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Post by graham on Jul 19, 2023 11:29:33 GMT
Yes of course. it depends how you do it and it’s been explained many times. Printing heaps of money following the banking crisis did not result in a great deal of general inflation, despite dire warnings from household economists. It only stoked inflation where supply was constrained, e.g. housing. (They could have done more to avoid that - increase supply or direct the money elsewhere, but they wanted to let house price inflation happen electorally). The cause of recent inflation is not too much money sloshing about, it is external shocks raising the price of energy and food. Curtailing the money supply will not fix this. Furthermore, the money supply is already falling and we risk recession. If you are worried about inflation, the key is to invest in things that will reduce inflation. Like cheaper energy. Cheaper housing etc. Exactly - the supply of cheap food and fuel is constrained, hence the current inflation; your idea will simply make that worse. Remember how Truss' decision to make huge policy shifts funded by borrowing went? She was out of office in 40 days. That was largely because she was seeking to rely on Borrowing to fund tax cuts. Earlier increases in Borrowing to fund higher Public Spending did not have that effect at all - eg the Furlough scheme. Kwarteng had also told us 'there is more to come.' |
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c-a-r-f-r-e-w
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Post by c-a-r-f-r-e-w on Jul 19, 2023 11:29:49 GMT
Yes of course. it depends how you do it and it’s been explained many times. Printing heaps of money following the banking crisis did not result in a great deal of general inflation, despite dire warnings from household economists. It only stoked inflation where supply was constrained, e.g. housing. (They could have done more to avoid that - increase supply or direct the money elsewhere, but they wanted to let house price inflation happen electorally). The cause of recent inflation is not too much money sloshing about, it is external shocks raising the price of energy and food. Curtailing the money supply will not fix this. Furthermore, the money supply is already falling and we risk recession. If you are worried about inflation, the key is to invest in things that will reduce inflation. Like cheaper energy. Cheaper housing etc. Exactly - the supply of cheap food and fuel is constrained, hence the current inflation; your idea will simply make that worse. Remember how Truss' decision to make huge policy shifts funded by borrowing went? She was out of office in 40 days. Reducing the cost of energy will not make energy inflation worse! (Unless you come up with some crazy way of doing it). And Truss got into trouble by making more open-ended commitments that weren’t subject to analysis and were hard to predict. Not because she wanted to spend money. |
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pjw1961
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Post by pjw1961 on Jul 19, 2023 11:30:26 GMT
Do you believe that in the current state of the economy the BoE can turn on the magic money tree of QE without stoking rampant inflation, driving up interest rates and crashing the pound? Because if you do you will be in a tiny minority. The Monetary transmission system is far from clear. We do know ,however, that the reliance on Quantitative Easing on a massive scale did not produce the surge in inflation across the economy predicted by Monetarist economists - other than in the housing and equity markets.Higher inflation came later via the combined effects of Covid, the Ukrainian war and Brexit. It didn't then - the question is what would it do now, in the very different economic conditions of 2023? |
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Mr Poppy
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Post by Mr Poppy on Jul 19, 2023 11:42:42 GMT
Not our polity but polling has now stopped ahead of Spanish election so below is YG's final call. Median estimate sub-totals:
Centre Right + Far Right: 133 + 42 = 175
Centre Left + Left Wing: 113 + 34 = 147
With 176 seats needed to form a govt.
A RW coalition including the formerly toxic Vox, propped up with some regional RoC NATS seems the most likely outcome. Comparisons to UK are risky of course but if UK was PR and folks wanted rid of a LW govt then it's certainly plausible that UK could have CON + RUK (or even further RW), possibly propped up by DUP if the numbers were close. Whilst CON are 'Billy no mates' then with the chance to get back into #10 then they probably would be about as fussy as the various Centre-Right parties in mainland Europe and I'm sure RUK would love a few red briefcases (as per LDEM after GE'10). Of course Starmer is "long opposed" to PR and pretty obvious why given the risk LAB would split and Starmer-LAB might have to rely on a genuine LW party to have the confidence of HoC rather than simply purge the LW from LAB and rely on FPTP to secure RW-LAB majorities
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Post by moby on Jul 19, 2023 11:49:53 GMT
1. A few examples on UKPR2 of 'Green-Lefties' that appreciate the need to lower population growth but I did note the partisan split in the polling 2. They are pushing the 'Reform not Spend'* approach - like we haven't tried that before?!? Whilst I was against most of Corbyn's "radical" approach and Truss was wrong on her timing and stupid not to realise that then we do need some changes. Sadly I expect LAB will just change the colour of the sticking plasters but wonder if at some point LAB's lack of ambition will 'cut-thru' all the immediate concerns and the high loyalty of LAB'19 voters will start to slide. Current expectations of a change of colour on the deckchairs:
* "Labour will rebuild broken Britain with big reforms, not big spending. That’s a promise"www.theguardian.com/commentisfree/2023/jul/15/labour-approach-britain-failed-tory-rebuildNot a ringing endorsement or expression of hope is it ? But-what does that say about Cons ? On the Starmer quote-I was just smiling at the Blair Koolaid he is drinking. It will drive some on the left to self immolation ! Nothing in those numbers that should suprise anyone imo. The public mood is cynical and negative about politics and Govmt. Do people really think Starmer could sort Labour out after a crushing defeat, make them electable again in the eyes of the voting public, then get a reasonable lead in the polls while filling people with optimism and hope with a range of radical policies that don't bankrupt us?  ...Not even God could do that one. Nonetheless he's achieving some of that though and the jury is out on the rest. No wonder an increasingly desperate Mr Poppy is spinning negative narratives designed to do CCHQ's bidding to poke his new left allies into action. It's almost as if the last four years of crushingly bad and corrupt Govmt didn't happen! |
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Post by neilj on Jul 19, 2023 11:49:57 GMT
Long term councillor Susan Hall selected as London mayoral candidate for the tories. Following the storming of the United States Capitol by supporters of Donald Trump in an attempted coup inJanuary 2021, Hall compared the attack to other British politicians' opposition to Brexit. Because everyone remembers when remain supporters stormed Westminster intent on stopping the Brexit confirmation! So she's bonkers then! Should fit in perfectly. Seems even the tories aren't impressed with her She also praised the Truss budget, so I can understand why the tories are disappointed in her |
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Post by moby on Jul 19, 2023 11:51:27 GMT
No what Starmer and the 'Blairites' have been doing is making us competent and electable again in the eyes of the public. Tories did that. Look at the polling. Just as they gave Labour a big boost for Blair. Nonsense, it was the public. |
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Post by shevii on Jul 19, 2023 11:57:19 GMT
No what Starmer and the 'Blairites' have been doing is making us competent and electable again in the eyes of the public. Every single time the polls have widened it is because of something the Tories have done, not any steady move in Labour's favour as people get used to them. Tories crashed over Partygate, then improved a bit, crashed over Truss, then improved a bit and then dropped again when Partygate and Johnson became headlines. Similar was seen during Covid good news/bad news. Where I would agree with you is that Starmer's positioning means he can attract deep into Tory voters where Corbyn wouldn't have. However that's very different from looking competent or full of the ideas that Blair had. In fact we have ratings from yougov for Starmer being "competent" which are currently slightly negative- 37 not competent and 34 competent and 29 not a clue. yougov.co.uk/topics/politics/trackers/is-keir-starmer-incompetentSo yes- only 34% of the country currently think he is competent which was meant to be what he was selling himself as, along with "foresnsic" - that's a smiley not a typo :-). |
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Post by Deleted on Jul 19, 2023 11:59:29 GMT
Long term councillor Susan Hall selected as London mayoral candidate for the tories. Following the storming of the United States Capitol by supporters of Donald Trump in an attempted coup inJanuary 2021, Hall compared the attack to other British politicians' opposition to Brexit. Because everyone remembers when remain supporters stormed Westminster intent on stopping the Brexit confirmation! So she's bonkers then! Should fit in perfectly. Seems even the tories aren't impressed with her She also praised the Truss budget, so I can understand why the tories are disappointed in her It would appear that the Political Editor of The Sun is not impressed !
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Mr Poppy
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Post by Mr Poppy on Jul 19, 2023 12:01:08 GMT
Do you believe that in the current state of the economy the BoE can turn on the magic money tree of QE without stoking rampant inflation, driving up interest rates and crashing the pound? Because if you do you will be in a tiny minority. Yes of course. it depends how you do it and it’s been explained many times. Printing heaps of money following the banking crisis did not result in a great deal of general inflation, despite dire warnings from household economists. It only stoked inflation where supply was constrained, e.g. housing. (They could have done more to avoid that - increase supply or direct the money elsewhere - but they wanted to let house price inflation happen electorally). The cause of recent inflation is not too much money sloshing about, it is external shocks raising the price of energy and food. Curtailing the money supply will not fix this. Furthermore, the money supply is already falling and we risk recession. If you are worried about inflation, the key is to invest in things that will reduce inflation. Like cheaper energy. Cheaper housing etc. (And it’s not necessarily a minority view, unless a majority were against energy subsidies etc.) The problem with "parallel universe" analysis is that we'll never know EG1 After the banking crisis then we faced a 'debt deflation' spiral and the inflation caused by QE might have averted a much nastier outcome. IMO they kept broader QE going for far too long and the 'unintended' (but foreseeable) consequences meant the cure for avoiding deflation created a new sickness (eg BTL and house price inflation due to collapse in annuity rates and BTL looking such a #nobrainer way to achieve high, inflation-ish linked income). EG2 If we'd build a load more houses then we probably wouldn't have stoked house price inflation but hard to say about other inflation. Also in the 'short-term' then increasing demand (eg for builders and materials to build a load more houses) would likely stoke inflation. IMO the house price bubble could have been avoided by controlling the money supply but all govts like to keep the 'good times' rolling. I was a fan of "Green QE" and done right then we could still do a bit of that (ie I agree with the bit in bold). All it would need is a tweak of the 'fiscal rules'. Timing not ideal yet but once inflation is "under control" then some short-term boost to demand to reduce future energy usage and energy prices would be a very good idea IMO. EG £28bn per year "invested" in reducing govt spending on heating public buildings and reducing CoL to increase disposable incomes and create a multiplier effect to boost economy could be "sold" to the market as a good investment. BoE only acting as 'buyer of last resort' via yield curve targeting of long gilts (as they did in the LDI crisis to great effect). I appreciate the comparison of HMG to household is flawed but if a household can look at borrowing to invest in saving money via improved insulation then an HMG can certainly look to do that. Done right it shouldn't impact the household's ability to borrow and hence should not effect HMG's ability to borrow money. CON are doing a tiny bit of that but LAB could move a lot faster if they just tweak the financial rules and I hope no one is pretending they can't do that. |
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Post by leftieliberal on Jul 19, 2023 12:02:40 GMT
Bewildered that some seem to have swallowed the fiscal responsibility stuff on the 2 child benefits cap. Reversing it would reportedly cost £1.3bn - that's an absolute drop in the ocean. If Labour can't commit to something like that they'll not commit to anything meaningful at all. Just feels like the sort of policy that played well with their beloved focus groups. Given my population control views I'm less instinctively bothered by this particular policy but also recognise that child poverty is something we cannot allow to happen so however you do it you need to be supporting 3rd to 20th children. Also, without having looked at the research, some are saying this makes no difference to whether people have more than two children or not, so it's an ineffective policy as well as being floated that this costs the state more money in other ways. The problem with this "there is no money left" line is that you can create money and you also make your spending choices. CGT equalised with Income Tax raises £16 billion and is more than fair- if anything unearned income should be at a higher rate. Keeping nuclear weapons is an off the scale cost. The choices an incoming Labour government can make are very much limited but they still have choices and currently they are just saying "no money left" and that's it. Here I am on the point of agreeing with you and you make this absurd statement. The annual in-service costs of the UK's strategic nuclear deterrent, including the Atomic Weapons Establishment and the Nuclear Warhead Sustainment Capability Programme, basing, decommissioning, and disposals, are estimated at 6% of the defence budget (£3 billion for 2023/24 based on current planned expenditure). See commonslibrary.parliament.uk/research-briefings/cbp-8166/If I felt I could trust US Presidents any longer, then I might argue for spending that 6% on conventional weapons, but it's not off-the-scale on anyone's terms. |
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c-a-r-f-r-e-w
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Post by c-a-r-f-r-e-w on Jul 19, 2023 12:08:35 GMT
Tories did that. Look at the polling. Just as they gave Labour a big boost for Blair. Nonsense, it was the public. Oh, so if it’s the public then you can’t credit Starmer either. But of course polling indicates a response to particular things, like the calamity of Truss. Starmer’s actions seem more tailored to the views of swing voters in marginals than the general electorate anyway. For example, he has rowed back on nationalisating utilities, but even a lot of Tories now support that. (It’s only 8% of the public who are against, most of them on this board!) |
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c-a-r-f-r-e-w
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Post by c-a-r-f-r-e-w on Jul 19, 2023 12:14:14 GMT
Yes of course. it depends how you do it and it’s been explained many times. Printing heaps of money following the banking crisis did not result in a great deal of general inflation, despite dire warnings from household economists. It only stoked inflation where supply was constrained, e.g. housing. (They could have done more to avoid that - increase supply or direct the money elsewhere - but they wanted to let house price inflation happen electorally). The cause of recent inflation is not too much money sloshing about, it is external shocks raising the price of energy and food. Curtailing the money supply will not fix this. Furthermore, the money supply is already falling and we risk recession. If you are worried about inflation, the key is to invest in things that will reduce inflation. Like cheaper energy. Cheaper housing etc. (And it’s not necessarily a minority view, unless a majority were against energy subsidies etc.) EG2 If we'd build a load more houses then we probably wouldn't have stoked house price inflation but hard to say about other inflation. Also in the 'short-term' then increasing demand (eg for builders and materials to build a load more houses) would likely stoke inflation. IMO the house price bubble could have been avoided by controlling the money supply but all govts like to keep the 'good times' rolling. Yes, if you invest in housing you might get a short term inflationary pressure, but only where supply is constrained. And if it’s something optional that is constrained, it is unlikely to be a big factor. You should be trying to make sure you have enough supply of essentials to keep prices down anyway. But anyway, if the investment does result in some excess money in circulation causing a bit of inflation short-term, you can bleed it off with some judicious short-term taxation to leave the money supply back where it was. But with the benefit in a while of the extra cheaper housing or wind turbines or whatever to reduce inflation. |
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Mr Poppy
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Post by Mr Poppy on Jul 19, 2023 12:16:11 GMT
Nonsense, it was the public. Oh, so if it’s the public then you can’t credit Starmer either. But of course polling indicates a response to particular things, like the calamity of Truss. Starmer’s actions seem more tailored to the views of swing voters in marginals than the general electorate anyway. For example, he has rowed back on nationalisations, but even a lot of Tories now support that. (It’s only 8% who are against, most of them on this board!)I'm not opposed to some nationalisations (eg Bulb could have stayed as a State run company). I have my concerns about HMG running monopolies but that is due to the risk of militant trade unions prioritising their workers at the expense of taxpayers/public. With low trade union power (eg ability to strike when providing an essential service) then I'm not opposed to HMG running monopolies (eg perhaps a regional water company if they go bankrupt and HMG can pick them up on the cheap - noting the previous discussion that £1 is not necessary cheap if you're then liable for all the debt). At the moment then I think it is fair to say the private sector has too much power in certain sectors where they operate as a monopoly or cartel. Full state ownership of everything would go way too far the other way but a "third way" would be a mix of private and public with each side keeping the other side 'honest'. |
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c-a-r-f-r-e-w
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Post by c-a-r-f-r-e-w on Jul 19, 2023 12:18:52 GMT
Yes of course. it depends how you do it and it’s been explained many times. Printing heaps of money following the banking crisis did not result in a great deal of general inflation, despite dire warnings from household economists. It only stoked inflation where supply was constrained, e.g. housing. (They could have done more to avoid that - increase supply or direct the money elsewhere - but they wanted to let house price inflation happen electorally). The cause of recent inflation is not too much money sloshing about, it is external shocks raising the price of energy and food. Curtailing the money supply will not fix this. Furthermore, the money supply is already falling and we risk recession. If you are worried about inflation, the key is to invest in things that will reduce inflation. Like cheaper energy. Cheaper housing etc. (And it’s not necessarily a minority view, unless a majority were against energy subsidies etc.) I appreciate the comparison of HMG to household is flawed but if a household can look at borrowing to invest in saving money via improved insulation then an HMG can certainly look to do that. Done right it shouldn't impact the household's ability to borrow and hence should not affect HMG's ability to borrow money. CON are doing a tiny bit of that but LAB could move a lot faster if they just tweak the financial rules and I hope no one is pretending they can't do that. Yes indeed, you can usefully borrow to invest and leave yourself better off under household economics which seems to elude some household economists. But you tend not to be able to print your own money or get multiplier effects due to money recirculating (unless you try your own household currency or summat) |
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Mr Poppy
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Post by Mr Poppy on Jul 19, 2023 12:23:00 GMT
EG2 If we'd build a load more houses then we probably wouldn't have stoked house price inflation but hard to say about other inflation. Also in the 'short-term' then increasing demand (eg for builders and materials to build a load more houses) would likely stoke inflation. IMO the house price bubble could have been avoided by controlling the money supply but all govts like to keep the 'good times' rolling. Yes, if you invest in housing you might get a short term inflationary pressure, but only where supply is constrained. And if it’s something optional that’s unlikely to be a big factor. You should be trying to make sure you have enough supply of essentials to keep prices down. But anyway, if the investment does result in some excess money in circulation causing a bit of inflation short term you can bleed it off with some judicious short-term taxation. As per our discussion t'other day then there are a variety of ways HMG could "bleed it (inflation) off" but I think we broadly agree and done right then the 'good times' could keep rolling for longer without the wild speculation in property or other asset classes that leads to higher risk of boom+bust. |
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Post by neilj on Jul 19, 2023 12:26:21 GMT
Seems even the tories aren't impressed with her She also praised the Truss budget, so I can understand why the tories are disappointed in her It would appear that the Political Editor of The Sun is not impressed !
She sounds delightful...fat shaming other women |
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Post by moby on Jul 19, 2023 12:26:57 GMT
No what Starmer and the 'Blairites' have been doing is making us competent and electable again in the eyes of the public. Every single time the polls have widened it is because of something the Tories have done, not any steady move in Labour's favour as people get used to them. Tories crashed over Partygate, then improved a bit, crashed over Truss, then improved a bit and then dropped again when Partygate and Johnson became headlines. Similar was seen during Covid good news/bad news. Where I would agree with you is that Starmer's positioning means he can attract deep into Tory voters where Corbyn wouldn't have. However that's very different from looking competent or full of the ideas that Blair had. In fact we have ratings from yougov for Starmer being "competent" which are currently slightly negative- 37 not competent and 34 competent and 29 not a clue. yougov.co.uk/topics/politics/trackers/is-keir-starmer-incompetentSo yes- only 34% of the country currently think he is competent which was meant to be what he was selling himself as, along with "foresnsic" - that's a smiley not a typo :-). For you it's all about what 'the tories have done'.... but that is only part of the picture imo, you are totally ignoring the other side of the equation; Starmers first job was to make Labour more united and competent enough to look like an alternative Govmt. That takes time, especially when you look at the numbers Labour dipped to in 2019. To expect better competency numbers for Starmer at this stage, given the context of the state we are in is rather unrealistic. Labours current task is look like a credible alternative Govmt in a country where the economy is badly damaged, confidence is low and the international markets are watching. Blair had more room, the economy had already started to recover and we were in the EU. The legacy Starmer will inherit is terrible in comparison, a war in Europe, fallout from a pandemic, a divided country, and the loss of political influence abroad and a damaged economy as a result of brexit. Yet everybody feels a victim and everyone will want a piece of the shrinking cake. His task will be herculean! He therefore has no option but to create some time and space by pushing back on expectations and promises; he can't say anything that can be used against him by the tories either, especially with another year to go. It is absolutely no suprise that his polling numbers are not that favourable at present.
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c-a-r-f-r-e-w
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Post by c-a-r-f-r-e-w on Jul 19, 2023 12:34:15 GMT
Yes, if you invest in housing you might get a short term inflationary pressure, but only where supply is constrained. And if it’s something optional that’s unlikely to be a big factor. You should be trying to make sure you have enough supply of essentials to keep prices down. But anyway, if the investment does result in some excess money in circulation causing a bit of inflation short term you can bleed it off with some judicious short-term taxation. As per our discussion t'other day then there are a variety of ways HMG could "bleed it (inflation) off" but I think we broadly agree and done right then the 'good times' could keep rolling for longer without the wild speculation in property or other asset classes that leads to higher risk of boom+bust. Pretty much Trev. It isn’t so much a case of whether we invest or not, but a case of what’s the best way of doing it to get the best return, and avoid ill-effects like inflation, environmental damage, inequality, market eff-ups a la Truss etc. |
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Post by pjw1961 on Jul 19, 2023 12:51:22 GMT
Exactly - the supply of cheap food and fuel is constrained, hence the current inflation; your idea will simply make that worse. Remember how Truss' decision to make huge policy shifts funded by borrowing went? She was out of office in 40 days. Reducing the cost of energy will not make energy inflation worse! (Unless you come up with some crazy way of doing it). And Truss got into trouble by making more open-ended commitments that weren’t subject to analysis and were hard to predict. Not because she wanted to spend money. I have good news for you on increasing energy supply to reduce cost point. In the same interview where Reeves was lamenting the state of the economy she said: "Labour would invest in new nuclear and renewables and insulating people’s homes to bring down energy bills, unpick holes in the UK’s “botched Brexit deal” and do more to help people back into the labour market." www.theguardian.com/politics/2023/jul/19/rachel-reeves-labour-bedroom-tax-child-benefit-cap |
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Post by steve on Jul 19, 2023 12:51:24 GMT
@trevor
If that transpires there's no way for PP to form a majority administration with VOX as the other available partners either wouldn't work with VOX or in the case of the Catalan or Basque nationalist parties neither PP or Vox would work with them.
That should be fun
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Post by c-a-r-f-r-e-w on Jul 19, 2023 12:54:47 GMT
Reducing the cost of energy will not make energy inflation worse! (Unless you come up with some crazy way of doing it). And Truss got into trouble by making more open-ended commitments that weren’t subject to analysis and were hard to predict. Not because she wanted to spend money. I have good news for you on increasing energy supply to reduce cost point. In the same interview where Reeves was lamenting the state of the economy she said: "Labour would invest in new nuclear and renewables and insulating people’s homes to bring down energy bills, unpick holes in the UK’s “botched Brexit deal” and do more to help people back into the labour market." www.theguardian.com/politics/2023/jul/19/rachel-reeves-labour-bedroom-tax-child-benefit-capYes and if you recall, I agree with it. It’s the delay that’s at issue. (I even think Starmer has a point about the NHS, which you happen to disagree with). p.s. it’s not just about increasing supply, but doing things like sorting those contracts that pin the price of leccy to gas, when the leccy is actually produced for a lot less. Which may be another benefit of building new generation, with new contracts. (If the private sector are insisting on the dodgy contracts though, then we may need more state involvement in the market). |
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Post by steve on Jul 19, 2023 12:55:47 GMT
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Post by steve on Jul 19, 2023 13:00:11 GMT
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Post by Deleted on Jul 19, 2023 13:54:53 GMT
Earlier increases in Borrowing to fund higher Public Spending did not have that effect at all - eg the Furlough scheme. The Pandemic response spending was funded entirely by QE. The last tranch of additions to the Asset Purchase Programme were in 2020-£450bn. A figure approximating to the total Pandemic response spend. By this stage QE had finally transitioned from a Liquidity stimulus in response to a global Credit Freeze, to blatant funding of Government spending. Indeed the Governor of the Bank of England made it explicitly clear that had UK Treasury faced market sentiment then AS THEY DO NOW, they would have failed to raise the funds .:- "Laying bare the scale of the national emergency at the early stages of the pandemic, Andrew Bailey said the government would have struggled to finance the running of the country without support from the central bank. Asked in an interview with Sky News what would have happened had the Bank not intervened, Bailey said: “I think the prospects would have been very bad. It would have been very serious.” “I think we would have a situation where, in the worst element, the government would have struggled to fund itself in the short run.” G JUne 2020 The HoL Economic Affair Committee , in their report "Quantitative easing: a dangerous addiction?" ( July 2021) said that the only QE effect which had any certainty was an increase in wealth disparity. These remarks feature in its conclusions :- "We sympathise with the Bank of England that it has had to meet its mandate in an economic environment in which its independence has been more difficult to define compared to when operational independence was granted in 1997. Dealing with the economic consequences of the COVID-19 pandemic means the Bank necessarily working more closely with HM Treasury to ensure policy is complementary. However, HM Treasury has not helped to clarify its relationship with the Bank in its ambiguous answers to us. Furthermore, adding additional roles to the Bank risks it losing focus on its primary responsibility to control inflation." "While the evidence on quantitative easing’s economic impact is mixed, we note that central bank research tends to show quantitative easing in a more positive light than the academic literature. We conclude, on balance, that the evidence shows quantitative easing has had limited impact on growth and aggregate demand over the last decade. To stimulate economic growth and aggregate demand, quantitative easing is reliant on a series of transmission mechanisms that operate primarily in and through financial markets. There is limited evidence to suggest that these increase bank lending or investment, or boost consumer spending by wealthy asset holders. " "Quantitative easing’s precise effect on inflation is unclear, and the magnitude of recent quantitative easing on future inflation has not yet been established. However, we heard that the latest round of quantitative easing could have an inflationary effect as it coincides with substantial government spending, bottlenecks in supply, and a recovery in demand after the COVID-19 pandemic." ( ie-that last tranche of QE probably WAS inflationary ) |
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Post by graham on Jul 19, 2023 14:09:05 GMT
Earlier increases in Borrowing to fund higher Public Spending did not have that effect at all - eg the Furlough scheme. The Pandemic response spending was funded entirely by QE. The last tranch of additions to the Asset Purchase Programme were in 2020-£450bn. A figure approximating to the total Pandemic response spend. By this stage QE had finally transitioned from a Liquidity stimulus in response to a global Credit Freeze, to blatant funding of Government spending. Indeed the Governor of the Bank of England made it explicitly clear that had UK Treasury faced market sentiment then AS THEY DO NOW, they would have failed to raise the funds .:- "Laying bare the scale of the national emergency at the early stages of the pandemic, Andrew Bailey said the government would have struggled to finance the running of the country without support from the central bank. Asked in an interview with Sky News what would have happened had the Bank not intervened, Bailey said: “I think the prospects would have been very bad. It would have been very serious.” “I think we would have a situation where, in the worst element, the government would have struggled to fund itself in the short run.” G JUne 2020 The HoL Economic Affair Committee , in their report "Quantitative easing: a dangerous addiction?" ( July 2021) said that the only QE effect which had any certainty was an increase in wealth disparity. These remarks feature in its conclusions :- "We sympathise with the Bank of England that it has had to meet its mandate in an economic environment in which its independence has been more difficult to define compared to when operational independence was granted in 1997. Dealing with the economic consequences of the COVID-19 pandemic means the Bank necessarily working more closely with HM Treasury to ensure policy is complementary. However, HM Treasury has not helped to clarify its relationship with the Bank in its ambiguous answers to us. Furthermore, adding additional roles to the Bank risks it losing focus on its primary responsibility to control inflation." "While the evidence on quantitative easing’s economic impact is mixed, we note that central bank research tends to show quantitative easing in a more positive light than the academic literature. We conclude, on balance, that the evidence shows quantitative easing has had limited impact on growth and aggregate demand over the last decade. To stimulate economic growth and aggregate demand, quantitative easing is reliant on a series of transmission mechanisms that operate primarily in and through financial markets. There is limited evidence to suggest that these increase bank lending or investment, or boost consumer spending by wealthy asset holders. " "Quantitative easing’s precise effect on inflation is unclear, and the magnitude of recent quantitative easing on future inflation has not yet been established. However, we heard that the latest round of quantitative easing could have an inflationary effect as it coincides with substantial government spending, bottlenecks in supply, and a recovery in demand after the COVID-19 pandemic." ( ie-that last tranche of QE probably WAS inflationary ) I have read those comments before - but - as is often the case- they remain pretty speculative in that few firm conclusions are reached. |
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steve
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Post by steve on Jul 19, 2023 14:11:22 GMT
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c-a-r-f-r-e-w
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A step on the way toward the demise of the liberal elite? Or just a blip…
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Post by c-a-r-f-r-e-w on Jul 19, 2023 14:14:18 GMT
The Pandemic response spending was funded entirely by QE. The last tranch of additions to the Asset Purchase Programme were in 2020-£450bn. A figure approximating to the total Pandemic response spend. By this stage QE had finally transitioned from a Liquidity stimulus in response to a global Credit Freeze, to blatant funding of Government spending. Indeed the Governor of the Bank of England made it explicitly clear that had UK Treasury faced market sentiment then AS THEY DO NOW, they would have failed to raise the funds .:- "Laying bare the scale of the national emergency at the early stages of the pandemic, Andrew Bailey said the government would have struggled to finance the running of the country without support from the central bank. Asked in an interview with Sky News what would have happened had the Bank not intervened, Bailey said: “I think the prospects would have been very bad. It would have been very serious.” “I think we would have a situation where, in the worst element, the government would have struggled to fund itself in the short run.” G JUne 2020 The HoL Economic Affair Committee , in their report "Quantitative easing: a dangerous addiction?" ( July 2021) said that the only QE effect which had any certainty was an increase in wealth disparity. These remarks feature in its conclusions :- "We sympathise with the Bank of England that it has had to meet its mandate in an economic environment in which its independence has been more difficult to define compared to when operational independence was granted in 1997. Dealing with the economic consequences of the COVID-19 pandemic means the Bank necessarily working more closely with HM Treasury to ensure policy is complementary. However, HM Treasury has not helped to clarify its relationship with the Bank in its ambiguous answers to us. Furthermore, adding additional roles to the Bank risks it losing focus on its primary responsibility to control inflation." "While the evidence on quantitative easing’s economic impact is mixed, we note that central bank research tends to show quantitative easing in a more positive light than the academic literature. We conclude, on balance, that the evidence shows quantitative easing has had limited impact on growth and aggregate demand over the last decade. To stimulate economic growth and aggregate demand, quantitative easing is reliant on a series of transmission mechanisms that operate primarily in and through financial markets. There is limited evidence to suggest that these increase bank lending or investment, or boost consumer spending by wealthy asset holders. " "Quantitative easing’s precise effect on inflation is unclear, and the magnitude of recent quantitative easing on future inflation has not yet been established. However, we heard that the latest round of quantitative easing could have an inflationary effect as it coincides with substantial government spending, bottlenecks in supply, and a recovery in demand after the COVID-19 pandemic." ( ie-that last tranche of QE probably WAS inflationary ) I have read those comments before - but - as is often the case- they remain pretty speculative in that few firm conclusions are reached. Yeah, I mean regarding getting more growth out of it, it’s true that QE might be done better, to direct funds to where they might better be used instead of too much of it going to inflate asset prices etc.. But we didn’t have much general inflation in the years following the banking crisis, and if you look at the money supply now it has been falling for a while now. |
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steve
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Post by steve on Jul 19, 2023 14:19:54 GMT
Little Nigel Fromage is still having a tantrum about his bank account. Apparently poor Nige left ‘disgusted and appalled’ by 40-page Coutts memo labelling him ‘racist’. I mean who would have described Foridge as a racist just because he said the entire population of Turkey were about to arrive in brexitania to concurrently steal your jobs, claim benefits , steal everyone's houses while living for free in hotels and something involving fish! He's still not getting his bank account back he's not got enough money. Poor Frimidge Attachment Deleted |
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Deleted
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Post by Deleted on Jul 19, 2023 14:20:48 GMT
But we didn’t have much general inflation in the years following the banking crisis, Because :- a) Government did not pair QE with fiscal stimulus-the reverse in fact. ( until 2020 !) b) Government reduced Deficits c) By and large Banks chose to hold the proceeds of QE as excess reserves rather than increasing their pace of lending and thereby creating money |
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...Not even God could do that one. Nonetheless he's achieving some of that though and the jury is out on the rest. No wonder an increasingly desperate 
