It’s Wednesday and so I write less on the blog to allow me to write more elsewhere. And, we get a chance to savour some music – today some of the best vibraphone playing that was recorded. Simon Jenkins wrote a column in the UK Guardian on Monday (August 8, 2022) – Who knows if Truss or Sunak is right on the cost of living crisis – where are all the economists? – which runs the line that my profession has gone to ground as the two Tory leadership hopefuls come out with diametrically opposed views as to how to fix the ‘cost of living crisis’ in the UK. Well, he could have answered his own question. Who would want the opinion of the ‘economists’ by which I mean the mainstream macroeconomists given they have an appalling record of prediction anyway. The majority are supporting the Bank of England’s kamikaze interest rate increases because they think monetary policy is an effective solution to inflationary pressures and they agree that unemployment should be a policy tool rather than a policy target. He might also have noted in his article that who gets a platform in the public debate about economic matters is heavily biased against those who might offer an alternative view. Try getting an Op Ed in the UK Guardian, for example, if you are non mainstream and not part of the ‘progressive, pro-Europe’ network in London. And on those cost of living pressures, no mainstream economist that the UK Guardian is likely to publish would propose nationalising energy supply, public transport, water supply and telecommunications anyway. Which is the best long-term solution to protect workers and low-income consumers. Further, the latest data from the US indicated that inflation has peaked and inflationary expectations are falling sharply. Did anyone mention the word ‘transitory’ around here?...Bill Mitchell – billy blog
Where are all the economists? Its lucky they have gone AWOL
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
“ Which tells us that people are understanding this is a transitory phenomenon driven by a number of separate causes, but, which no propagation mechanism (like a wage-price spiral) is threatening to perpetuate.”
ReplyDeleteWe have to watch interest income (USTs) and bank capital increase (IOR) as they continue to raise the rate… that could become a positive feedback …
unless the additional bank capital is employed to finance increased industrial inventories and the unit prices of those collaterals then can be reduced…
These new policies are just starting to have any observable effect…