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Bank Of England Independence
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By (user no longer on site) OP
over a year ago
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It would be a monumental mistake if the Bank had its independence taken away.
Governments are absolutely useless when using the levers of raising and lowering interest rates. Turning it into a political point scoring exercise, I mean that whatever political part of the spectrum that government resides in.
Who agrees or disagrees?
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How ironic if it was a Tory govt, you know the free market ,financially prudent party. Who after putting us in Trillions of debt,and got us out of our biggest trading market
Then decided they needed to control the Bank of England to give Another new party leader a chance in a not too distant Election |
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By (user no longer on site) OP
over a year ago
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"Kind of agree but is it up to the bank to decide on quntative easing?"
It is, but whatever decision were made, I’d rather have have an independent bank, not a bank which is an instrument of some political experiment.
Government should let experts who are impartial and understand the economy than some MP trying to keep their seat at the next GE.
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"Kind of agree but is it up to the bank to decide on quntative easing?
It is, but whatever decision were made, I’d rather have have an independent bank, not a bank which is an instrument of some political experiment.
Government should let experts who are impartial and understand the economy than some MP trying to keep their seat at the next GE. "
Unfortunately we have a government who is on record as saying "Britain has had enough of experts"
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By (user no longer on site) OP
over a year ago
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"Kind of agree but is it up to the bank to decide on quntative easing?
It is, but whatever decision were made, I’d rather have have an independent bank, not a bank which is an instrument of some political experiment.
Government should let experts who are impartial and understand the economy than some MP trying to keep their seat at the next GE.
Unfortunately we have a government who is on record as saying "Britain has had enough of experts"
"
Yes tis true.
Then they should sack themselves because apparently they’re “experts” in bullshit  |
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"It would be a monumental mistake if the Bank had its independence taken away.
Governments are absolutely useless when using the levers of raising and lowering interest rates. Turning it into a political point scoring exercise, I mean that whatever political part of the spectrum that government resides in.
Who agrees or disagrees?
"
Agree with you. One of Gordon Brown's better decisions. |
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By *irldnCouple
over a year ago
Brighton |
There is some weird economic decisions being made.
The normal driver of inflation is overheated consumer spending/demand but that is not what is happening here. The huge rise in energy prices coupled with supply chain issues caused by Brexit, Pandemic and war in Ukraine, is massively pushing up prices of essentials.
So with the cost of living increase being driven by essentials rather than consumer demand, the BoE rises interest rates increasing debt payments for people already struggling.
In normal times increasing interest rates is used to cool down consumer spending. This is not the driver for inflation right now. |
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" How ironic if it was a Tory govt, you know the free market ,financially prudent party. Who after putting us in Trillions of debt,and got us out of our biggest trading market
Then decided they needed to control the Bank of England to give Another new party leader a chance in a not too distant Election"
This..
Deflection from their own piss poor performance over the last 12 years..
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By *eroy1000Man
over a year ago
milton keynes |
"It would be a monumental mistake if the Bank had its independence taken away.
Governments are absolutely useless when using the levers of raising and lowering interest rates. Turning it into a political point scoring exercise, I mean that whatever political part of the spectrum that government resides in.
Who agrees or disagrees?
"
I agree. Is the bank of England independence under threat? I have not seen any stories on it at all but not seen much news last few days |
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" How ironic if it was a Tory govt, you know the free market ,financially prudent party. Who after putting us in Trillions of debt,and got us out of our biggest trading market
Then decided they needed to control the Bank of England to give Another new party leader a chance in a not too distant Election"
Correction - covid put us in billions of debt.
Ironic that those who are shouting the loudest now about cost of living and debt are the very same people who were demanding the harder and longer lockdowns that completely decimated the uk/global economy.
Everything has a price as we are now finding out.
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" How ironic if it was a Tory govt, you know the free market ,financially prudent party. Who after putting us in Trillions of debt,and got us out of our biggest trading market
Then decided they needed to control the Bank of England to give Another new party leader a chance in a not too distant Election
Correction - covid put us in billions of debt.
Ironic that those who are shouting the loudest now about cost of living and debt are the very same people who were demanding the harder and longer lockdowns that completely decimated the uk/global economy.
Everything has a price as we are now finding out.
"
Mate, the elephant in the room..
Mentioning covid whilst ignoring the economic self harm of Brexit..
Hmm..
Think in politics they call it events..
Regardless of what it's called and the circumstances of where we are now a cohesive strategy is required for what is looking like real hardship for many..
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By *ovebjsMan
over a year ago
Bristol |
" How ironic if it was a Tory govt, you know the free market ,financially prudent party. Who after putting us in Trillions of debt,and got us out of our biggest trading market
Then decided they needed to control the Bank of England to give Another new party leader a chance in a not too distant Election
Correction - covid put us in billions of debt.
Ironic that those who are shouting the loudest now about cost of living and debt are the very same people who were demanding the harder and longer lockdowns that completely decimated the uk/global economy.
Everything has a price as we are now finding out.
"
Agreed
The first lockdown as a fire break was a good idea as it would give time for extra temporary hospitals to be put together.
The biggest mistake was trying to continually enforce lockdowns and not merely using said nightingale hospitals for the purpose they were created.
Everting has a cost
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"Who do I trust more…. Economists or politicians…. Hmmmmm! "
This..
We should all be wary, the decision to give BOE has been very widely seen as a positive move..
I think if Truss gets in she will interfere to the point Bailey will resign and then there's the scapegoat for the Tories.. |
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"Who do I trust more…. Economists or politicians…. Hmmmmm! "
Which economists?
As we are finding out, like the scientists, the economists also have differing opinions which make a world of difference to how events pan out |
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"Who do I trust more…. Economists or politicians…. Hmmmmm!"
"Which economists?"
For god's sake, don't let Richard Murphy anywhere near a government position. Some economists are worse than the politicians. |
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By *irldnCouple
over a year ago
Brighton |
"Who do I trust more…. Economists or politicians…. Hmmmmm!
Which economists?
For god's sake, don't let Richard Murphy anywhere near a government position. Some economists are worse than the politicians."
Why exactly? |
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"For god's sake, don't let Richard Murphy anywhere near a government position. Some economists are worse than the politicians."
"Why exactly? "
Richard Murphy is a Modern Monetary Theory extremist. He believes that the government can just print as much money as it wants to, and then tax it all back if inflation starts to go too high. He also believes in taxing wealth, forcing companies to account for scope 3 emissions, and levying a financial transaction tax.
There's loads more, but basically he's a nutter that thrives on attention. |
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By *irldnCouple
over a year ago
Brighton |
"For god's sake, don't let Richard Murphy anywhere near a government position. Some economists are worse than the politicians.
Why exactly?
Richard Murphy is a Modern Monetary Theory extremist. He believes that the government can just print as much money as it wants to, and then tax it all back if inflation starts to go too high. He also believes in taxing wealth, forcing companies to account for scope 3 emissions, and levying a financial transaction tax.
There's loads more, but basically he's a nutter that thrives on attention."
Not all be says is mad though! He is challenging BoE interest rate charges as the current inflation is not being driven by consumer discretionary spend, but by energy wholesale prices and supply chain issues. |
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By (user no longer on site)
over a year ago
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"Who do I trust more…. Economists or politicians…. Hmmmmm!
Which economists?
As we are finding out, like the scientists, the economists also have differing opinions which make a world of difference to how events pan out"
Not all economists can be 100% correct but the majority were right about Brexit |
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"Who do I trust more…. Economists or politicians…. Hmmmmm!
Which economists?
As we are finding out, like the scientists, the economists also have differing opinions which make a world of difference to how events pan out"
The economy isn't an exact science. However, science is an exact science. |
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"Richard Murphy is a Modern Monetary Theory extremist. He believes that the government can just print as much money as it wants to, and then tax it all back if inflation starts to go too high. He also believes in taxing wealth, forcing companies to account for scope 3 emissions, and levying a financial transaction tax.
There's loads more, but basically he's a nutter that thrives on attention."
"Not all be says is mad though! He is challenging BoE interest rate charges as the current inflation is not being driven by consumer discretionary spend, but by energy wholesale prices and supply chain issues."
You're right, he doesn't always say mad things, sometimes he is just wrong.
The above is a good example. He's correct that interest rate rises are usually used to tackle inflation caused by an excess of money. He's correct that the current inflation is caused by supply issues. Where he is wrong is in assuming that the cause of inflation makes any difference to how it should be tackled. |
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By *irldnCouple
over a year ago
Brighton |
"Richard Murphy is a Modern Monetary Theory extremist. He believes that the government can just print as much money as it wants to, and then tax it all back if inflation starts to go too high. He also believes in taxing wealth, forcing companies to account for scope 3 emissions, and levying a financial transaction tax.
There's loads more, but basically he's a nutter that thrives on attention.
Not all be says is mad though! He is challenging BoE interest rate charges as the current inflation is not being driven by consumer discretionary spend, but by energy wholesale prices and supply chain issues.
You're right, he doesn't always say mad things, sometimes he is just wrong.
The above is a good example. He's correct that interest rate rises are usually used to tackle inflation caused by an excess of money. He's correct that the current inflation is caused by supply issues. Where he is wrong is in assuming that the cause of inflation makes any difference to how it should be tackled."
So how does increasing the cost of borrowing address either the supply chain issues or wholesale energy prices? |
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"Richard Murphy ... doesn't always say mad things, sometimes he is just wrong.
The above is a good example. He's correct that interest rate rises are usually used to tackle inflation caused by an excess of money. He's correct that the current inflation is caused by supply issues. Where he is wrong is in assuming that the cause of inflation makes any difference to how it should be tackled."
"So how does increasing the cost of borrowing address either the supply chain issues or wholesale energy prices?"
It doesn't.
Under 'normal' inflation the problem is that there is too much money sloshing around the system. Raising interest rates doesn't fix that. It doesn't take that money away from people, it just makes less money available to the banks. This means that the supply of money is lower than it was, so the excess will slowly drain away.
In today's situation the problem is a shortage of supply. Raising interest rates won't fix that, but it will reduce demand, which will help to curb inflation. |
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"Kind of agree but is it up to the bank to decide on quntative easing?
It is, but whatever decision were made, I’d rather have have an independent bank, not a bank which is an instrument of some political experiment.
Government should let experts who are impartial and understand the economy than some MP trying to keep their seat at the next GE.
Unfortunately we have a government who is on record as saying "Britain has had enough of experts"
"
Well, we’ve also had enough of clown and bozos running the country for the last few years. It’s clear now that none have been up to the job at hand. Time for change. We need people in charge that actually understand and can identify (ie, beyond the debating clubs of Bullingdon) with the day to day concerns of ordinary people. We are the majority. |
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By *irldnCouple
over a year ago
Brighton |
"Richard Murphy ... doesn't always say mad things, sometimes he is just wrong.
The above is a good example. He's correct that interest rate rises are usually used to tackle inflation caused by an excess of money. He's correct that the current inflation is caused by supply issues. Where he is wrong is in assuming that the cause of inflation makes any difference to how it should be tackled.
So how does increasing the cost of borrowing address either the supply chain issues or wholesale energy prices?
It doesn't.
Under 'normal' inflation the problem is that there is too much money sloshing around the system. Raising interest rates doesn't fix that. It doesn't take that money away from people, it just makes less money available to the banks. This means that the supply of money is lower than it was, so the excess will slowly drain away.
In today's situation the problem is a shortage of supply. Raising interest rates won't fix that, but it will reduce demand, which will help to curb inflation."
Which is fine “normally” except that demand is already suppressed as the rising cost of living for essentials (utilities, fuel, food) is reducing discretionary spending anyway. So making borrowing more expensive just increases pressure to a point that for millions is unsustainable. People will just not be able to pay for gas/electric. |
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"Which is fine “normally” except that demand is already suppressed as the rising cost of living for essentials (utilities, fuel, food) is reducing discretionary spending anyway. So making borrowing more expensive just increases pressure to a point that for millions is unsustainable. People will just not be able to pay for gas/electric. "
Ah, but this is economics, not social care. The Bank of England's job is to curb inflation, not to care for the poor. That's what the government ought to be doing.
To make it clear, I agree that raising interest rates will be bad for many people, but in the long run inflation would be much worse for them. Following Richard Murphy's advice would just push the whole problem into the future. |
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By *irldnCouple
over a year ago
Brighton |
"Which is fine “normally” except that demand is already suppressed as the rising cost of living for essentials (utilities, fuel, food) is reducing discretionary spending anyway. So making borrowing more expensive just increases pressure to a point that for millions is unsustainable. People will just not be able to pay for gas/electric.
Ah, but this is economics, not social care. The Bank of England's job is to curb inflation, not to care for the poor. That's what the government ought to be doing.
To make it clear, I agree that raising interest rates will be bad for many people, but in the long run inflation would be much worse for them. Following Richard Murphy's advice would just push the whole problem into the future."
Ok I will ask again but this time put aside any emotive reference to people...
How does increasing the base rate tackle inflation caused by supply chain issues and wholesale energy prices? |
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"How does increasing the base rate tackle inflation caused by supply chain issues and wholesale energy prices?"
It doesn't tackle the supply chain issues, or the energy prices, but it does push down demand (even further than it's already dropped). |
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By *irldnCouple
over a year ago
Brighton |
"How does increasing the base rate tackle inflation caused by supply chain issues and wholesale energy prices?
It doesn't tackle the supply chain issues, or the energy prices, but it does push down demand (even further than it's already dropped)."
So back to people - it pushes down demand to eat food or heat homes/cook food!!!! This isn’t about discretionary spend!
It is the wrong strategy. It is ostrich head in sand and blindly following an outdated approach not intended for these circumstances.
What is going to happen when millions of people/households simply cannot pay their utility bills? Are they all going to have their gas/electric cut off (it is against the law to cut off water). What follows then? The utility company losses will be so huge they demand a bail out (even though they should have cash reserves to cover losses and would have if they hadn’t splashed to cash with shareholder dividends). Meanwhile those millions of people with no gas/electric will do what? Sit quietly freezing/starving? Or protest/riot?
And what about that demand decreasing. If the only thing people can spend money on is food and energy, then how many companies will then go bust when nobody is buying their products/services? Oh look mass unemployment! Loads more people without the means to buy food and energy! |
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By *irldnCouple
over a year ago
Brighton |
"So back to people ...
The Bank of England's job is to control inflation. If you were the governor, what would you do, and how would it curb inflation?"
I would not have raised the base rate because it is not going to address the issue. It is an unnecessary action at a time of increased cosr to businesses and people. It is blind orthodoxy.
I think Japan have the right idea...
“The Bank of Japan maintained ultra-low interest rates on Friday and its guidance to keep borrowing costs at "present or lower" levels, signaling its resolve to focus on supporting the economy's tepid recovery from the Covid-19 pandemic.“ |
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"I would not have raised the base rate because it is not going to address the issue."
I disagree with you there, but at least we both agree that Richard Murphy's idea of cutting the base rate to zero is a bad one.
Going to fill up the car yesterday I see that diesel prices have dropped 10p in the last few days. Maybe there's a light at the end of the tunnel, and the supply issues are starting to be addressed. |
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By (user no longer on site)
over a year ago
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Slightly off topic, but at what point do we startbtomlook at collective responsibility to reduce demand ? Not the poor folk who are on the edge already, but those of us who can change habits to help.
Even if you can afford petrol today, should we be walking more to help reduce the demnad and help our fellow man ? Being more careful with food and leccy? |
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"Slightly off topic, but at what point do we start to look at collective responsibility to reduce demand ?"
It's too late. Those with a sense of conscience will have already reduced their usage. Those that haven't done so are unlikely to be persuaded to care at this point. |
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By *eroy1000Man
over a year ago
milton keynes |
"So back to people ...
The Bank of England's job is to control inflation. If you were the governor, what would you do, and how would it curb inflation?
I would not have raised the base rate because it is not going to address the issue. It is an unnecessary action at a time of increased cosr to businesses and people. It is blind orthodoxy.
I think Japan have the right idea...
“The Bank of Japan maintained ultra-low interest rates on Friday and its guidance to keep borrowing costs at "present or lower" levels, signaling its resolve to focus on supporting the economy's tepid recovery from the Covid-19 pandemic.“"
I also struggle with the raising of interest rate policy but not sure what else the bank can do. Japan has taken the opposite route but although they keep their interest rates low, their overall debt is huge even compared to the UK. I noticed the other day that supply routes are improving, all be it slowly. Hope it continues but going to be a rough ride |
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"Who do I trust more…. Economists or politicians…. Hmmmmm!
Which economists?
As we are finding out, like the scientists, the economists also have differing opinions which make a world of difference to how events pan out
The economy isn't an exact science. However, science is an exact science."
Correct -but you are, sadly, wasting your time with that clarification. |
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