So Huw Pill of the BoE admits that #interestrates policies are a 'powerful' but 'blunt' tool to fight #inflation while warning that high(er) #food prices are likely here to stay for some time.
He went on to say that the BoE cannot mount 'surgical strikes' to help certain sections of society... (that would be unless its the #banking sector I assume?)
Accepting its not was wage rises driving inflation, he's decided that its imported!
Yup, we've moved to the foreigners are to blame narrative!
Thank goodness we have an independent BoE. I can only imagine how much harm it would do for them to be political.
(EDIT: to be clear, /s)
Well, one reason is the profit spread between savings rates & lending rates & another is actually (as Steve Keen & others have pointed out for years) actually #banks don't really need deposits, they create credit by other means than the model of fractional banking would presume
The argument is that banks create credit by first of all generating loans (to people who have the ability to pay) creating a performing asset on the balance sheet, while also recognising the loan as a liability (that the bank has to pay out), thereby zeroing out the balance sheet existence of the credit, essentially creating credit out of thin air... there's quite a bit of work on how this is achieved - See Keen's work & others.
@ChrisMayLA6
When the only tool you have is a hammer, everything starts to look like a nail.
Watching the BoE try to use interest rates to solve the current economic problems is like watching an army use field artillery to combat a locust plague β an extremely powerful weapon, but totally inappropriate and ineffective, not to say unnecessarily destructive.
@KimSJ @ChrisMayLA6
It is unforgivable that any mature economy has only a single tool (central bank interest rates) to tame inflation.
The *first* tools should be anti-price gouging rules, trust busting actions and windfall taxes.
@KimSJ @ChrisMayLA6
You mean the political choice to let profits rip - while using pay freezes and interest increases to erode the sepnding power of the masses?
Yeah, complete coincidence. /s
A lot of it is 'faith-based' policy... their faith in a specific model of the #economy, which while widely critiqued outside the mainstream, still holds sway in the policy elite(s)!
@ChrisMayLA6
Clearly led by false prophets, then!
How do we get enlightenment into the treasury and the political elites? I hesitate the suggest re-education camps, as I suspect they don't work and ARE terrible in other ways.
Perhaps starting with primary & secondary education, by liberating teachers from the national curriculum and treating them as professionals again.
Start with University #economics departments in my view... I taught a heterodox #economics course before I retired, in a politics Dept. & the economics department banned their students from taking it... they're not really open to the alternatives & so their students frequently are not introduced to the alternatives to the mainstream discipline!
Ha ha, don't get me started on how #universities are actually remarkable conservative institutions.....
Oh yes, the NPM was a cancer that spread throughout the #university sector & while now modified still ripples through the dire staff/management relations behind the long running disputes that have disrupted the sector
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