Rishi Sunak and economics

[BillyStubbsTears]

https://mobile.twitter.com/RishiSunak/status/1321802739320500224

Only just seen this.

Christ up above, this is gold plated horse shite. This so badly misrepresents the relationship between Govt and money, it would fail any university economics exam. It's the equivalent of an aeronautical engineer saying a plane can only stay in the sky if it flaps its wings like a bird.

I HOPE he is deliberately and knowingly misleading people here. The alternative, that he actually thinks what he saying here is the truth, is too frightening to process. If the Chancellor genuinely doesn't know that the Govt, through the Bank of England, can create money at will, and if he doesn't know that we have barely paid back a penny of debt since WWII, then there's not much hope for the economic future.

But it IS one or the other. He's either deliberately lying, or as thick as a bucket of monkey spunk on this topic. There's no other alternative.

[Bentley Bullet]

Of course, you could be wrong, but then again that's not an option, is it?

[Filo]

He’s obviously playing on peoples ignorance of how Money works in a Country with its own central bank

[BillyStubbsTears]

Of course, you could be wrong, but then again that's not an option, is it?

Generally, yes of course I could be wrong about anything. But I'm not in this case. Go read up a bit about basic economics, then come back and tell me what you think.

[Bentley Bullet]

I imagine even if I became an expert at basic economics I still wouldn't consider myself more knowledgeable than the chancellor of the exchequer!

[big fat yorkshire pudding]

I thought the boe was supposed to operate independently in its decision making on the policy relating to money supply?

[ravenrover]

I imagine even if I became an expert at basic economics I still wouldn't consider myself more knowledgeable than the chancellor of the exchequer!

What are the special qualifications you need to be Chancellor?
In this case the ability to say yes to The Clown or Cummings?

[BillyStubbsTears]

I imagine even if I became an expert at basic economics I still wouldn't consider myself more knowledgeable than the chancellor of the exchequer!

Then I assume you are saying that he is straight-faced lying? Because what he's saying is 100% not correct. So, if he's intelligent enough to know that, the only other possibility is that he is deliberately deceiving people.

[BillyStubbsTears]

I thought the boe was supposed to operate independently in its decision making on the policy relating to money supply?

The BoE DOES operate independently on a day-to-day basis. But is does so within the context of targets set for them by the Chancellor.

Regarding us having to pay back borrowing, that is such an overly simplistic comment from the Chancellor that is just defies belief.

We paid back borrowing (i.e. ran a Govt surplus) in (I think) only three years between 1945 and 1970. We have done so only 6 times since 1970. We have not paid back more than a tiny fraction of the debt that we ran up to fight WWII. The debt seemed gargantuan at the time. It was £21bn - nearly three times the total of everything we produced in a year.

We managed it, not by paying it off. We did it by making it shrink in importance by massively growing the economy. Now, that debt is equal to less than 1% of everything we produce in a year.

Of course, you have to by pay interest on any debt that you take on. But at the moment, the bond markets are lining up to give money to the UK Govt pretty much for free. Interest rates on 10 year bonds are currently 0.2%. On 30 year bonds they are 0.7%. So we could borrow £1trn if we wanted to and pay back only 1% of GDP in interest. Meanwhile, we could use that £1trn to boost the economy and stoke up growth.

Sunak COULD have said that in his reply. Instead, he chose to tell people a load of piss and wind, to support his position that he doesn't want to borrow. Like I say, I desperately hope that he knows he is deceiving people, because if he really doesn't understand this basic economics...

[Bentley Bullet]

I imagine even if I became an expert at basic economics I still wouldn't consider myself more knowledgeable than the chancellor of the exchequer!

Then I assume you are saying that he is straight-faced lying? Because what he's saying is 100% not correct. So, if he's intelligent enough to know that, the only other possibility is that he is deliberately deceiving people.

You seem to be getting confused here. It's YOU that's saying he's straight-faced lying! It's YOU that's only providing two possibilities. I'm merely suggesting there could be a third possibility if you ever considered the option of you being wrong.

[BillyStubbsTears]

BB. I frequently consider the possibility of me being wrong. It's just that I 100% am not on this issue. Sunak's description was simply not accurate in how Govt financing works in the real world. Like I say, if you're really interested in discussing the topic here (as opposed to what you usually do, which is to discuss the topic of arguing) there are plenty of sources which you could read about how Govt finances actually work, and none of them aimed at anyone above primary school level would sound like Sunak's explanation.

If you prefer to argue about arguing instead, I'll leave you to it.

[Bentley Bullet]

Give over! Every post you make is aimed at provoking an argument, and if anyone expresses an unfavourable response you claim they're being argumentative!

THAT'S what I call arguing about arguing!

[Glyn_Wigley]

I imagine even if I became an expert at basic economics I still wouldn't consider myself more knowledgeable than the chancellor of the exchequer!

You don't need to. You just have to show yourself more knowledgable than BST, which you seem to think is setting the bar low so it shouldn't be beyond you.

[wilts rover]

Sunak is a public schoolboy, ex-city stockbroker who has twelve houses, married a billionaires daughter and has his own savings in an off-shore trust so he doesn't have to pay tax on them.

To be fair to him, what does he know about paying money back? He only ever spends it, either his own or somebody elses.

[BillyStubbsTears]

Give over! Every post you make is aimed at provoking an argument, and if anyone expresses an unfavourable response you claim they're being argumentative!

THAT'S what I call arguing about arguing!

But there's the thing BB. I post about facts and opinions. You are perfectly at liberty to disagree with any of that. You can present counter analyses and present other information. I'm happy to discuss (civilly) with anyone who does that.

But you rarely do. You simply try to wind up a fight. This thread is a textbook example.

[Bentley Bullet]

I did give other information, in the form of a third option.

[drfchound]

Sunak is a public schoolboy, ex-city stockbroker who has twelve houses, married a billionaires daughter and has his own savings in an off-shore trust so he doesn't have to pay tax on them.

To be fair to him, what does he know about paying money back? He only ever spends it, either his own or somebody elses.

......and i reckon most of us would be delighted to be in his position.
Even if it meant being pulled to bits by people on a football forum.

[tyke1962]

I'm no economist by any means but I understand in layman's terms that creating money risks inflation .

Inflation is the Tories , their donors and a good proposition of their voters worst nightmare because inflation kills great wealth .

Sunak is possibly ideology driven , he's a bob or two his self .

[Bentley Bullet]

Doesn't inflation also have an effect on lower-income families and older vulnerable citizens?

[BillyStubbsTears]

Doesn't inflation also have an effect on lower-income families and older vulnerable citizens?

Not if Govt takes steps, which it can, to protect their income.

[Glyn_Wigley]

I'm no economist by any means but I understand in layman's terms that creating money risks inflation .

Inflation is the Tories , their donors and a good proposition of their voters worst nightmare because inflation kills great wealth .

Sunak is possibly ideology driven , he's a bob or two his self .

It only affects them if their assets are in money form. Most of the rich have their assets in stocks, land and property. Which inflation doesn't affect.

[BillyStubbsTears]

Glyn. That's only the case if the value of those assets keeps pace with price inflation. It didn't for the period 1945-1979

[belton rover]

Another degree in Philosophy
God f**king help us!
Thick t**t!

[Glyn_Wigley]

Glyn. That's only the case if the value of those assets keeps pace with price inflation. It didn't for the period 1945-1979

You're confusing price with value. The price will change but the relative value won't.

And prices are only used to gauge inflation because it's the least worst method there is. As a measure of inflation it's crap but it's the best method we've got.

[BillyStubbsTears]

Not sure I follow you Glyn. Consider this scenario.

I have £1m invested in property in year 1, and current expenses (food, energy, tech, socialising, etc) are, say, £20k per year.

If inflation on current expenses is 5% p.a. but property values stagnate, in 40 years time, my property portfolio has the same monetary value, but current costs are now £140k per year. So the cost of living is far higher as a fraction of my property wealth than it used to be.

Surely it was that mechanism that whittled away at the relative wealth of the richest in society between 1945-79? Because we had high inflation on current costs and very low inflation on capital. And that's flipped over the past 40 years, re-entrenching the relative wealth of the richest few percent. Or am I missing something?

(And yeah, simplistic numbers, but they demonstrate the principle.)

[Glyn_Wigley]

Inflation isn't the rise in the cost of living. It's the rate that a currency loses its value, which is a uniform rate across the whole economy That's why using the cost of living is a crap way of measuring it, it's always a subjective measure and not an objective one, and also that the prices of individual things can still go up and down relative to each other within the loss in value of the currency. That's why Mad Mick was talking out of his arse when trying to use property values and the price of gold to prove that a recession was happening.

[BillyStubbsTears]

Yes I get that. The currency deflator is ONE measure of inflation. But whatever terminology you use, it is a possibility  that current costs can rise faster than capital value. And if they do, the relative wealth of those holding capital assets decreases.

That's my point. How you define the term "inflation" is secondary.

[big fat yorkshire pudding]

Of course Glyn inflation is not uniform and can fluctuate wildly between sectors. Of course you can inflate yourself out of payments inside your own currency but that's very difficult to do outside your own currency given exchange rate movements.  I'm not sure how much of our borrowing is Forex related but it could be quite high.

Also on Sunak, again criticism of him for being successful financially. Is that his fault?  Why do we criticise those who've done well for themselves?

[bpoolrover]

https://www.bbc.co.uk/news/amp/business-54824120

[Filo]

https://www.bbc.co.uk/news/amp/business-54824120

The only criticism is that this should have come before the lockdown, many thousands lost their job on 31st October when the original furlogh ended