Wednesday, October 12, 2022

Bill Mitchell — Bank of England announces end to propping up corporate greed – sort of!

It’s Wednesday and overnight there has been a Twitter storm, which like most of these Tweet Crazes, is about nothing at all and only serves to embarrass the Tweeters, not that they are aware of the humiliation. I refer to the statements made overnight by the Bank of England boss who reiterated press releases the day before in saying the Bank would not continue to prop up pension funds who had mismanaged their assets. The Twitterati seemingly didn’t really get the point. And while we are on central banking, the former IMF chief economist Olivier Blanchard was interviewed in the last few days (I won’t link to it) claiming in relation to the US economy that “the path to avoiding a recession is narrow because the economy is still overheating”. He then concluded that the Federal Reserve Bank “is no longer behind the curve but still has work to do to deal with stubborn underlying inflation pressures”. He thought the Federal Reserve’s funds rate (its policy rate) would go higher than 5 per cent. Planet Not Earth. To keep us on the straight and narrow after those contributions to public discourse, we end today with some piano music. Always a good idea to stay calm and reflective....
Bill Mitchell – billy blog
Bank of England announces end to propping up corporate greed – sort of!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Matt Franko said...

LOL! Now people getting a few lousy bucks from a pension is “corporate greed!”….

Ahmed Fares said...

Bill Mitchell is a trained economist. Too bad he doesn't know anything about investing.

The rising interest rates, as I have explained previously, aid the big banks and the wealthy, which is one reason they are not a very efficient tool for bringing down aggregate spending anyway,

Banking is a spread business. Banks prefer lower interest rates because they make more loans, and they have fewer loan losses. As for the wealthy, the value of their assets fall as interest rates rise.

Matt Franko said...

That could be changing as now for first time ever the CB is raising while paying IOR while having high reserve balances at the banks..

The way I see it the IOR credits directly to bank capital as IOR creates no additional bank liability….

Banks still have over 3T reserve assets soon getting 4% IOR so that is increasing bank capital by 10b per month… 120b annual is close to previous combined annual earnings of the whole sector…

If Pocahontas ever figures this out she is gonna go on the warpath….