news & politics:discussion

[lazyred]

1 minute ago, steviewevie said:

Yeah but that is done by government and voters might not like it so leave it to the bank to do the pain with no gain.

I said I understood the politics against it, I'm just interested in the economic effect

[steviewevie]

2 minutes ago, lazyred said:

I said I understood the politics against it, I'm just interested in the economic effect

Well, surely it would have an effect economically. But it isn't going to happen.

Starmer will put up taxes though. It is written.

[steviewevie]

This is the whole fiscal vs monetary thing, right. Thatcherism. Inflation vs unemployment. Friedman. Or something.

 

[fraybentos1]

3 minutes ago, steviewevie said:

Well, surely it would have an effect economically. But it isn't going to happen.

Starmer will put up taxes though. It is written.

 

Just now, steviewevie said:

This is the whole fiscal vs monetary thing, right. Thatcherism. Inflation vs unemployment. Friedman. Or something.

 

You hit the bottle on a Wednesday stevie ? 

[Ozanne]

13 minutes ago, lazyred said:

I said I understood the politics against it, I'm just interested in the economic effect

https://amp.theguardian.com/commentisfree/2023/aug/03/spain-inflation-lower-bank-england-interest-rates
 

This might help with some of questions. 

[Ozanne]

6 minutes ago, steviewevie said:

This is the whole fiscal vs monetary thing, right. Thatcherism. Inflation vs unemployment. Friedman. Or something.

 

Surely you’d rather have inflation than being unemployed? As it’s easier to combat higher prices if you have an income whereas if inflation is low it doesn’t really matter if you don’t have a job to pay for things?

[fraybentos1]

1 minute ago, Ozanne said:

Surely you’d rather have inflation than being unemployed? As it’s easier to combat higher prices if you have an income whereas if inflation is low it doesn’t really matter if you don’t have a job to pay for things?

Why must you think in such a basic and narrow way. This isn't about individuals it's about the wider economy. Obviously a slight uptick in unemployment is better than high inflation

[Neil]

28 minutes ago, Ozanne said:

Spain did something very similar and seems to have worked. 

spain can't do anything similar -  it doesn't have a sovereign currency.

[Neil]

2 minutes ago, Barry Fish said:

?

uses the euro. so theres the economy of all euro economies acting on the currency, so spanish interest rate rises don't have the same effect onto the economy.

[Neil]

its too different to use as a comparator.

[Ozanne]

18 minutes ago, Neil said:

spain can't do anything similar -  it doesn't have a sovereign currency.

Even without having their own currency they still have handled it better than us. 

Edited August 16, 2023 by Ozanne

[Neil]

7 minutes ago, Ozanne said:

Even without having their own currency they still have handled it better than us. 

there's too much of a difference to use as a compator to arrive at that sort of conclusion.

[Ryan1984]

2 hours ago, Neil said:

reckon there must be youngsters getting decent rises my kid is in an already generous first -post-grad-job at £37k had no shame in asking his boss for £50k). think boss said no..... my kid got he idea from somewhere that asking for  £50k was ok.

What does your kid do? (And does his company have any other vacancies?)

[Ozanne]

25 minutes ago, Neil said:

there's too much of a difference to use as a compator to arrive at that sort of conclusion.

Not really, just because they don’t have their own currency doesn’t mean we can’t compare. It shows that if a central bank doesn’t do much and the government puts measures in place you can keep inflation under control. Basically where there’s a will there’s a way. 

[steviewevie]

1 hour ago, Ozanne said:

Surely you’d rather have inflation than being unemployed? 

Rather than me being unemployed maybe, someone else unemployed not so much.

[cellar]

1 hour ago, lazyred said:

Can tax rises and price controls be used alongside interst rate rises? I understand the politics against this but would they have the same economic effect? If they work on inflation then tax rises and price controls could spread the pain by targeting the areas that benefit from or are unaffected by rate rises.

Yeah so they could be - I like you am in favour of tax rises that target the wealthy, regardless of inflation (particularly would like to see CGT changes). But yes, this is reducing spending power (by taking the money away altogether), so would push inflation down. Big political impacts as you say though, and tax changes typically have a bigger impact on markets than gradual rate rises, too.

There's historical evidence of price controls not working to control inflation, and I think the logic surrounding it is pretty sound. If wages are rising (which they need to in an inflationary market), and you put price controls in place, people end up with more excess money (because their wage rise that they originally demanded to pay for more expensive necessities actually ends up getting spent on something else), and this will push inflation up. Unless you want to put wage controls in place as well, but I don't think anyone wants that.

And yeah as I know you're aware, but worth clarifying, these would be governmental policies, so it is a bit of a different ball game. I'd absolutely support tax rises on the wealthy, but its not going to happen with this government. Luckily BoE is autonomous is being able to raise IRs.

[fraybentos1]

9 minutes ago, Ozanne said:

Not really, just because they don’t have their own currency doesn’t mean we can’t compare. It shows that if a central bank doesn’t do much and the government puts measures in place you can keep inflation under control. Basically where there’s a will there’s a way. 

ECB has raised rates from 0.25% to 4.5%.

https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html

Not quite sure why you keep highlighting Spain as a shining example of what can be achieved outwith raising IRs when they have raised them drastically. 

[cellar]

1 hour ago, steviewevie said:

I bet you in a few years they will say they went too far with interest rate rises.

Tenner?

Haha, I'll actually take that bet. I think in a few years time they will look back and wish they'd raised interest rates faster.

(Maybe we should call it 20 quid in future years value, if I turn out to be wrong about IRs bringing down inflation 🙃)

[steviewevie]

Patience 

 

[steviewevie]

1 minute ago, cellar said:

Haha, I'll actually take that bet. I think in a few years time they will look back and wish they'd raised interest rates faster.

(Maybe we should call it 20 quid in future years value, if I turn out to be wrong about IRs bringing down inflation 🙃)

You're on.

I owe so much money from lost bets on the sh*t thread, why not...

[Neil]

21 minutes ago, Ozanne said:

Not really, just because they don’t have their own currency doesn’t mean we can’t compare. It shows that if a central bank doesn’t do much and the government puts measures in place you can keep inflation under control. Basically where there’s a will there’s a way. 

so if the govt instead of the bank alters inflation rates then other factors don't matter, and its all good?

[Neil]

extra bank holiday if the lionesses win. 🙂 

[Neil]

germany has pout forward legislation to decriminalise cannabis. 

[Ozanne]

2 minutes ago, Neil said:

so if the govt instead of the bank alters inflation rates then other factors don't matter, and its all good?

No, I’m saying he government should bring in other fiscal measures like price controls, tax on excess profits etc. There wasn’t any need to raise interest rates. 
 

15 minutes ago, steviewevie said:

Rather than me being unemployed maybe, someone else unemployed not so much.

Spoken like a true socialist 😉

[Ozanne]

12 minutes ago, steviewevie said:

Patience 

 

It’s always jam tomorrow with the Tories. Just keep taking the pain, it’ll get better eventually.