The thread I wrote yesterday morning transferred, with minor edits, to Prospect magazine.
They then asked me to do a TikTok video for them, which I knocked out rather quickly. It's now been viewed nearly 200,000 times:
@prospectmagazine Richard Murphy explains why he thinks the Bank of England's decision to raise interest rates will have dire economic consequences and warns of an almighty economic crash. Richard is a chartered accountant, political economist and professor of Accounting Practice at Sheffield University, as well as co-founder of the Green New Deal . @Conservative Party UK @UKLabourParty @sheffielduni #economy #bankofengland #interestrates #recession #monetarypolicy
It looks like I need to explore another aspect of social media.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Good job, Richard! Now one on what has caused the massive inflation they’re all wittering on about would be useful.
Maybe you could start with a call to James O’Brien on LBC. He asked today for people to educate him on what is going on, since his understanding is that inflation is caused by consumer spending/demand pushing prices up. So if we have less, we’ll spend less, and inflation will go down. Needs you to sort him out and follow up with a TikTok like this to reinforce the message.
I will see….
There is a day job to d0o as well
It would be step in the right direction if we could state openly who puts prices up. Owners, and managers of companies small and large put prices up, workers don’t. And workers in the UK have seen their standard of living steadily eroded since 2008.
Well done Richard for finding the time to do this – too!
It took about 7 minutes, all in…
Dear Mr Murphy,
I saw the tweets that you posted on twiter, re shared by a Brit who currently resides in Berlin. While I am writing this comment I have your article on another screen. I would like to point out to you the opinions that you expressed, to which I disagree, paragraph by paragraph.
So, in the second paragraph you mention conventional economic theory. In my opinion Economics is a science, not a theory, and same way there is no New English Medicine, or German Medicine, there is only one science Medicine, or in our case Economics, there is no such thing as conventional economic theory.
In the 8th paragraph you assume an assumption made by the BoE (the UK households have too much cash), In my opinion, BoE does not have this assumption. The assumption is that with 0% interest rate, UK households will borrow money to finance their expenses. When a majority of UK households do that the prices of goods and services will go up, as there will be too much money chasing too few goods, irrespective of the other factors.
In the 15th paragraph you misinterpret your own chart. The 6th decile has a wealth of more than 100k GBP. What your graph says is that half of the Great Britain households have a wealth above 100k GBP, have nots? I don’t think so. Moreover, without providing the data regarding the actual numbers of GB households in each decile this graph showcases one thing only, that different people have different amounts of wealth – shocking!
P27. There is no food shortage in GB, if there was a food shortage GB would not export food. Oil companies make profits because there is an increased demand for oil as a result of more money in the market. Oil companies are posting bigger profits because there is one player that no longer can sell, and they do act accordingly, they just dig, refine and distribute more oil. The price of oil is down btw.
Also, you mention the policy is reckless, I do not think so. The raised interest rates will enable people to save more money and to buy fewer things. The only way this policy will not work, is because it is not as aggressive at it should be.
I am going to follow you on twitter. In the couple of years it will be clear if the policy worked or not. I am looking forward to the moment when in a couple of years I will come back on this blog to check if I was right or wrong.
I read your second paragraph and thought “idiot”
The rest seems to confirm it
Richard – I think you are a refreshing change from the mainstream with some great progressive ideas. Calling someone an idiot is not debate is it, whether you may think it or not I don’t think it is necessary.
Sometimes being succinct is fine
And I have a life
‘Daniel’
Just a few things if I may as I am mightily irritated by your post.
As far as I am aware, all science relies on theory. See this from a well known internet dictionary:
‘A hypothesis is an assumption made before any research has been done. It is formed so that it can be tested to see if it might be true. A theory is a principle formed to explain the things already shown in data. Because of the rigors of experiment and control, it is much more likely that a theory will be true than a hypothesis.’
It seems to me Daniel that you’ve created a hypothesis but you’ve not provided any data so it can’t be a theory which is of a higher order than a hypothesis. This blog on the other hand is full of data in order to create theory – which is part of science – even a dismal science like economics. You are outmatched.
The problem with orthodox economics today Daniel is that it is overtly reductionist. It manages to carry this off by hiding behind complicated mathematic modelling that has no relation to reality at all and uses strange language to describe what it is doing so that people (especially gullible politicians) cannot tell that they are being lied to.
You obviously soak all the orthodox crap up as can be seen by your assertion about interest rates from the BoE. If there were no inflationary effects from BREXIT and the war in Ukraine, your assertion would be correct. But BREXIT and the war in Ukraine are real and add to the complexity of the issue concerning inflation. You are also oblivious – like the dyed in the wool orthodox follower that you are – to the other crises in the UK economy (and also in the States) which is a crisis in wage levels – paid work – against higher living and housing costs forcing people into debt. The interest rates you talk of are only going to add to recession and social misery as debts are paid and consumption is cut back.
You even assert that there are no food shortages in this country yet can you explain to me why is it that I and millions of others have noticed empty shelves in our most popular supermarkets whereas this was previously very rare? Our food exports BTW have suffered since BREXIT came in too, putting companies and jobs at risk.
My verdict on your post Daniel?
Well, only a plonker would come here and parade their ignorance as you have done.
Go somewhere else – please.
Agreed
But I did not have your patience
So why does BBC R4 not have a single economist who queries the BoE strategy? Vicky Price almost did- but from all the coverage you would think everyone agrees rates have to rise – and the only debate is about timing and amount.
It’s true, there is no critique in the mainstream media
Richard, you should start a sweepstake on when the next GE will take place. Good bet would obviously be next May, but could things become so bad that a snap election be called beforehand?
I think October possible
Richard could you by any chance respond directly to Andrew Sentence and El-Erian on twitter, the IEA head as well. They genuinely are behind the current interest rate strangulation and it’s hard for us mere trolls to get our voice across in any meaningful way. People on Twitter tend not to read people’s timeline so it’s better to reply directly. Thanks
I am sorry, but I am finite, and commenting on other people’s comments is a waste of time for me, I am afraid, compared to the impact my own comments can deliver. The read are vastly lower, and there is no guarantee they respond. I rarely do on Twitter. I get so many comments it is simply impossible to do so. They may be the same.
Thank you for your clear, concise and informative articles – written and broadcast-as I understand economics so much better. Would that you had a programme on TV to explain to the great majority what is actually happening .
That is very unlikely to happen!
Richard, in reference to the ‘idiot’, it might just be me but there does seem to be more numbsculls trying to pick holes in your arguments of late. Could be that your message is getting out there more than ever and the fools don’t like it. Here’s hoping.
I suspect so
Being 86 I was raised during the war years a time of shortage colourfully described in the film Hope & Glory. We kids tolerated shortage as we knew nothing different and nurtured by a benevolent Government with MAAF orange juice, cod liver oil capsules, a free half pint of milk per day plus a spoonful of malt we were well nourished on our limited but adequate potions. After the conflict money seemed in abundance but goods to spend it on were limited . Cars were in short supply, giggies also, houses cost around 700 pounds each, beer and spirits were cheap. Mr Dad as a local government employee had free paraffin, free coal free phone , rent free, free water & electricity. Between then and now it seems everyone has become an economic unit to be utilised by usurers & money lenders with the connivance of a capitalist government. A reckoning is on its way painfully .
The reckoning is going to be soon
Being a feral youth I inevitably had a broken nose leading to sinus problems. Then in my teens after competitive swimming in chlorinated swimming baths I was prostrated with intense sinus pain for hours. An operation at age eighteen cured it other than I still have a reaction to chlorine even in small doses. During my thirties showering ~I would snort water in and out to clear a blocked nose & what happened ,the old sinus pain returned. Realizing after a time that I was provoking this pain due to the chlorine in the water even in a small quantity I stopped this habit & the after shower sinus pain stopped. I can still identify chlorine from a long way away. Dare I suggest Richard that you test this by drinking only distilled water for a short time and keeping away from mains water.
Back to business my apologies to Harold Wilson’s memory his was an excellent record of house building in the 60/70’s .
Sounds like me. I had forgotten the malt extract, but now I remember – Virol. The cod liver oil was from a bottle and my mother used to put it on a spoon with the orange juice to make it more palatable. I’ve never know a government as daft as the last few years. I can’t believe there is even a small section of the public cheering on the stupidity of Truss. BoE says it has to deal with inflation. Then Sunak says he has to deal with inflation. But the primary cause of inflation is energy prices, in part by huge profits of energy companies. Therefore you would think dealing with these excess profits would be the first thing to tackle. Putting up interest rates is just like extra inflation for those on low incomes who have to borrow. Richard is right, crash and social unrest coming. I hope to be around long enough to see positive change.
Richard I’m 100% behind you. I only discovered this site a few months ago but have been encouraged by your message. I post many of your articles on Facebook to get the message out to as many as possible. Keep up the good work.
I hope your sinusitis clears up soon. I suffer it from time to time and know how debilitating it can be.
I’m 74 and hope I live long enough to see the changes that are so desperately needed.
With a small civil service pension as well as my state pension I consider myself to be one of the lucky ones, but for how much longer.
I have an RIO mortgage, currently on a fixed rate until the end of 2025. Hopefully interest rates will have come down again before then or I may not be one of the lucky ones!
David, I’m curious about RIO meaning. Is it Retirement Income Option or R….something Interest Only?
Retirement Interest Only. There is no repayment date: the idea is that the principal debt is repaid (presumably out of then capital value of the house) on death (or moving into a care home). I suppose this is a form of equity release, but without the interest rolling up. It reduces the death estate, but frankly most people aren’t not paying inheritance tax. It recognises the truth, that for most people, their home is their only substantial asset.
Would it be reasonable to request that your video, which I was anxious to see, might be placed other than on TikTok (a platform that I refuse to support)?
Thanks
I don’t actually have it….Prospect do