern monetary understanding you might mention my petition, the intent of which you’ll understand, I’m sure https://you.38degrees.org.uk/p/boe-nhs
I think the really interesting question is why so few individuals engage in inductive thinking particularly on the issues that relate to their well-being. Nobody would read this blog, for example, if the quality of inductive thinking wasn’t high, good writing alone wouldn’t do it, the two run together. It perhaps seems better to accept that you aren’t easily going to be able to change the vast majority of individuals to better balance out their modes of thinking and concentrate how you can best influence the political parties and their politicians even to the point of abandoning the existing parties and supporting a new one.
Here, for example, is an interesting idea which will probably require a new party to implement it:-
https://www.politico.eu/article/parallel-currency-italy-possible-eurozone/
Interestingly it reminds me of Hjalmar Schacht’s MEFO bill’s which got introduced under a relatively new party, unfortunately Hitler’s Nazi Party, but it worked remarkably well to bring growth back to Germany:-
http://www.nakedcapitalism.com/2013/12/philip-pilkington-hjalmar-schacht-mefo-bills-restoration-german-economy-1933-1939.html
Hi Schofield,
“….concentrate how you can best influence the political parties and their politicians…..”
Don’t fall for the binary trap. There is no “either…or….” ; it has to be both.
Why ? Because politicians who come up with sensible policy suggestions which no one understands don’t get elected. So it’s both. Educated polity and educated electorate.
When push comes to shove any elector can choose to cross the line and stand for election. Not easy without party support, but it can be done. Not easy to change the groupthink of Party either. Who can do one may not be able to do the other.
Horses for courses. We must each do what we can and play the strengths we think we have.
In ‘Network Marketing’ circles they promote the ‘Three Foot Rule’. Anyone within three feet of you is a prospect, further away than that you have to shout….and people don’t appreciate being shouted at. (Especially when it’s ‘for their own good’ 🙂 )
I agree with everything you have said – and having just read Pablo Neruda’s ‘Memoirs’ – even the bit about what your mentor said about poets connecting with the people. Neruda certainly seemed to do this.
The only thing I would add is that I think that there are going to be a number of GFCs and not just ‘the one’ before we see any real change. Which is why we should indeed talk to the next generation in order to carry on and hand over these wonderful new ideas (and some good old ones that should never have been forgotten) here and elsewhere that deserve to be tried or rediscovered.
Agreed
Pilgrim Very Slight Return says:
” I think that there are going to be a number of GFCs and not just ‘the one’ before we see any real change.”
Hell’s Bells, Pilgrim, I hope you’re wrong. How any times do we have to go through this sort of nonsense before our polity sees the writing on the wall ?
At least I once more
And once may not be enough
Andy – I would like to be wrong.
Richard enunciates how change will come about and accurately:
‘(But) still sharing the common aim of aspiring to something better, and believing that possible’.
However, we are an atomised country really at present. There are other aspirations of a more personal nature competing with these good ideas: ‘Love Island’ is very popular on TV which many sit at home and watch indoors; we stare at our mobile devices and satisfy our individual desires by buying things in order to achieve ‘self realisation’ or use them to justify our prejudices and partiality to our own views about things without having them challenged or debated with others; we are intensely interested in a certain sporting tournament in Russia. And of course there is BREXIT for good measure. And to wash this all down there is a fondness for alcohol and other substances to get us through our misery.
Another way of looking at being atomised is seeing us more isolated than before. Do not be fooled by the term ‘social media’. We increasingly know that the phenomenon has a dark side and it could also be seen as ‘anti-social media’.
Samuel Johnson said: ‘Solitude is dangerous to reason, without being favourable to virtue’. Spot on in my opinion.
The good thing Andy is that there are people who feel that something is wrong and that the world could be different and this group will grow slowly with a common aim for that objective which is why I said that there could very well be a few more GFCs before the people have really had enough.
“At least once more
And once may not be enough”
Well you’ve seen Stephanie Kelton’s boom and bust graph. The ‘v’ shape has gradually morphed into ‘u’ shaped longer recoveries and her prediction is that inevitably sooner or later they turn ‘L’ shaped.
Maybe we’re still a couple of steps away from that.
But you’ve got to hand it to Gordon ‘No more Boom and Bust’ Brown’; . Now we have Stagger and Collapse. Why mess about with a market correction when you can have a crash. Much richer pickings there for the vultures and the crocodiles.
For absolutely no good reason of course.
May Heaven (or the electorate) preserve us from LINO chancellors.
PS Having just re-read my post….
And preserve us from ‘May Heaven’ too. 🙂
A reflective piece of writing that brought a tear to my eye. We have so much to gain by making a leap of faith not least the preservation of our planetary home. Let’s hope we humans will have the courage to take it. I can’t bear to think about the consequences of not doing so for future generations.
“The remarkable thing about big thinking is that anyone can do it. Anyone can partake in it. Anyone can discuss it. Anyone can find some aspect of it that they can make their own. And no one will know it all, so we are all in the same boat of not knowing everything. Of not understanding it all. Of not being able to articulate every aspect of it. But still sharing the common aim of aspiring to something better, and believing that possible.
What is more, this is the only way change happens.
Thanks
Civic lesson from Bill Mitchell and Thomas Fazi.
Re-imagining the 21st Century National State
[In the 21st century] the NATIONAL STATE [is] a place where citizens can seek refuge ‘in democratic protection, popular rule, local autonomy, collective goods and egalitarian traditions’, as Wolfgang Streeck argues, rather than a culturally and ethnically homogenised society. This is also the necessary prerequisite for the construction of a new international(ist) world order, based on INTERDEPENDENT but INDEPENDENT SOVEREIGN STATES.
For the vast majority of people that don’t belong, and never will belong, to the globetrotting international elite, their sense of citizenship, collective identity and common good is INTRINSICALLY and INTIMATELY TIED TO NATIONHOOD. Ultimately, being a citizen means to DELIBERATE WITH OTHER CITIZENS IN A SHARED POLICAL COMMUNITY, AND HOLD DECISION MAKERS ACCOUNTABLE.
As Michael Ignatieff writes:
Most citizens don’t love the state, or identify with it, and thank goodness they look to their families, their neigbourhoods, and traditions for the belonging and loyalties that give life meaning. But they also know that they need a SOVEREIGN with power to COMPEL COMPETING SOURCES OF POWER IN SOCIETY to SERVE THE PUBLIC GOOD. People don’t want big government, but THEY DO WANT PROTECTION. They are PERFECTLY WILLING TO TAKE RESPONSIBILITY FOR THEMSELVES, BUT THEY WANT SOME POUBLIC AUTHORITY TO PROTECT THEM FROM THE SYSTEMIC RISKS IMPOSED ON THEM BY THE POWERFUL. They refuse to see why large corporations should privatise their gains, but socialise their losses. They want a COMPETENT SOVEREIGN, and what goes with this, THEY WANT TO FEEL THAT THEY ARE SOVEREIGN.
[The] conditio sine qua non for [a] NATIONAL SOVEREIGNTY BASED ON POPULAR SOVEREIGNTY, DEMOCRATIC CONTROL OVER THE ECONOMY, FULL EMPLOYMENT, SOCIAL JUSTICE, REDISTRIBUTION FROM THE RICH TO THE POOR, INCLUSIVITY AND MORE… [is as follows]:
1. A correct understanding of the capacities of monetarily sovereign (or currency-issuing) governments, and more specifically, an understanding that such governments are NEVER REVENUE OR SOLVENCY CONSTRAINED, because they issue their own currency by LEGISLATIVE FIAT, and therefore can NEVER ‘RUN OUT OF MONEY’, OR BECOME INSOLVENT. These governments always have an UNLIMITED CAPACITY to spend in their own currencies; that is they CAN PURCHASE WHATEVER THEY LIKE, as long as there are goods and services for sale in the currency they issue. At the very least, they can purchase ALL IDLE LABOUR and put it back to productive use (for example through a Job Guarantee [programme]). This also means understanding that there is NO SUCH THING AS A BALANCE-OF-PAYMENTS GROWTH CONSTRAINT in a flexible exchange economy in the same way as it exists in a FIXED EXCHANGE RATE environment…A monetarily sovereign nation that floats its currency … can pursue rising living standards [for its citizens], even if this means an expansion of the current account deficit, and a depreciation of the currency… Through capital controls and other instrument, the aspirations og global finance can be brought into line with the DEMANDS OF A GOVERNMENT INTENT ON ADVANCING THE WELL-BEING OF ITS CITIZENS.
2. A DRASTIC EXPANSION OF THE STATE’S ROLE — and equally drastic downsizing of the private sector’s role — IN THE INVESTMENT, PRODUCTION AND DISTRIBUTION SYSTEM… A broad renationalisation of key sectors of the economy — including the FINANCIAL SECTOR — and a new and updated notion of planning, aimed at placing the commanding heights of ECONOMIC POLICY UNDER DEMOCRATIC CONTROL [is necessary] for the SOCIO-ECOLOGICAL TRANSFORMATION OF PRODUCTION AND SOCIETY that is desperately needed to deal with the ongoing — and worsening — environmental crisis.
Reclaiming the State
William Mitchell & Thomas Fazi
I find caps very off putting
I do not like being shouted at
Speak to your computer guru and see if it’s possible to have the option to use italics. They aren’t so ‘shouty’. but serve a turn.
Caps are not just ‘shouty’ they’re difficult to read because they have no word shape. probably not the first rule of Typography but it has high status.
Great column thanks Mr Murphy.
I look forward to a regular dose of your clear perspective.
Is it worth mentioning, that there may be an inflation time bomb waiting, that will affect the middle classes even, as we rejoin the majority of the human population in their subsistence existences?
That way the super rich will achieve the grand opulence and ownership of all they survey as they did in years past. I fear that great technological control infrastructures are already well advanced. I suspect a lot of QE has gone into investing in that regime machinery.
I don’t partake in conspiracy theories 😉
Lets enjoy these summer days and their fruits.
There is no evidence of that at all
Wally Wiilager says:
“I suspect a lot of QE has gone into investing in that regime machinery.”
I suspect most of it chasing speculative profits on the money markets. I don’t think much of QE has been ‘invested’ in anything. Not anything tangible at any rate.
Given household debt there has to be a good chance a rate increase will be a major contributor to the next UK recession, which in turn could trigger the next GFC. I read today that hawks at the Bank of England have been ‘boosted’ by the latest GDP figures. What do those figures show? Falling construction and manufacturing sectors, but retail growth due to the good weather and a royal wedding. Crikey, the MPC had better act quickly or we’ll be the next Zimbabwe!
Why is there this misplaced terror of inflation? Who does it benefit?
“Why is there this misplaced terror of inflation? Who does it benefit?”
Creditors.
At the expense of debtors.
Well, the people who always mention inflation are the retired Matt who whenever I mention MMT and People’s QE always recoil in horror about the effects it might have on their fixed income.
And – given the tendency for this group to vote – you then have an unholy alliance between self interest and orthodox economic thinking that inhibits the genesis of new ideas.
My view would be to talk specifically about MMT and People’s QE and make it clear what these mechanisms might do to pension provision. In other words what steps might a courageous Government take to mitigate any deleterious effects by PQE/MMT on fixed incomes? The question needs to be answered.
I’m not sure what the answer is but we could be looking QE printing money into pension pots too as well as finding better ways to provide pensions overall (using pensions to boost nationally needed green projects or civil engineering projects under a national investment bank). The whole thing as it is needs an overhaul of some kind.
I will see if there is time to write on that today….