The Edict of Diocletian

[Nemo]

This was an edict passed in Roman times as the government continued to debase the currency. It has ben tried many times since but has never worked.

Now we have The Edict of Sunak:

https://www.msn.com/en-gb/news/uknews/a ... r-AA1bOUmx

It won't work either. If you are serious about controlling inflation then stop debasing the currency Sunak!

[Dod101]

This was an edict passed in Roman times as the government continued to debase the currency. It has ben tried many times since but has never worked.

Now we have The Edict of Sunak:

https://www.msn.com/en-gb/news/uknews/a ... r-AA1bOUmx

It won't work either. If you are serious about controlling inflation then stop debasing the currency Sunak!

I agree in general with your comments but our inflation is not caused primarily by the debasement of the currency but rather by increases in costs outside of our control; primarily the costs of energy which of course feeds into almost every other cost. Even had our currency appreciated by 10/15% against others we would still have had inflation this time round.

Dod

[Nimrod103]

This was an edict passed in Roman times as the government continued to debase the currency. It has ben tried many times since but has never worked.

Now we have The Edict of Sunak:

https://www.msn.com/en-gb/news/uknews/a ... r-AA1bOUmx

It won't work either. If you are serious about controlling inflation then stop debasing the currency Sunak!

I agree in general with your comments but our inflation is not caused primarily by the debasement of the currency but rather by increases in costs outside of our control; primarily the costs of energy which of course feeds into almost every other cost. Even had our currency appreciated by 10/15% against others we would still have had inflation this time round.

Dod

The problem I have with the idea of imported inflation, is that if you look at other comparable countries, where is the evidence of imported inflation? During the oil crises of the 1970's German (West German) inflation was much lower than that experienced in the UK. Yet both countries were in many ways similar, especially from the POV of imported oil. Of course the Germans had a strong currency, which was well managed by the Bundesbank. But we had a badly managed weak currency. And the same applies today. See graphs below:

[scotview]

The comments in the Telegraph on Rishi's food price cap are absolutely scathing about the Conservatives.

I wonder what sort of people are advising Rishi.

[Arborbridge]

This was an edict passed in Roman times as the government continued to debase the currency. It has ben tried many times since but has never worked.

Now we have The Edict of Sunak:

https://www.msn.com/en-gb/news/uknews/a ... r-AA1bOUmx

It won't work either. If you are serious about controlling inflation then stop debasing the currency Sunak!

I'm not clear how Sunak is debasing the currency. Dod's view is more relevant, in my opinion.

In general, inflation has come to the aid of many governments: repeatedly, Tory and Labour governments have found it give convenient to inflate their way out of trouble. This was a practice which largely ended when we became tied in more to the then lower inflation countries in Europe - when we left the Eu one of the fears was we would revert to type and have high inflation once more. I'm not saying this is due to Brexit, only that it is likely that with our new "freedoms" one of the freedoms is for governments to play fast and loose and go back to the bad old days.

Arb.

[Nimrod103]

This was an edict passed in Roman times as the government continued to debase the currency. It has ben tried many times since but has never worked.

Now we have The Edict of Sunak:

https://www.msn.com/en-gb/news/uknews/a ... r-AA1bOUmx

It won't work either. If you are serious about controlling inflation then stop debasing the currency Sunak!

I'm not clear how Sunak is debasing the currency. Dod's view is more relevant, in my opinion.

In general, inflation has come to the aid of many governments: repeatedly, Tory and Labour governments have found it give convenient to inflate their way out of trouble. This was a practice which largely ended when we became tied in more to the then lower inflation countries in Europe - when we left the Eu one of the fears was we would revert to type and have high inflation once more. I'm not saying this is due to Brexit, only that it is likely that with our new "freedoms" one of the freedoms is for governments to play fast and loose and go back to the bad old days.

Arb.

It is of course Bailey who is debasing the currency by seemingly ignoring his orders to get inflation down to 2% (i.e 2% debasement is acceptable). Though Sunak is not helping by running such large deficits which need financing.

I'm not sure how being closer to the EU would help management of the economy. We were closest aligned during the ERM experience, and that period showed the Government and the BoE to be totally incompetent, and imposed dire conditions on the people of the UK. Only relieved when we started to use some common sense, and left the ERM.

[Urbandreamer]

I'm not clear how Sunak is debasing the currency. Dod's view is more relevant, in my opinion.

Arb.

If we ignore blaming Mr Sunak, the answer is very very simple.

Public spending, by which I mean All public spending, has to be paid for. There are two places where you can find money to pay people not to work, to pay their fuel bills etc. Either taxes or borrowing. We had a significant amount of QE, which technically is as quack is to a duck with respect to money printing. Then we had the huge Covid bills. Now we have the bills to keep the lights on etc.

The situation has left western governments and the UK with a sovereign debt crisis. There are three solutions. Stop paying for anything, ie including the NHS. Default on your debts. Finally inflate the debt away (financial repression).

Now Dod is right that there are reasons that some things are currently expensive. However there are only three (again) reasons that they should continue to get more expensive (inflation). Demand for them could increase. The supply continue to decrease. Finally the yardstick used to measure could change. The latter is the value of money, which is most easily influenced by increasing the supply (with commodity money that's debasement).

A simple web search will provide charts of M0, M1 M2 etc. The increase in supply in recent years is remarkable. Austrian economists would regard any increase in such as inflation.

[Arborbridge]

It is of course Bailey who is debasing the currency by seemingly ignoring his orders to get inflation down to 2% (i.e 2% debasement is acceptable). Though Sunak is not helping by running such large deficits which need financing.

Well, you may think it clear cut, but I am quite sure such a complex issue cannot be laid at the door of one person - or even a group of people such as the MPC. Bailey is not "ignoring" his orders: orders which are impossible to fulfill are not realisable orders, or at least may not be realisable either immediately or without other dire consequences. We do not live in a harsh Communist or Fascist state where the necessary actions might be possible.

It cannot be as simple as you make out in a democracy - at least that's my intuitive opinion.

Arb.

[Nimrod103]

It is of course Bailey who is debasing the currency by seemingly ignoring his orders to get inflation down to 2% (i.e 2% debasement is acceptable). Though Sunak is not helping by running such large deficits which need financing.

Well, you may think it clear cut, but I am quite sure such a complex issue cannot be laid at the door of one person - or even a group of people such as the MPC. Bailey is not "ignoring" his orders: orders which are impossible to fulfill are not realisable orders, or at least may not be realisable either immediately or without other dire consequences. We do not live in a harsh Communist or Fascist state where the necessary actions might be possible.

It cannot be as simple as you make out in a democracy - at least that's my intuitive opinion.

Arb.

From well over a year ago Bailey has insisted inflation in the UK is transitory, and this has driven his and the MPC's strategy of being reluctant to raise interest rates. So now we have this story this morning. Asleep at the wheel is too generous a conclusion. Culpably incompetent would be more accurate. And for £600,000/year plus state pension.

(https://www.telegraph.co.uk/business/20 ... -desantis/)
The Bank of England will not get inflation back under control until the end of 2025 because of soaring food prices and a "concerning" rise in wages, according to Goldman Sachs. The Wall Street giant predicted it will take at least two-and-a-half more years for policymakers to bring the headline rate back to its 2pc target from the current 8.7pc level. It blamed a "more gradual decline in food inflation" and the UK's tight jobs market for the slower decline. While Goldman said a sharp fall in gas prices will help bring down household energy bills significantly this year, it added: "food inflation, on the other hand, remains at record levels and has shown limited signs of slowing so far." Ibrahim Quadri, UK economist at Goldman, added: "Given the tightness in the labour market, we remain concerned about the risk of wage growth not cooling sufficiently and sustainably over the medium term."
Goldman analysis shows there is roughly a six-month lag between any significant rise or fall in producer prices and its impact on the cost of the weekly shop. While this relationship suggests supermarket prices "should moderate going forward", it added that the decline was likely to be more "gradual" than usual. It expects food prices to keep rising at an annual pace of at least 2.5pc until 2026.

[Arborbridge]

Well, you may think it clear cut, but I am quite sure such a complex issue cannot be laid at the door of one person - or even a group of people such as the MPC. Bailey is not "ignoring" his orders: orders which are impossible to fulfill are not realisable orders, or at least may not be realisable either immediately or without other dire consequences. We do not live in a harsh Communist or Fascist state where the necessary actions might be possible.

It cannot be as simple as you make out in a democracy - at least that's my intuitive opinion.

Arb.

From well over a year ago Bailey has insisted inflation in the UK is transitory, and this has driven his and the MPC's strategy of being reluctant to raise interest rates. So now we have this story this morning. Asleep at the wheel is too generous a conclusion. Culpably incompetent would be more accurate. And for £600,000/year plus state pension.

(https://www.telegraph.co.uk/business/20 ... -desantis/)
The Bank of England will not get inflation back under control until the end of 2025 because of soaring food prices and a "concerning" rise in wages, according to Goldman Sachs. The Wall Street giant predicted it will take at least two-and-a-half more years for policymakers to bring the headline rate back to its 2pc target from the current 8.7pc level. It blamed a "more gradual decline in food inflation" and the UK's tight jobs market for the slower decline. While Goldman said a sharp fall in gas prices will help bring down household energy bills significantly this year, it added: "food inflation, on the other hand, remains at record levels and has shown limited signs of slowing so far." Ibrahim Quadri, UK economist at Goldman, added: "Given the tightness in the labour market, we remain concerned about the risk of wage growth not cooling sufficiently and sustainably over the medium term."
Goldman analysis shows there is roughly a six-month lag between any significant rise or fall in producer prices and its impact on the cost of the weekly shop. While this relationship suggests supermarket prices "should moderate going forward", it added that the decline was likely to be more "gradual" than usual. It expects food prices to keep rising at an annual pace of at least 2.5pc until 2026.

But isn't this all just part of the compromise which the government and BOE have decided is necessary? Some would have argued at the time for higher rates, others would have said the cost to the economy would be too great.
It's all a value judgement on who you want to hurt the most and it isn't just Bailey who is involved in this judgement, but there are many moving parts. It seems to me, quite simplistic to focus on one individual as the cause: there's a whole government/treasury/BOE machine behind these things and the people taking the flak are just the tip of the system. Your reduction to one person is, I feel, more than a little unfair and besides, coloured by hindsight. And remember, there's an election coming up which must colour everything from the government side.

We aren't going to agree on this one, so probably no more to be gained by further discussing it - we've both made our positions quite clear for anyone else who wants to input.


Arb.