Basic economics

I have been appalled this week at the ineptitude and ignorance of people who should know better. A member of the Government who shall remain nameless averred that his government was reducing costs for the working man. Or I suppose, “the ordinary working man”, whatever they finally decide the definition of that Paladin is.

Sadly, I have to tell you that Government puts UP the cost of doing business AND the cost of Government. It has not put it down.  And the result?  No growth and stagflation, which is defined as growing unemployment and increasing inflation. Unless everyone is lying (and I can actually see the benefits of doing that) the official figures quite clearly state unemployment is up, inflation is up and growth is down. 

Everyone and his dog knew that life after the general election was going to get worse, yet people still voted for it. We are a very perverse nation.

Never mind the government, the Old Lady of Threadneedle Street aka The Bank of England has made a complete mess from start to finish. Its only mandated job is to keep inflation under control. It palpably hasn’t. Andrew Bailey when at the Prudential Regulation Authority presided over what became known as  “the pensions scandal”. Sahid Javid wanted him in (for no apparent reason, but perhaps just to get him away from the PRA)  Dominic Cummings wanted Andy Haldane as Governor, who at least knew something about money. I regret to say that Andrew Bailey is an Economist by training – well sort of - and did research at the London School of Economics in the mid 80s. Either he didn’t absorb economic principles or he misunderstood them. How else do you account for his insouciance  regarding inflation when he stated it was a blip and of no consequence just before it roared off to above 11%? He had clearly totally forgotten (assuming he ever knew) that increasing the money supply was a basic reason for inflation. And MASSIVELY increasing it as they did for Covid without sterilising it at all has resulted in everyone losing out for years. Inflation is a tax just as much as Government dictat. It is much more devious and insidious and evil – though that is a moot point.

What else have they got wrong this week? There was a report of high earners and non-doms leaving the UK in ever rising numbers which  means that median salaries are actually falling. (In case you don’t know median and average are two different things. Average is all the numbers added up and divided by the total number of numbers. Median is a list of figures highest to lowest and taking the number bang in the middle. Obviously, if the higher numbers get taken out the one in the middle will drop) Median salaries falling means the definition of poverty which is defined by a line below the median, makes it look as if the government is doing great. Even an idiot can see this is not actually eradicating  poverty, it is back to lies, damn lies and statistics.

In yet another blow to anything like a chance to make the books balance, 30 year government gilts just hit their highest level since 1998. That also signals a belief that inflation is here to stay.  All the sums for Government spending and income are already completely out of kilter and this latest merely confirms yet again that Rachel from Accounts’ spreadsheets are in dire need of revision. The bond markets have concluded that the course she is on is unsustainable, and they smell blood in the water. Not only is it unsustainable it’s destroying the economy. 

Since 2000, global money supply (M2) has grown, at an 8% annual rate. US national debt has grown, coincidentally, also at 8% per year. I can absolutely assure you, if your wealth does not grow at least at the same rate as money supply and debt, you are getting poorer. On that measure practically everyone in the UK is getting poorer every day.

 In another canary in the mine, the Government regards the Ballymena and Southport riots as aberrations but they are not. Everyone is politely ignoring the goings on in Epping, which are already beginning to spiral out of control, and if “something is not done” we will find there is genuine civil disobedience on our streets. Unfortunately I’d be willing to bet the “ something” that will be done will only inflame the situation.

I will give you a prediction, one I made last year just after the election and when the winter fuel allowance was scrapped. This Parliament will not run for five years.  Some AI bots have apparently already predicted there will have to be a general election next May.  I know, I know, it’s only AI being fed with prejudices. But it’s maybe worth a punt.

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