The Premiership of Mary Elizabeth Truss.Sept 2022 - Oct 2022

[Ponty]

Richard Murphy for Chancellor

I’m sure he’d be great in a hard left govt, he certainly seems to get very involved in politics for an economist, so why not! He’d keep IR’s on the floor and not worry about the currency (it’s value or how much is printed) or inflation. Get him in!

 

[Tony L]

The one thing we do know about growth is 12 years of Tory rule is clearly its antidote. Twelve years where we’ve seen the UK credit rating downgraded multiple times, the £ halve in value against the dollar, our GDP collapse from 6th globally to 20th etc. We certainly know what doesn’t work.

 

[Ponty]

Correct, 12 years of ZIRP didn’t work.

 

[paulfromcamden]

he certainly seems to get very involved in politics for an economist

He's a retired chartered accountant.

In a response to a question raised in the House of Commons, Labour's Shadow Chancellor John McDonnell stated with regard to Murphy "He is not the economic adviser and never has been, because we doubted his judgment, unfortunately. He is a tax accountant, not an adviser. He is actually excellent on tax evasion and tax avoidance, but he leaves a lot to be desired on macroeconomic policy"

https://en.wikipedia.org/wiki/Richard_Murphy_(tax_campaigner)#Involvement_in_"Corbynomics"

 

[matthewr]

Correct, 12 years of ZIRP didn’t work.

You are now going to explain why this 12 year period of artificially low interest rates didn't cause *any* inflation for 11 years aren't you?

 

[Heckyman]

Trussonomics is faith based ,no evidence no facts.

In fact there's quite a lot of evidence — that unfunded tax cuts don't work! Hence the market reaction.

There's a couple of things that might help that noises have been made about. Taking on NIMBY-ism and increasing immigration. But hard to see how they get public support for that.

Reducing the cost of energy would be important too, but even Biden is struggling there. There seems no end in sight to the war. Whoever sabotaged Nord Stream wants to make sure there's little prospect of peace.

 

[matthewr]

He's a retired chartered accountant.

That occupation well known for being full of radical communist revolutionaries.

 

[laughingboy]

Correct, 12 years of ZIRP didn’t work.

That's a shirking of responsibility, if ever I saw one. The Bank of England is independent and set a monetary policy that could have enabled growth. ZIRP would have ended sooner if there had been growth.

The question is, in February 2012, when Vince Cable wrote his letter to Cameron and Osborne about the government having no long-term vision for growth (BBC), what did they do about it? Cable warned them that they were not 'thinking a decade or two ahead, beyond the electoral angle'. Which brings us to now: the fruits of their inaction.

 

[Ponty]

You are now going to explain why this 12 year period of artificially low interest rates didn't cause *any* inflation for 11 years aren't you?

Presumably ignoring colossal asset price inflation powered by ZIRP, which is now going to bite a lot of folks on the bum. That’s what sucked money out of the economy, everyone loading up on more and more debt to leverage against ever increasing asset values.

 

[sideshowbob]

In The Times today, Nadine Dorries (yes, *that* Nadine Dorries) has accused Truss of “lurching to the right”.

 

[Ponty]

That's a shirking of responsibility, if ever I saw one. The Bank of England is independent and set a monetary policy that could have enabled growth. ZIRP would have ended sooner if there had been growth.

The question is, in February 2012, when Vince Cable wrote his letter to Cameron and Osborne about the government having no long-term vision for growth (BBC), what did they do about it? Cable warned them that they were not 'thinking a decade or two ahead, beyond the electoral angle'. Which brings us to now: the fruits of their inaction.

Politicians aren’t interested in long term, the next election is about as far as they’ll look, all of them. Every time there was a wobble, they cut IR’s to prop up the sacred cow of house prices, because high house prices win elections. To think the BoE acted wholly independently at all times is stretching the imagination IMHO.

 

[ff1d1l]

I’m sure he’d be great in a hard left govt, he certainly seems to get very involved in politics for an economist, so why not! He’d keep IR’s on the floor and not worry about the currency (it’s value or how much is printed) or inflation. Get him in!

You think he's better than the current guy?

 

[matthewr]

Presumably ignoring colossal asset price inflation powered by ZIRP, which is now going to bite a lot of folks on the bum. That’s what sucked money out of the economy, everyone loading up on more and more debt to leverage against ever increasing asset values.

Sorry, this is just economically illiterate nonsense. You can't say the price of bread and milk didn't go up because everyone was investing in the stock market.

Also a problem of excess capital almost by definition cannot lead to people taking on debt to pay for assets.

 

[matthewr]

ZIRP would have ended sooner if there had been growth.

Exactly. And specifically it would have ended sooner when the growth started to push inflation.

 

[laughingboy]

Presumably ignoring colossal asset price inflation powered by ZIRP, which is now going to bite a lot of folks on the bum. That’s what sucked money out of the economy, everyone loading up on more and more debt to leverage against ever increasing asset values.

That's a very small part of the picture, and you've presented no evidence for that. The other features of the last decade have been stagnant wages (wages in Dec 2019 were still lower than before the 2008 crash - Politics Home) and low productivity (Guardian). Not everything has to do with ZIRP, even if you are right about its effects.

 

[Ponty]

Sorry, this is just economically illiterate nonsense. You can't say the price of bread and milk didn't go up because everyone was investing in the stock market.

Also a problem of excess capital almost by definition cannot lead to people taking on debt to pay for assets.

Tell that to the scores of folks who will soon be in negative equity on the house with a soaring mortgage to pay. They thought ZIRP was here to stay so loaded up to the max. A global pandemic which brings the world to its knees and house prices go up 20%. Only in a fantasy world, which is what we’ve been in for far too long.

 

[farfromthesun]

"We asked 100 people to name something that grows. You said pie...."

 

[matthewr]

Tell that to the scores of folks who will soon be in negative equity on the house with a soaring mortgage to pay. They thought ZIRP was here to stay so loaded up to the max. A global pandemic which brings the world to its knees and house prices go up 20%. Only in a fantasy world, which is what we’ve been in for far too long.

Obviously, the economy is not the housing market.

And again you need to put forward your alternate policy. Interest rates are stuck at zero. We have a decade+ of near zero growth. What is your suggested monetary policy?

Note, by the way, if you wanted fiscal policy to take up the slack as we reached the limits of monetary policy welcome to the club you are now a dangerous lefty.

 

[Jim Audiomisc]

People may find some of this interesting as a sidelight on what he have now reached in terms of Government economic 'policy' and the impact of what the press present as reality, etc.
https://www.bbc.co.uk/programmes/m001cdnt

 

[laughingboy]

Obviously, the economy is not the housing market.

And again you need to put forward your alternate policy. Interest rates are stuck at zero. We have a decade+ of near zero growth. What is your suggested monetary policy?

Note, by the way, if you wanted fiscal policy to take up the slack as we reached the limits of monetary policy welcome to the club you are now a dangerous lefty.

Yes, this is the key point. The argument that interest rates should have been higher requires an alternative path: either massive deficit spending would have been required to support the economy (printer go brrr, brrr - fine by me), or the economy would have crashed (remember we almost got a double-dip recession in 2012, even with ZIRP) probably to a degree unmatched in our lifetimes. Bye-bye businesses, banks and households.