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Post by Deleted on Jul 15, 2023 8:19:22 GMT
Theres more than one driver to this inflation spiral, the biggest been the war in Ukraine and energy prices, which affects so much across the economy.
But why is average inflation now lower in Europe, even amongst those nations heavily reliant on Russian gas and oil ?, bearing in mind that the UK is one of the European countries least reliant on Russian gas and oil.
Public Debt - is one reason
Labour shortages - another reason
The labour shortages are driving up wages, and many would say this is a good thing, but its a spiral which is damaging the economy - a restaurant faces (1) higher energy prices (2) rising supply costs (3) having to raise wages to attract staff. The result is higher end prices to the customer, customers then stay at home or go to the cheaper restaurant.
If high food inflation persists ( and the Institute of Grocery Distribution says it will ), then we could see the big four supermarkets begin to close some stores ( Tesco, Sainsburys, Morrisons, Asda ) because the discount supermarkets are taking their customers.
Some care homes have closed, catering establishments are closing, many businesses are struggling.
Whether people want to accept the fact or not - Brexit is one of the causes of the current economic crisis, manifested in labour shortages, resulting in higher business costs.
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Post by sheepy on Jul 15, 2023 8:24:34 GMT
Theres more than one driver to this inflation spiral, the biggest been the war in Ukraine and energy prices, which affects so much across the economy. But why is average inflation now lower in Europe, even amongst those nations heavily reliant on Russian gas and oil ?, bearing in mind that the UK is one of the European countries least reliant on Russian gas and oil. Public Debt - is one reason Labour shortages - another reason The labour shortages are driving up wages, and many would say this is a good thing, but its a spiral which is damaging the economy - a restaurant faces (1) higher energy prices (2) rising supply costs (3) having to raise wages to attract staff. The result is higher end prices to the customer, customers then stay at home or go to the cheaper restaurant. If high food inflation persists ( and the Institute of Grocery Distribution says it will ), then we could see the big four supermarkets begin to close some stores ( Tesco, Sainsburys, Morrisons, Asda ) because the discount supermarkets are taking their customers. Some care homes have closed, catering establishments are closing, many businesses are struggling. Whether people want to accept the fact or not - Brexit is one of the causes of the current economic crisis, manifested in labour shortages, resulting in higher business costs. As for new labour they have the same ridiculous people fronting for them who don't have a clue but just repeat what they are told. |
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Post by zanygame on Jul 15, 2023 8:26:35 GMT
I disagree. The more money you have the less you are effected by non progressive taxes. Increase progressive taxes and you slow spending across the board. And again stop trying to deflect the conversation and address the point. As far as I'm concerned it could be a temporary rise in taxes just the same as the temporary rise in interest rates. Big difference is that the pain would be shared, whereas the current method puts the pain on one group while lining the pockets of another. Sure, but all you would do is boost the government coffers which a huge chunk is already taken in interest on a National debt while at the same time taking it out of the economy hence slowing it and eventually creating another massive recession. Which the most wealthy never suffer from anyway. It has never worked before but then wash rinse repeat always seems the order of the day. So your concern is that the extra money might help reduce the national debt or pay for shortfalls in public areas? Surely that is better than giving it to rich bankers? As for never working, as far as I am aware it has never been tried. Can you link me an example of taxation rises designed to reduce inflation? |
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Post by sheepy on Jul 15, 2023 8:36:55 GMT
Sure, but all you would do is boost the government coffers which a huge chunk is already taken in interest on a National debt while at the same time taking it out of the economy hence slowing it and eventually creating another massive recession. Which the most wealthy never suffer from anyway. It has never worked before but then wash rinse repeat always seems the order of the day. So your concern is that the extra money might help reduce the national debt or pay for shortfalls in public areas? Surely that is better than giving it to rich bankers? As for never working, as far as I am aware it has never been tried. Can you link me an example of taxation rises designed to reduce inflation? No it won't reduce the national debt it never has and as for shortfalls it will be swallowed up as it always is in pet projects, what it might do though is create a situation where government borrowing will increase as its take rises. What it is really Zany is a big con. It is only a matter of getting enough votes to keep it going. |
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Post by sheepy on Jul 15, 2023 8:45:06 GMT
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Post by Orac on Jul 15, 2023 8:55:21 GMT
You didn't ask me for a view on tax rates, you asked for a better alternative to interest hikes. Do you deny that massive increases in taxation would reduce spending and therefore inflation? You see I know you don't mind people with young families and new homes taking the punch so long as its not you. If you want to use taxation to reduce demand then the obvious way is to increase VAT to 25%. But we both know that is not what you had in mind - it's your usual 'tax the rich' mantra that would have no effect on general demand in the economy. The obvious way to reduce inflation is to do what works in other economies - stop having artificially high prices for energy. The only big effect i can see this is having is to reduce productivity. The government taxes people, gives the money to its employees, who then compete for the purchase of a reduced number of goods. Ie it is, if anything, inflationary. |
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Post by Fairsociety on Jul 15, 2023 9:02:59 GMT
Nope.
Inflation is caused by too much money chasing too few goods. If you increase the cost of money then the problem just gets worse.
The only reasons that governments increase interest rates is because
(a) they have to look as though they are doing something even if it is the wrong thing
(b) the public demand that something be done, even if it is stupid.
Oh they are doing something alright, they are fucking things up even more.
Where is the logic behind having 13 interest rate rises in succession, do they think people have their own money tress, they are creating a even bigger problem, people will be losing their mortgaged homes, landlords will have to raise rents, or kick tenants out or sell up, and the BoE think that's going to solve inflation.
So we will have thousands more homeless, house repossessions, Landlords out of business, the housing market flooded with sales and repos, yes well done Andrew Baily you first class fuckin prick, no wonder you lost your job as CEO of FCA, you incompetent baffoon
FFS I bet a 9 year old kid could have worked it out better.
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Post by Orac on Jul 15, 2023 9:16:44 GMT
Nope.
Inflation is caused by too much money chasing too few goods. If you increase the cost of money then the problem just gets worse.
The only reasons that governments increase interest rates is because
(a) they have to look as though they are doing something even if it is the wrong thing
(b) the public demand that something be done, even if it is stupid.
Oh they are doing something alright, they are fucking things up even more.
Where is the logic behind having 13 interest rate rises in succession, do they think people have their own money tress, they are creating a even bigger problem, people will be losing their mortgaged homes, landlords will have to raise rents, or kick tenants out or sell up, and the BoE think that's going to solve inflation.
So we will have thousands more homeless, house repossessions, Landlords out of business, the housing market flooded with sales and repos, yes well done Andrew Baily you first class fuckin prick, no wonder you lost your job as CEO of FCA, you incompetent baffoon
FFS I bet a 9 year old kid could have worked it out better.
Interest rate rises act against inflation by reducing the availability of money (increasing the scarcity of money). One thing that makes this change a shock is that we have has absurdly (i would call it 'unnaturally') low interest rates for a decade or arguably more. Many current adults were not adults in a time where interest rates were high - the entire economy has become accustomed to interest rates sitting at about zero |
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Post by Fairsociety on Jul 15, 2023 9:34:31 GMT
Oh they are doing something alright, they are fucking things up even more.
Where is the logic behind having 13 interest rate rises in succession, do they think people have their own money tress, they are creating a even bigger problem, people will be losing their mortgaged homes, landlords will have to raise rents, or kick tenants out or sell up, and the BoE think that's going to solve inflation.
So we will have thousands more homeless, house repossessions, Landlords out of business, the housing market flooded with sales and repos, yes well done Andrew Baily you first class fuckin prick, no wonder you lost your job as CEO of FCA, you incompetent baffoon
FFS I bet a 9 year old kid could have worked it out better.
Interest rate rises act against inflation by reducing the availability of money (increasing the scarcity of money). One thing that makes this change a shock is that we have has absurdly (i would call it 'unnaturally') low interest rates for a decade or arguably more. Many current adults were not adults in a time where interest rates were high - the entire economy has become accustomed to interest rates sitting at about zero That is solely down to the incompetence of the BoE, whether interest rates have been too low or not, they have been where they have been due to economic/inflation conditions that have dictated.
The BoE have a duty of care to monitor the situation months if not years in advance, then make reasonable adjustment in the event of 'now', not act at the eleventh hour.
They were asleep at the wheel, didn't see it coming, even though the likes of me, you and many more of us on this site seen it coming, so why should those paying mortgages end up as the fall guys, fortunately for me my house is bought and paid for, but I have family, friends who have mortgages. What I want to come out of this is the government put in place rules that the BoE can not put interest rates up any more maximum than 4-5 times in one year.
If the BoE have incompetently miscalculated then they must shoulder the burden and not pass it on to victims of circumstance, they are paid, and paid well not to fuck up, I bet they Big fat Baily still gets his Big fat salary and bonus, for failing at his job.
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Post by Dogburger on Jul 15, 2023 9:57:05 GMT
Nope.
Inflation is caused by too much money chasing too few goods. If you increase the cost of money then the problem just gets worse.
The only reasons that governments increase interest rates is because
(a) they have to look as though they are doing something even if it is the wrong thing
(b) the public demand that something be done, even if it is stupid.
Oh they are doing something alright, they are fucking things up even more.
Where is the logic behind having 13 interest rate rises in succession, do they think people have their own money tress, they are creating a even bigger problem, people will be losing their mortgaged homes, landlords will have to raise rents, or kick tenants out or sell up, and the BoE think that's going to solve inflation.
So we will have thousands more homeless, house repossessions, Landlords out of business, the housing market flooded with sales and repos, yes well done Andrew Baily you first class fuckin prick, no wonder you lost your job as CEO of FCA, you incompetent baffoon
FFS I bet a 9 year old kid could have worked it out better.
And while all that is going on the rich get richer , profits and dividends doing very well as are wages and bonuses of the selected few . Thats where your inflation is . The government/BoE is targeting the wrong people |
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Post by Fairsociety on Jul 15, 2023 10:01:10 GMT
Oh they are doing something alright, they are fucking things up even more.
Where is the logic behind having 13 interest rate rises in succession, do they think people have their own money tress, they are creating a even bigger problem, people will be losing their mortgaged homes, landlords will have to raise rents, or kick tenants out or sell up, and the BoE think that's going to solve inflation.
So we will have thousands more homeless, house repossessions, Landlords out of business, the housing market flooded with sales and repos, yes well done Andrew Baily you first class fuckin prick, no wonder you lost your job as CEO of FCA, you incompetent baffoon
FFS I bet a 9 year old kid could have worked it out better.
And while all that is going on the rich get richer , profits and dividends doing very well as are wages and bonuses of the selected few . Thats where your inflation is . The government/BoE is targeting the wrong people It's a bank bail out by the backdoor, mortgage payers bailing out the bank, yet again the tax payers foot the bill for the banks utter incompetence, and even worse the government are sitting back and allowing it to happen, it's getting that way that the Tories are too afraid of 'upsetting' the establishment, they are being walked all over, Civil Service, public sector, the Woke, illegal migrants, Just Stop Oil, I've no idea what they are thinking of. |
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Deleted
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Post by Deleted on Jul 15, 2023 10:44:51 GMT
I know it is a simplistic point of view but higher interest rates make the poor who need to borrow, poorer, and the rich who can invest, richer. The Tories are often accused of that.
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Post by Fairsociety on Jul 15, 2023 10:59:04 GMT
I know it is a simplistic point of view but higher interest rates make the poor who need to borrow, poorer, and the rich who can invest, richer. The Tories are often accused of that. That's the plan, someone has to pay for Covid, the massive furlough fraud, the business bail outs, £12 billion on PPE and the list goes on.
The less well off will pay the price.
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Post by Orac on Jul 15, 2023 10:59:13 GMT
I know it is a simplistic point of view but higher interest rates make the poor who need to borrow, poorer, and the rich who can invest, richer. The Tories are often accused of that. That's too over-simplistic imho. Higher interest rates tend to reduce asset inflation (the chief source of rich's riches) |
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Post by zanygame on Jul 15, 2023 12:13:15 GMT
So your concern is that the extra money might help reduce the national debt or pay for shortfalls in public areas? Surely that is better than giving it to rich bankers? As for never working, as far as I am aware it has never been tried. Can you link me an example of taxation rises designed to reduce inflation? No it won't reduce the national debt it never has and as for shortfalls it will be swallowed up as it always is in pet projects, what it might do though is create a situation where government borrowing will increase as its take rises. What it is really Zany is a big con. It is only a matter of getting enough votes to keep it going. I disagree. Extra income from tax has often been used to reduce national debt. In any case the two others factors That is reduces spending across the board That its better than giving it to the already rich. Outweigh (IMO) any downside you see. |
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