The reality that the Bank of England and the Treasury are, in combination, seeking to create the biggest recession in UK living memory is seeping through into the mainstream media.<\/p>\n
This was by Larry Elliott in the Guardian<\/a> yesterday:<\/p>\n If there was really such a thing as a fiscal black hole, it might be a good idea to fill it, but the idea that Britain is about to sucked into a vortex because it is running a budget deficit is a fairytale. A country that has its own currency, as the UK does, can print money to cover its spending. While it is never admitted, the Bank of England\u2019s quantitative easing \u2013 large-scale buying of bonds \u2013 effectively funded government deficits during both the global financial crisis and the pandemic. There is no black hole because there is no way the government can ever run out of money.<\/p><\/blockquote>\n Larry added:<\/p>\n But even though it should be obvious that more austerity will make structural economic problems worse, the UK is firmly in the grip of a technocratic, economic orthodoxy that insists budgets must be balanced, inflation tamed and markets kept sweet. The consensus among the commentariat is that there is no real alternative to what the Bank and the Treasury are doing. Credibility is the priority.<\/p>\n This argument has been deployed before. It was used in 1925, when the consensus agreed there was no alternative to putting the pound back on the\u00a0gold standard<\/a>. It was used in 1990, when the consensus was that there was no alternative to joining the\u00a0exchange rate mechanism<\/a>. Eventually, the \u201cno gain without pain\u201d approach was seen to lack credibility, and abandoned. But only after immense damage was done.<\/p>\n<\/blockquote>\n My colleague, Danny Blanchflower gets significant credit for the views we are promoting in the article.<\/p>\n The Guardian editorial this morning reinforces this theme:<\/p>\n Without mechanisms to keep prices going higher, they will fall. This is what happened in\u00a02009<\/a>\u00a0after the last big shock. There\u2019s no sign that both price- and wage-setters are simultaneously driving up their demands. But there are distributional and political choices in how inflation is brought down. The Bank places an oppressive thumb on the scale of economic justice, to guarantee the continued \u2013 and baleful \u2013 dominance of extractive interests in the British economy. As the central banks\u2019\u00a0annual report<\/a>\u00a0shows, they think that if the rising cost of goods causes inflation, then workers, not companies, should pay for it with lower pay. The Bank of England should be stopped in its tracks, not left to ride roughshod over the public.<\/p><\/blockquote>\n I hope Labour are listening. They need to, very urgently.<\/p>\n","protected":false},"excerpt":{"rendered":"\n