Forum Topic

Double digit inflation

With the excessive money printing during the covid pandemic by governments around the world, most economies are now experiencing high inflation due to the expansion of the money supply, and the unnecessary lockdowns.The UK rate was recently recorded at around 10%.With Holland just announced 17.1% and Poland 17.2% inflation, will people also blame this foreign inflation on Brexit and Liz Truss?

John Lambert ● 989d38 Comments

" still think Kiers idea of no business rates on the High Street is ridiculous"What ideas are that?Can someone share a policy reference please?

Ed Robinson ● 985d

That is interesting Michael,Even smaller increments would be an improvement for reasons clearly outlined in the link.With regards to house price inflation, building more houses is not the only thing that governments could do.Rent controls would help stop the spiralling costs as better pension protection and more regional investment away from London - perhaps even move parliament.Of course the government & opposition will not do any of the above for fear of upsetting their core voters.I remember the 16% mortgage rate under the Conservatives - so I'm not suggesting that homeowner had an easy time. Many people I knew handed their keys back to the bank during that period.However property prices are beyond the reach of many who are condemned to having live under short term lets or going under as mortgage rates increase.

Ed Robinson ● 985d

Ed. I came across this on LinkedIn today (a previous boss of mine had "liked" it). It does support your idea that a better algorithm, perhaps incorporating allowances and benefits, into a smoothed rising curve function would provide a fairer solution.https://taxpolicy.org.uk/marginal

Michael Ixer ● 985d

Thanks Nick. I enjoyed reading your posts too, and I agree with your view that this forum has been taken over by left wing fanatics.I won't be visiting much in the future lol.

John Lambert ● 985d

Spain seems to be taking an approach to reduce taxes for low earners and increase them for the wealthy:https://www.reuters.com/markets/europe/spain-hopes-gain-314-billion-euros-revenues-with-new-tax-proposals-2022-09-29/

Michael Ixer ● 985d

Ed. Neat idea having a continuous function to determine tax rates rather than bands: would your preference be a hyperbolic or exponential function? I'm not sure many would consider that a simplification, although being able to determine one's net income by integral calculus is a fun idea :-)Seriously, I'm not sure what can be done about property prices other than building more homes with a high proportion of social housing?

Michael Ixer ● 986d

John Lambert has been a welcome addition to the forumIt feels like he’s really bossing it and giving some very valuable lessons in tax and other matters to many people. Including myself.Winstone, I have to confide in you that I am off the sauce for an indefinite period. The only downside of this is for the poor pubs of Putney whom Ive been avidly supporting for over 26 years now. I fear they will miss my hard earned cash. I still occasionally pop to The Angel on Roehampton High st for a half of red bull. And I will still eat out a fair bit and shop (only in SW15 postcode)Re the High Street. Whilst I don’t mind Sir Kier. Someone told me we both looked like rugged butchers with our red faces after a good session. I still think Kiers idea of no business rates on the High Street is ridiculous. How will the councils fund anything within that vicinity. Rents will increase of the back of that idea as well.I really don’t think Kier should be anywhere near the Labour Party. He’s far too normal and sane a person. Particularly all those Labour MPs who went on that march against the police officer who shot the chap that tried to ram him with a stolen car after being told 11 times to stop. On final note. I’ve written to Kwasi to thank him. I cannot believe I got a 66 quid payment for my utility bill this month. I mean it’s so warm I’ve generally been wearing T shirt and shorts at home. I fully appreciate there are so many families out there that need it . But I feel bad that i could make a profit . Especially if I have all my showers in office , charge my phone and laptop in office. Matt Palmer even told me he uses a candle to heat his house in order to avoid Emissions and he doesn’t use gas for cooking either. Nick

Nick Gulliford ● 986d

"Double digit inflation"If only there was the same concern about house price inflation since the '80's.Talking of the 80's there is no need to have these large steps in income tax bands.Income tax is no longer manually calculated so it could increase gradually and appear more as a curve.

Ed Robinson ● 986d

It seems to me that people here are complaining about the current government's handling of the crisis rather than the fact that there are some economic headwinds at present.Most people (on this forum and in the country) were supportive of lockdowns at the peak of the pandemic. At the time this was ccommon sense, as was supporting the economy.You seem to believe in some simplistic fairy story whereby  inflation results from and only from the money supply, regardless of raw material shortages, lack of spare capacity in the eonomy or declarations of war. This is not much use in the real world.One wonders, what is YOUR solution to the current energy price crisis? If additional government borrowing is off the table, one is left either with letting many people and businesses go bust or with massive tax rises.

Michael Winstanley ● 986d

Well those lyrics are evidence of history repeating. Written in 1982.

Freddie Francis ● 986d

I got a bum education. double digit inflation, Can't take a train to the job there's a strike at the station.When Rap lyrics become frighteningly real.

Mark Phillips ● 986d

I am sorry, but you are mixing two completely different things.Yes, as I said before, I supported the lockdowns from a public health point of view, but quite a few were against them mainly from an economic point of view but also due to cancer patients not having appointments at the hospitals.  It was for the politicians to balance the lockdowns with the economy.  I may have my views on these, but they had all the relevant information at their finger tips.Even today, I will prioritize health over money.  The latter you can deal with somehow, but losing your health is rather final, do you not think?

Ivonne Holliday ● 986d

What was the alternative to lockdowns? The probable collapse of the NHS under the load of Covid admissions, and the resulting consequences of that? Of course, there was always going to be a price for stabilising the economy during the pandemic. On top of that we now have the disruption caused by Putin attacking Ukraine. I guess the question is who pays for it; those with the most wealth or the poorest? Sounds like the Tory MPs are providing feedback to the PM from their constituents and giving more to the rich doesn't sound very popular ... of course the tax cut to those paying 45% may only be a relatively small part of the borrowing but it's the public perception that counts. It will be interesting to see how the UK compares with some EU countries that also had lockdowns .. where are France and Germany looking to put the burden for paying for  this?

Michael Ixer ● 986d

I looked back at some of the threads during covid and many people were lockdown fanatics on here, and also many criticised Boris for opening up too soon.Now you are complaining about the current economic crisis.God help us, you just can't help some people!

John Lambert ● 986d

I am sorry John, although I was paying attention, I misunderstood you as you mentioned that the 45% rate cut was a drop in the ocean. Lockdown has cost billions (plus the billions that BoJo lot spent on PPE etc that never materialized).Sadly, the lockdowns were needed from a public health safety point of view.  If only to help the NHS, very same the  conservatives are so keen in destroying.  We were all aware that lockdowns were going cost the country a fortune and that we will be paying for them for many years to come.  Another thing that I find unacceptable is that Truss has mounted a massive debt on top of the one we had with the energy caps - and no contributions from the energy companies (who are supposed to invest in infrastructure, etc) which made profits of enormous proportions and they (I quote) "do not know what to do with them".The debt we have at the moment is due to Brexit, COVID, the energy crisis plus the war in Ukraine.  And no, I am not a leftie, I do not support Labour and, in the latter years, neither do I support the conservatives who have become, in my view, a circus of incompetent so-called politicians.

Ivonne Holliday ● 986d

Ivonne, it's interesting you mention Ms Truss being like a weather vane. As someone who studied mathematics a long, long time ago I've always felt that economics, like the weather, is best analysed with chaos theory because of their complexity in terms of the number of variables and their interactions. The only difference being that the weather is underpinned by the laws of physics and might be predictable if one could solve all the partial differential equations, transformations, etc involved, whereas the economy may follow some rules - for example, supply and demand, price elasticity, etc - but some variables are dependent on the rationality (more likely the irrationality?) of individuals and their confidence in particular actions. Hence that making defining it let alone predicting it impossible? However, perhaps some basic accounting principles hold true: where there's a debit there's a credit, so one disabled person's benefit cut is a credit to enable bankers' tax cuts. So they can buy the chancellor champagne?

Michael Ixer ● 986d

Well, Liz Truss has had quite a few U-turns:- She was a Remainer, and now she is not. - She supported Brits to fight in Ukraine then now she does not. - She wanted to build on the green belt, and now she doesn't.- She wanted to arm Taiwan and now she is not sure if she will or won't.- She wanted to cut civil servants' pay in the regions and then she said she didn't.- Now she and the Chancellor say the 45% will not be dropped.I think a weather vane is more stable than this lot!

Ivonne Holliday ● 986d

You obviously haven't been paying attention Ivonne.I said in my 1204pm post on 02/10/22 post that I didn't agree with the 45% rate cut even though it is only saving 2 billion a year.As I said the cause of all this is the lockdowns which cost the country about 400 odd billion.If you were one of the people calling for lockdowns you are part of the problem, so you are not in a great place to criticise the government debt.

John Lambert ● 986d

Hello Michael W,Following the news this morning that the 45p rate was not going to be dropped, I paraphrase a rather well known saying:"You can stay if you want to, this lady is all for turning."

Ivonne Holliday ● 986d

Good morning John,I really do not follow your line of thought.You say that the debt crisis around the world is out of control and can never be repaid.  (Can I hear a small voice saying cancellation of debt, somewhere?)You also say that the government and the new budget will push inflation higher with the additional 150B spend.  So, in order to "balance the books", it was OK to drop the 45% tax band for the wealthiest people as is cutting benefits for the people who have the least?

Ivonne Holliday ● 986d

Now we've seen the first U-turn ... from the Chancellor who seems to be carrying the can for the removal of the 45% tax band. Still, if you're PM and most of the MPs probably wanted someone else to lead them, and your mandate comes from what are allegedly a small number of elderly white men the more others take the blame the better for you?

Michael Ixer ● 986d

Michael, I can see you believe in MMT economics (magic money tree economics)Well unfortunately your economic model is about to blow up.The debt crisis around the world is out of control and can never be repaid.More money chasing fewer goods pushes the prices up as we are now seeing.The government and the new budget will only push inflation higher with the additional 150B spend.The ticking time bomb of fractional reserve banking, leverage and derivatives will bring down the current system in the no too distant future.  Banks are already showing a lot of stress.

John Lambert ● 986d

Now that even the Prime Minister and her Chancellor have come out against ditching the 45p rate, supporters of that initiative look particularly foolish don't you think?

Michael Winstanley ● 986d

Wrong way? Not at all. I can appreciate a bit of ribaldry from someone who has clearly been on the sauce. All good fun.I am not a multi-billionaire. nor do I have any yachts. I am quite well educated, having more than one secondary degree, but these only confer expertise in certain narrow fields. I like to think I am bright but I did not go to Eton nor do I heve one of these cupboards with clever gongs that apparently Mr. KK has.You seem to be a great supporter of Mr KK, perhaps because you feel it is your duty always to stick up for the Tory party, whatever idiocy they get up.So do you think it is a good idea at the moment to reduce tax rates for high earners and encourage banks to pay higher bonuses? Do you think that this somehow helps the local Putney retail market that you so often claim to support? Or helps the economy generally? Do you think it will help the Tory Party win the next General Election? How exactly? 

Michael Winstanley ● 987d

You’re very clever though Winstone Winstanley . And you’re a multi billionaire aren’t you?Do you have a super yacht when you go to South Of France?I’m trying to have a bit of fun so don’t take this the wrong way my dear friend

Nick Gulliford ● 987d

iF Kwasi Kwarteng is so clever, how is it he hasn't delivered his message better?I am in awe at a man so clever that everyone else but he is is wrong.I am convinced that KK is very clever, of the exam passing, scholarship getting kind. It also appears that he knows he is very clever, to the point of arrogance, having no attention span to consider any other point of view.Ideology though is not an intelligence test. Having the belief that high earners should get a tax cut whilst those on disability benefits should not get rises in line with inflation, this is not an IQ test but a test of basic humanity. One which KK appears to have failed.I have met some very, very clever people in my time. Often they are best kept away from anything to do with the real world.

Michael Winstanley ● 987d

Good point, Jane. I was thinking of my own posts, I must be getting paranoid! 

Michael Ixer ● 987d

Following on from Nick's comment, has anyone said the Chancellor is stupid?Yes. The OP on the Truss and Kwarteng thread described these two as ‘dumb and dumber’.  Good description from Sue, a Tory Party member.

Jane Carter ● 987d

I don't think anyone would disagree that the pandemic and oil shortage, and the resulting inflation are global problems. Following on from Nick's comment, has anyone said the Chancellor is stupid? Of course being very bright doesn't mean one can't make unwise decisions (even stupid ones) - the issue here is surely the message that was sent to everyone fom voters and
MPs to those who manage the markets when the plans were announced? There seems to be a lack of confidence on all levels - hence the swings in opinion polls, negative response and fluctuations in the markets requiring intervention from the BoE to reportedly stop some defined benefit pension schemes from collapse. Lack of confidence can only be increased by the Chancellor's refusal to subject his plans to open and independent scrutiny when he first presented. To put it another way, his plans could be brilliant but no one believes him because he hasn't shown his workings and had them marked?Other countries may have higher inflation rates but they don't seem to be experiencing the same market turmoil that the UK is? Perhaps the market makers prefer the suggestion that the energy price crisis should (at least in part) be paid for by the oil and gas producers making unplanned, excessive profits?Of course, the PM is on the backfoot: the government's lost time during the leadership election caused by Johnson's unparliamentary actions, and during that leadership battle the current PM and previous Chancellor have admitted the mistakes of the last decade. Cutting the top rate tax while many are struggling to pay bills on basic necessities such as food and heating plus saying future generations rather than those making excess profits will pay for the help that is being given without explaining the details seems a pretty unwise message to send to voters, but I'm not a politician.(I believe the PM has now admitted that the plans were poorly presented but a didn't hear the Laura K interview.)

Michael Ixer ● 987d

As someone said on the forum recently, the ones that were calling for heavy unnecessary lockdowns need to own this mess!Ok, but was that not a conservative government ordering the lockdowns?

Ivonne Holliday ● 987d

I was referring to the 65bn the BoE spent bailing out the economy last week.

Matt Palmer ● 987d

I'm not sure if you have done your sums Matt?The drop from 45% tax to 40% is costing 6.6 billion where as the ridiculous lockdown (which you supported) cost the taxpayer about 450 billion, so the tax cut (which I actually don't agree with) is a drop in the ocean.It is the lockdown costs that are crippling the country and bringing high inflation.The debt crisis is going to hit us all very hard and very soon.As someone said on the forum recently, the ones that were calling for heavy unnecessary lockdowns need to own this mess!

John Lambert ● 987d

The problem with this conservative vs labour really annoys me!  The truth is that two wrongs do not make one right.Labour may not be my favourite but I can assure you that the current conservative lot are despicable!

Ivonne Holliday ● 987d

Yes Nick I did see that. Another horrible left wing racist rag!Unfortunately Labour are drowning in their own racism.Rupa Huq showed her true colours last week suggesting Kwarteng doesn't count as a black person because his politics aren't to the left. It doesn't get more nasty than that!https://www.spectator.co.uk/article/race-row-overshadows-starmer-s-speech

John Lambert ● 987d

Will he get an award for causing the BoE to bail us out to the tune of £65bn? "most unnecessary spend of money caused by a cabinet minister" perhaps?

Matt Palmer ● 987d

John,You’re wasting your time on this forum. There are people that think Kwasi Kwarteng is stupid. He had to get a trophy cabinet at his house he achieved so many prizes for academia. 1st from Cambridge , scholar at Harvard.Did you see that classic left wing Daily Mirror paper getting the wrong photo of him on their front page! Surprised it hasn’t caused more controversy on this forum.

Nick Gulliford ● 987d

Latest inflation figures around the worldGermany 10%Belgium 11.27%Croatia 12.3%Romania 15.32%Netherlands 17%Czech Republic 17.2%Bulgaria 17.7%Lithuania 22.4%Anyone interested in learning about the creation of money resulting in the current mess then this link is worth a watch.https://www.youtube.com/watch?v=x-xik96nX1k

John Lambert ● 987d

Oh dearie me Dminus. Have you nutters actually studies economics at a serious level? This sole preoccupation with the money supply is so 1980's - it didn't work then and it belies an eccentric simplicity now. The inflation we are now experiencing results largely from a supply shock. The world's major economies have been managing their money supply the same way since the financial crisis in 2008. Odd that the pandemic should suddenly change the outcome isn't it?Here's a bit of homework. Try plotting a graph of "money printing" (by which you might mean quantitative easing, it's hard to tell with amateurs) against inflation rates for the currencies in question. Advanced question: since when has Holland had its own inflation rate?And finally - why is the average standard of living in the UK lower than most western European countries? Poland is becoming to look attractive. Explain that.

Michael Winstanley ● 989d