ks.234
Half way to Infinity
I you want a reply you’ll have to go over to Wigwam
By how much should the Bank of England increase interest rates in a traditional monetarist economy
- Thread starter lawrence001
- Start date
lawrence001
Basic Member
If it was the PFM show it would be the MMT wing. In the remainer building. But with a separate annexe for the small ppn of anti EU leftists. Klassik and Le Baron would split their time between the two.
misterdog
Not the canine kind
In the USA where my brother lives (California) food prices have risen by 30 % gas and oil by 50% who you gonna blame ?
No Brexit, No right wing politicians .
Fail.
Oooops.
ks.234
Half way to Infinity
Perhaps you should actually read their posts more carefully as you said you would?
ks.234
Half way to Infinity
No. Brexit might make the looming economic crisis worse, but it was not the cause. Likewise, monetarism is not the cause, but is only likely to make the current crisis worse.
Monetarism assumes that inflation is caused by too much government spending so seeks to resolve the issue by reducing money supply by raising interest rates in the hope of reducing spending from the non government sector.
But the inflation we have now has nothing to do with excess deficit spending, it has to do with external factors, so raising interest rates is the wrong tool for the wrong problem.
Making spending more difficult for the non government sector at the precise time that people need to find the means to spend more to meet rising fuel and food bills is never going to do anything but make things worse for those people with the most need.
Reducing defict spending at a time when we need more deficit spending is madness.
Monetarism is not to blame for our current inflation, but it misdiagnoses the current causes and offers only a single solution that will only make our current situation worse.
lawrence001
Basic Member
I'm not sure it does. It assumes inflation is caused by the money supply growing faster than output.
Is it that that don't believe in MMT? Or that they haven't made mixed comments about the benefits of EU membership?
ks.234
Half way to Infinity
Which ultimately comes down to reducing the deficit or raising interest rates, or both
Why are you asking me questions about other members? You know where they live now afterall? What not ask them yourself?
Minio
Kind of Sort of Not really...
Because raising interest rates affects the poorest.
It has a much smaller effect on those that have the spending power which supposedly causes inflation.
sean99
pfm Member
Inflation is falling in the UK and US - so I'm not sure we can conclude that raising interest rates has not worked, unless you believe that it's coincidence that inflation is falling (which it might well be, at least partially, as supply chains recover).
Raising interest rates, by itself, was never going to be sufficient when both the US and particularly the UK have a dire shortage of housing, particularly in places where people can find jobs. However this doesn't mean that interest rates should not have been raised.
Minio
Kind of Sort of Not really...
I believed the cost of living crisis was born from the inflation that was born from the supply and demand imbalance of fuel prices that are paid by everyone in heating bills and food prices.
The USA had higher inflation than the UK at the beginning of Ukraine war period.
It now has lower inflation because their domestic natural gas and petroleum production, per person, is several times higher than that of the UK.
Unfortunately we cannot run delivery trucks and fire up boilers on wind and sunshine.
The USA had higher inflation than the UK at the beginning of Ukraine war period.
It now has lower inflation because their domestic natural gas and petroleum production, per person, is several times higher than that of the UK.
Unfortunately we cannot run delivery trucks and fire up boilers on wind and sunshine.
sean99
pfm Member
I feel that the sudden spike in fuel and food prices was just the straw that broke the camel's back. The underlying problem is the 25 year inflation in housing costs, coupled with wages that were falling in real terms because the UK was becoming less productive relative to its peer economies.
Richard Lines
pfm Member
ks.234
Half way to Infinity
QE did not cause inflation
ks.234
Half way to Infinity
Yes, agreed, but inflation of housing costs has a 50 year history, not just 25. However, it does undoubtedly contribute to inflation. In which case anti inflationary measures should be targeted at those who have profited from house price inflation, not those who have suffered it consequences.
Likewise with wages, raising interest rates presume that wage demand is the problem, but if wages are falling in real terms, then wage demands cannot be the problem and again, anti inflationary measures should be aimed at those profiting from the problem.
Minio
Kind of Sort of Not really...
The world is currently behind the curve on that, but I like the optimism.
Minio
Kind of Sort of Not really...
If you want to see thousands of new houses take a trip along the Norwich Northern Distributor Road and surrounding areas that were once fields of poppies.
I’m not sure where the jobs are (working from home?) or if there is much impact on the housing market now that prevailing interest rates are bearing down on the prices.
I’m not sure where the jobs are (working from home?) or if there is much impact on the housing market now that prevailing interest rates are bearing down on the prices.