Re: Crisis begins
Posted by Ken Waldron
on November 18, 2023, 8:11 pm, in reply to "
Crisis begins"
"The problem with analysing the UK economy over the past two years has, in large part, been with conventional economics’ misunderstanding of inflation. This is mostly to do with the abandoning of the distinction between monetary inflation and other causes of price increases (such as the post-2021 supply shocks). In effect, the economists, central bankers, and politicians leaped to the (wrong) conclusion that we were witnessing a re-run of the early-1970s and reached for the (equally erroneous) cure of higher interest rates. The (again wrong) belief being that only by causing a recession, increasing unemployment, and thus lowering demand across the economy, could we avoid the dreaded “wage-price spiral.” -The problem is that it was no " misunderstanding." They knew that this was not wage-price inflation: it's more that any other means of controlling inflation: especially the easiest and most effective which is as he notes to increase taxes progresively, is anathema to the wealthy. They are terrified of illustrating that an alternative policy not only exists but because it it is a more direct tool will in fact work more effectively than interest rate rises. But...but...that's Socialism!!!
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