History shows us that Treasury and Bank advice for the last fifty years has been poor, or in some cases Treasury advisers failed to prevent Chancellors making bad mistakes.Â
1970-73  The Bank allowed a massive explosion of credit, creating a secondary banking and property crisis. Inflation took off, and the Bank posted higher rates to contain it. A collapse was inevitable
1973-4Â Â An oil crisis brought on by OPEC hike oil prices and cutting supply added to the inflation. Higher interest rates and the net income hit from higher prices took the economy into recession and brought the property and banking system into trouble.Â
The Conservative government followed pay and price policies which did not work and failed to control the boom/bust policy of the Bank of England over credit and property valuations.
JR view – too inexperienced to have a view of the policy errors.Â
1974-6Â A Labour government came in thanks to economic failure by outgoing Conservatives. It decided to spend and borrow too much. Inflation continued and the government was forced into a visit to the IMF to borrow money to shore up the falling pound.
1976-9 Inflation and low growth stalked the UK economy , allied to a winter of strikes.Â
JR view I disagreed with the big uplifts in public spending and borrowing , especially through nationalised industries and saw them as inflationary and negative for growth
The Labour government followed a disastrous economic policy unconstrained by Bank or Treasury advice or maybe with their agreement.Â
1990-92 The UK joins the European Exchange Rate Mechanism. Economy enters a period of too much money and credit expansion, bringing on inflation, to be followed by a weak pound, excessive monetary tightening and a big recession.Â
JR view I wrote a pamphlet explaining how the ERM would be destabilising and argued the case against joining and against staying in.Â
The Conservative government was to blame for accepting strongly held Bank and Treasury advice to join and sticking with it after it was clear it was a disaster. Conservatives were evicted from government for 13 years for economic incompetence.Â
2004-7 Treasury, Bank and Gordon Brown allowed a big increase in credit and expansion of commercial bank balance sheets, claiming this would not be inflationary. Balance sheets of banks and borrowers become very overextended and inflation rose. Bank, Treasury and government then reined in credit too abruptly, raised rates and forced write offs of debt leading to the great financial crash and recession of 2008-9
JR view I opposed with my party the big build up in debt, and I also opposed correcting the imbalances so abruptly in a way designed to bring on bank collapses.Â
The Labour government lost office, so far for 12 years, based on its economic incompetence.Â
During all this time of boom/bust and defeats of governments I do not recall much comment on senior Bank of England or Treasury officials offering bad advice. Some of these events were brought on by following official advice. There has been no proper enquiry into bad advice and wrong forecasts.Â
June 29, 2022
Good morning.
I cannot believe that bad advice has consistently been given by the Treasury over that period of time. Governments of all hues have made various political decisions and most revolve around spending and pleasing / buying voters. That is the inherent flaw in our system.
The Conservative government of 2010 set up the Office of Budget Responsibility (OBR) because they wanted outside advice. It just as useless as all the other State bodies and QUANGO’s.
You have to have a set of economic principles which guide you. One being that you do not spend more than you can take in taxes and that means living within your means. This requires tight budgetary controls on the State. Another principle is the value of your currency. We have devalued our currency to such an extent that, the Private Sector, including individuals, are effectively subsidising State spending through inflation. All so that the State can maintain its high spending.
I cannot see a way out of this until someone somewhere realises that the UK Government cannot go on spending other people’s money.
June 29, 2022
Not just spending other people money but generally pissing it down the drain. Much of it is spend doing positive harm. Suanak even thought that taxing people (with all the costs of collection and distribution) then giving some back to others to buy meals in restaurants (Eat out to Help Out) was a good plan. We also have a benefit system that means for many people working is just not worth it. How can this be good for the economy and this is getting worse as benefits rise by inflation, commuting/fuel costs rise by inflation but salaries do not.
Leave the money with the people who earned it they will spend it far better than governments. The fools in government even think net zero, pointless degrees, a dire communist NHS, HS2, not fracking and blocking the roads are really great plans.
June 29, 2022
There needs to be a new TBE tax solely for Treasury and Bank of England employees to pay.
The amount they must pay is the difference between their forecast and the actual, paid 3 years 17 days in advance with reverse tapering backdated plus VAT @ Q-11 + 47%, with 13.23% fines for not paying between the fixed dates of Thurs and the preceding Sunday of the week after on the Hijri Calendar unless there is a b in the month.
Let them concentrate on working and paying that out, instead of messing us around with the interminable codes & penalties of their worthless nonsense.
June 29, 2022
LL,
+1
JR may have forgot the Steagle and Glass principle introduced after the Great Depression in US abandoned by Clinton to get black votes. Blaire and Brown copied which allowed banks to use funds from private banking to play roulette as an investment banker. Also directors of banks not held personally responsible for their actions. Playing whoopee (gambling) with other peoples money without consequence seemed to be overlooked by both Tory and Labour govtâs. It is beyond belief both parties did not think 14 years of reckless gambling where individuals would be paid vast sums would not end up with a bank crash.
Goodwin got off Scott free with a pension worth hundreds of thousands each year, Brown convinced one bank to buy another basket case one.
JR tell us what has now been put in place by your govt to make directors and boards of bank personally responsible for their actions? Barclays episode ended with nothing but a huge legal bill for the taxpayer. Tell what has been put in place, not ons or OBR quangos so govtâs can pass blame. Both should be scrapped along with FCA.
Better still why are chancellors and PMs not held personally to account for reckless decisions? Ie ERM lockdown etc. Such decisions should be given to the public if we are to pay such a heavy price.
Johnson currently spending like a drunk without any control or sanction. He cannot run his own private finances!! Another ÂŁ493 million to corrupt Ukraine, held to be one of the most corrupt countries in Europe and the world!
June 30, 2022
+1
June 29, 2022
Agreed, Lifelogic , but then we have a spendthrift at No10!
June 29, 2022
Lifelogic, well in Wales money for nothing largess could result in hundreds of 14-year-olds getting kicked out so the families don’t have to look after them anymore, the demands on foster care will expand because the state will give the child ÂŁ1600 for two years for nothing expected in return at 18, no apprenticeship, no job, no university course, just for being Welsh! 500 people are already eligible, 500 people in care just in Wales, the scheme will cost ÂŁ20m so what Welsh pot of gold is going to pay for that?
Children in stable working class families have to take on student loans and a 9% graduate tax payback for life, or getting a job for 45-55 hours per week to get their allowance for nothing! They say it will make kids coming out of foster care more equal with everyone else, but if they go on to university and get a little job at the weekend like most working parents kids do they are now much better off. Not every family can support their 18-year-olds especially if they have other kids to look after themselves, do the right thing, stay together and your kids get nowt. Wouldn’t it be better to put the cared for children in a University learning situation and provide their room with a meal in that complex if necessary on an essential needs course like carer, nurse, plumber, engineer etc.
June 29, 2022
+1
June 30, 2022
A lone voice Sir J in a Tory party government that has sadly swerved very left, breaking many manifesto commitments and usual tory policies. We are in a very dark place with BoE / Treasury equally left of centre.
Next will be the IMF again I fear, so everyone needs their investments spread globally.
June 29, 2022
And there is the problem @Tracy blinded by doing good the worthies screw the real working classes
June 30, 2022
NS, I was married and left home at 18 looking after myself, no parental help at all from either set of parents, I’d had three jobs to save up the month’s rent and a month down we needed to get a flat and we were working 12 hour days to save up a deposit for a house in a year, working weekends, no holidays for four years. I have absolutely no time for money for nothing idealism. It breeds handout demands for life and bad behaviour. Reward bad parents you’ll get more of them.
Too long on benefits getting your money for free and it creates anxiety and health problems, people develop all sorts of conditions from adhd to autism in order to keep the benefit train rolling with extra benefit payments. I personally know several people that got caught up in the trap, now they would be too afraid to get into work.
At 18 in the UK to get ÂŁ1600 per month on the NMW someone would have to WORK 54 hours per week! The joke is that Welsh teenagers don’t have student tuition fees anyway, and they can get low-income grants, so their only loan would be a top-up cost of living grant, why shouldn’t they have to take that on it is only paid back when their earnings go over the average wage in the UK. Drayford is going to get a lot more than he bargained for here, there are going to be loads of 15-16-year-olds kicked out this year requiring foster care so they are entitled to the Basic Income Pilot for the next 3 years, I think they only have to be in the system for 13 weeks. It says it all that only half of the 500 will take up the offer because they are already better off on existing benefits; better off than ÂŁ19,200 per year at 18!
June 29, 2022
From the Telegraph today – Electric cars face being fitted with tracking devices under proposals for a pay-per-mile road taxation system put forward by the Governmentâs own climate advisers. The Climate Change Committee (CCC) says the Government needs to find ways to cover the âsignificant holeâ in the public finances left by the loss of fuel duty and other taxes when petrol and diesel cars are replaced by electric models.
Well yes but new electric cars cost about ÂŁ1 per mile just in finance costs and depreciation of Car and Battery. EVâs only real selling point (other than misguided virtue signalling) is the rigged market for ULEZ, congestion charges, parking⊠and almost no tax on the charging electricity. Yet despite this vast government rigging they cost up to about four times more per mile compared to just keeping your old car for longer.
Keeping your old car also uses less CO2 compared to manufacturing a new EV. Furthermore we have no spare low CO2 to charge the vehicles with anyway. So can the ignorant fools on the CCG explain why they are pushing them please?
I note that at COP26 and Glyndebourne they had to use diesel generators for the EV charging (shipped in and out on diesel trucks) – total economic and environmental insanity!
June 29, 2022
Lifelogic :
The CCCâs ever increasing number of wheezes for keeping the climate and net zero scam going somehow reminds me of the ever increasing complexity of the earth centric model of the planetary system until Copernicus, Galileo and Newton brought it all crashing down.
June 30, 2022
Indeed – all you need do is add a few more epicycles to the Net Zero model and you will reach Nirvana (at least that is what Johnson seems to think).
June 30, 2022
+1
June 30, 2022
LL, don’t you just feel that the common and garden person is meant to stay in their own neighbourhood doing as few journeys as possible, preferably kept at home in the metaverse, doing their meetings by zoom and visiting people on the trains giving rail workers total control over us – pretty soon they’ll be paid more than doctors, and the station staff and ticket inspectors paid more than nurses.
June 29, 2022
John’s claim that the global financial crash of 2008 was somehow caused by a UK Labour government is comical.
It was caused by dodgy US ratings agencies enabling unsuspecting buyers around the world to pick up the negative equity of the US poor, through the transmitted effects of their iniquitous Foreclosure doctrine.
The negative equity itself was caused by the low-end property correction precipitated by Bush’s abrupt cancellation of his previous policy of moving to an amnesty for clandestine immigration.
If the US had something like the property provisions of the Human Rights Acts of the UK, Aus, NZ, and Canada, then that could not have happened, because Foreclosure would have been unfeasible and so no one would have wanted to touch those sub prime mortgages with no prospect of getting their greedy hands on poor people’s equity..
June 29, 2022
NLH, you are really Gordon Brown and I claim my ÂŁ5.
June 29, 2022
So typical of the lefties, always someone else’s fault !
June 29, 2022
Sir John provides an explanation, other people provide other ones.
Anybody who has taken the time to read a bit about the sub-prime mortgage crisis and how this transformed over a year into a major seizure of the global financing system would know that there were many genitors to the 2007-2008 crisis.
miami, MFD, Are you saying that there is no place for a civil, decent debate on this blog?
As for Pierrot le Clown, if he had read a bit of something about the crisis, he might have understood that indeed most countries were affected but that the USA and the UK were much more affected than others simply because of the larger weight of their financial/banking/investment sectors in their economies, and that China, Japan, Germany and France recovered much faster than the UK, specially without having their âChancellorsâ imposing the same restrictive economical policies as what Gedeon Osborne applied to the UK.
As I am sure Pierrot is keen on bettering himself, he might want to read
Too big to fail, Sorkin, 2010 seen from the USA
Swimming with sharks, Luyendijk, 2015, the UK financial sector in general including 2007-2008
Five minutes to midnight, Harrison, 2020 seen from the UK.
Nobody wants to die an idiot, eh?
June 30, 2022
No post without rudeness eh Hefner?
Grumpy and personally abusive towards other as usual.
Yet you try to claim the moral high ground with your call for “civil decent debate” on this blog.
Your lack of self awareness is hilarious.
June 30, 2022
hefner, so Gordon Brown thought Northern Rock allowing mortgages of 125% of the perceived value of a home was a good idea! It was obviously a problem when their shares started falling in early 2007 and HSBC reported increased Impairments on US mortgages around the same time relating to their accounts for 2006. Regulation failed>
June 30, 2022
Also, how was securitisation of mortgages a good idea? Read about Enron to see how they thought securitisation was a licence to print money and their CEO was originally jailed for 24 years although only served about half of that.
June 29, 2022
Japan, Germany, France, China and other major economies were not as affected as we were NHL.
Labour’s economic policies left us weakened as Sir John has explained.
June 29, 2022
In the UK Blair and Brown were all over Clinton’s idea to get the poor in America on the housing ladder and relaxed the rules here to match so that similar insecure, interest-only mortgages were provided to people who defaulted by the likes of Northern Rock and the RBS.
If people with poor credit histories are given mortgages in the UK then can’t and won’t pay their regular charges then boom, followed by bust should have been anticipated with due diligence.
June 29, 2022
Well true in part, but it was over geared and incompetent UK/US banks and dire incompetent regulation of them. Brown, the Treasury, the regulators and the BoE were all culpable. Banks in Spain and Canada had far fewer problems. In particular the state was insuring personal banking deposits should banks fail but were not properly considering the huge potential liabilities they were taking on in doing this. In the energy markets recently with so many energy companies going bust they have made a similar mistake. Allowing companies to speculate heads we win tails the government, bill and tax payer loose.
We still have fools in charge at the BoE as we see with the deliberate inflation. While at the FCA the fool at the top of the BoE gave us one size for all 39.9% overdraft rates regardless of risk. Clearly not a man who should be trusted with so much as a piggy bank. Where is any real & fair competition in banking?
Essentially companies acting as insurance companies without the assets to sufficiently cover the risks they were taking on. Head they win tales others lose!
June 29, 2022
Excellent comment Mark B. Your last paragraph confirms a good socialist principle, as practiced by our Conservative, but very un conservative, government.
June 29, 2022
The only way out is to do away with central banks and be like the Founding Fathers, dependent on lots of little private banks honouring their commitments. Without cheap, printed money, government would not be able to create a climate of profligacy which cascades down to every part of our lives and ends with inflation and the fleecing of the honest and provident. The way we are going, we will end up with the Soviet system of banking.
June 29, 2022
rose, it’s mostly about regulation. Following the Wall St crash in 1929 somewhere around 9000 small American banks collapsed over the following 4 years or so. To quote the Federal Reserve “One cause was the practice of counting checks in the process of collection as part of banksâ cash reserves. These âfloatingâ checks were counted in the reserves of two banks, the one in which the check was deposited and the one on which the check was drawn”.
July 1, 2022
Creative accounting or just blatant fraud? We still have hundreds of similar lies Enron, Equitable Life and many more.
June 29, 2022
Good comment.
For the U.K. to function as a democracy then governmentâs control over resources needs to be visible to the electorate, and the electorate need to be able to respond. Two things prevent visibility
(i) The BoE acting for the government so that it can fund its expenditure at interest below what would be a market rate, together with money printing taking income (the ability to consume & save) from the electorate via inflation â it is well hidden and allows fingers to be pointed to other reasons.
(ii) G >> T. When G ~ T it is clear that income is taken from the electorate and politicians need to convince the electorate that its reduced ability to consume and save is for a worthwhile reason.
Without fixing these problems governmentâs control over resources is not sufficiently transparent.
Nonetheless even if the fundamental failures above were rectified the electoral system would need to change to allow the people to respond via smaller parties â a few backbenchers wielding their copies of Mises or Marx is ineffective.
June 29, 2022
The assumption that advice given by any public sector official is either good or bad is dangerously flawed as it suggests honourable or moral intention. If a supposedly intelligent politician when elevated to a Ministerial posting cannot differentiate between well meaning official advice as opposed to advice designed to deceive or injure then they shouldn’t even be near the centre of power. It is the civil public that have to suffer the consequences of this ignorance and official malfeasance
Contemporary Public sector officials have become almost Nomenklatura and act politically not morally and therefore the advice offered is designed to facilitate political or career advantage rather than promote a national renewal which must be based on private sector vitality not on a parasitic Socialist political entity
As an aside. I see the Met Police has now fallen in the hands of the Woke activist class. Bye, bye law and order as we once knew it
June 29, 2022
+1
Yes I was just thinking that had money been dealt with in a moral wayâŠnot pushing loans..just not fiddling and obfuscationâŠsalami slicingâŠPiper AlphaâŠBear Sterns⊠etc etc
Then we most probably would not be in this situation?
Usury is probably our downfall.
June 29, 2022
Perhaps Eaton needs to up its game on economics and finances, same for Oxbridge. They appear to turn out so many useless dopes.
June 29, 2022
There are a hell of a lot of economic graduates with no grasp of economics. Thanks goodness our bridge, car and aircraft engineers are rather more competent!
June 29, 2022
Bojo le Clown’s latest woke comment:the Ukraine war would not have started if Putin was a woman.
Catherine the Great was a woman(as her numerous lovers could have testified) – and she gave her neighbours a good bashing!
June 29, 2022
Likewise her predecessor,the Empress Elizaveta Petrovna, who gave (even)Frederick the Great a good thrashing in the Seven Years War.
June 29, 2022
Putin would not invaded Ukraine if the West wasnât so woke and decadent, if the West hadnât made itself so dependent upon Russia for energy and raw materials and if the West wasnât engaged in destroying its economy with Net Zero.
June 29, 2022
At least London has a âwokeâ police force of some sortsâŠ.theyâre lucky I havenât seen a policeman/policewomen for years; apart from the odd police van whizzing by on the lunch break
June 29, 2022
Our local medium sized town had ONE policeman on duty last Saturday night. After phoning all the stations around they managed to find one more to help out. My husband has written to our MP demanding a response but we are not hopeful of a reply. He is a Conservative.
June 29, 2022
Possibly a good thing – people have learned to their cost to avoid contact with the boys and girls in blue.
June 29, 2022
The need for politicians with, amongst other qualities, a very good understanding of economics (preferably acquired through being active in business), is evident. A cabinet of JRs would not have followed the advice.
June 29, 2022
+1
Agree
JR comes, untainted by present madnesses, from The Age of Reason.
You need logic to run a country.
And I dare say he could do it standing on his head!
June 29, 2022
Released papers show that the true facts did not necessitate the involvement of the IMF, but that Healey was misled by politicised misinformation from officials.
June 29, 2022
He chose to be in a party that had to kowtow to its union masters. He has no excuse.
June 29, 2022
I suppose you would have wanted the Government to just ignore the IMF’s advice and just let the pound sink rapidly downwards Zimbabwe style.
The IMF were right.
June 29, 2022
Doubt if things have changed
June 29, 2022
Which agency provided misinformation to Healey, the civil servants in around the Prime Minister or the ONS or other external statistic providers?
June 29, 2022
“Money for nothing” has arrived in Wales ÂŁ1,600 Drakeford ÂŁ20m handouts. After Blair noting Starmer has no ideas. Well expect arrogant youngsters and basket case economic consequences.
Blatant bribery and expect scammers and more reason to dingy it across the Channel.
Pure disaster and so sad. Madness.
June 29, 2022
I am not against assisting vulnerable teenagers but where the financial training in schools to avoid falling into drugs and crime and worse?
June 29, 2022
Exactly UKretired123, Iâm not against helping teenagers but there must be some expectation of study or work for this money. At 18 they could go to University as any other teenager, or the Wales government should be able to co-ordinate traineeships with lodgings provided.
June 29, 2022
Quite easy to mislead one Denis Healey daft enough to join the Labour Party & he even though income tax rates of 98% were a great plan! A double first (Greats) but zero common sense!
âSome ideas are so stupid that only intellectuals believe them.â
â George Orwell
June 29, 2022
So you agree with our host’s comment that some of these events were brought on by bad official advice, NLH?
June 29, 2022
Then; as now, there is little understanding in the 99%, of how a sovereign fiat currency macroeconomy actually works. It is not in the interests of the elite 1% to explain it to them. Millions of Banking and Finance jobs world wide are based on the phrase; “It is difficult to get a man to understand something when his salary depends on his not understanding it.” (Upton Sinclair 1878â1968 American novelist and social reformer.)
June 29, 2022
So you are in the elite then acorn.
June 29, 2022
Illustrating further how incompetent Healey was.
June 29, 2022
is that not the point of the article?
June 29, 2022
yeah right !
June 29, 2022
âAdvisers advise, ministers decide.â
June 29, 2022
First a regime tries to ignore or downplay the results of its idiocy/criminality/deception.
Then it imposes totalitarianism through censorship. ( A bit like the Online Harm thingy).
Very hard to apportion blame then!
June 29, 2022
Good or bad, it’s still only advice. Ministers decide. Intelligent ministers would sniff out bad advisors.
This is no cover for lying and idiotic decisions. You stood on a manifesto commitment to increase defence spending by at least the rate of inflation. Now is an idiotic time to break that commitment. Again Corbyn wouldn’t have promised this but neither would he have broken that commitment. So we have nobody to vote for who will defend the country.
June 29, 2022
What a catalogue of disasters — What a sorry road we have been led down, time after time by the incompetent.
Anyone who imagines economics is a settled science should read the above piece before going to bed each night, and realise that we are all too often let down by dogmatic thinking, not to mention biased ideas.
The current road we are being taken down by the establishment is likely to turn out to be the worst, even, against this catalogue. At least when labour called in the IMF we were not threatened with food supply chain problems, wokism or a declining immoral state.
June 29, 2022
And in a similar vein read Meg Hillers shredding of MOD spending, complacent officials, lack of financial skills etc vast over cost runs, waste etc. this has been going on for decades. Nothing changes, no one fired.
Memo to Ben Wallace. Thank you for your request for another 10 billion. Your department has been wasting tax payers money for many years. Please shake your department out of its complacency as per Megs report and fund the money from efficiency savings. Even more so in these current times when every one is having to cut their cloth.
June 29, 2022
Hard to see how bad advice from the Treasury is to blame now – I doubt it is them advising Boris to throw money at every single problem we have, just yesterday committing to spend even more money on defence. Is there a single area of government expenditure where he’s committed to spend LESS money ?
June 29, 2022
Wow, what a biased and distorted view of the last 50 years. And, let us not forget or ignore that for the last 43 years we have had Tory governments for 30 of those years.
Where to begin? House prices! We have had one house price boom after another. In the mid 1980s the Tory government relaxed lending criteria – again – and between 1984 and 1987 house prices doubled. I know. I bought a property in 1984 for ÂŁ34k and sold it for ÂŁ85k in 1987. The ERM was a debacle, but I was paying a mortgage rate of 14.25% in 1984. The house price bust started – precisely – on August 1st 1988 because an idiotic TORY chancellor pored petrol on an overheating housing market by announcing, SIX MONTHS IN ADVANCE, that joint mortgage tax relief was to end. The housing market simply stopped on 1st August 1988 and the subsequent âhouse price crashâ was the principal cause of the recession and gloom that persisted until Labour won their landslide in 1997.
Of course, after a few years of prudence, Labour opted for the reliable debt-fuelled boom to create a house price boom. But to Let became an industry. A 2 up, 2 down in 1997 could be bought in Newcastle for ÂŁ15k – very affordable for locals. By 2007 the same property was over ÂŁ100k. People were using their houses as lending schemes. Re-mortgaging every year became a national obsession – âletâs take ÂŁ10k out of the house to pay for a holiday, car, weddingâ etc. The bust, the queues outside Northern Rock had NOTHING to do with the USA. They had everything to do with an unregulated banking sector in this country. No-one stopped the wide boys with their Mortgage Backed Securities and their Collateralised Debt Obligations.
And what did the Tories do since 2010? Why, give us close to zero base rates and ANOTHER house price boom. Even during COVID house prices have boomed.
The problem is not bad advice. It is simple incompetence. The only way the government can keep the balls in the air is a constant, relentless expansion of consumer, and government, debt. Boom and bust is inevitable.
A simple solution would always have been to include house prices in inflation figures. While inflation was allegedly 2% the reality was that people have been having to borrow more and more just to have somewhere to live. Look at rents now!
And the other government trick? Endless immigration to try to create growth.
June 29, 2022
The state should tax and spend sufficient for its main responsibilities: (1) the defence of the realm and (2) the provision within it of law, order, justice, and good basic infrastructure – the latter as the modern equivalent to the Roman roads. The state should restrict other taxation and spending, keep out of the way of its people as they organise and work to improve their lives, but have a modest safety net for children, the elderly and the infirm who are not otherwise provided for by or within their families or charities.
June 29, 2022
“1974-6 A Labour government came in thanks to economic failure by outgoing Conservatives. It decided to spend and borrow too much. Inflation continued and the government was forced into a visit to the IMF to borrow money to shore up the falling pound.”
…..
“During all this time of boom/bust and defeats of governments I do not recall much comment on senior Bank of England or Treasury officials offering bad advice.”
I believe that Denis Healey, the then Labour Chancellor of the Exchequer, blamed the pessimistic forecasts of HM Treasury for his decision to ask the IMF for a loan.
https://en.wikipedia.org/wiki/1976_UK_sterling_crisis
June 29, 2022
At the moment many people are living high from the savings they have accrued during the pandemic and the chancellor giving away more money to those on benefits. Until this Government starts to reign in its wasteful spending and implement policies to produce growth we wonât see any improvement. Itâs a dire shame that there are so many politicians who seem clueless about economics.
June 29, 2022
Last week there was published an insighful article by Nick Hubble in the USA which strikes a powerful chord with todayâs Diary. The author illustrates a vivid correlation with current events of repetitious policy gaffes over the last half century, and points to a disturbing ongoing trend.
Those interested may wish to search the title:
Snoop Dogg for Bank of England governor?
June 29, 2022
The ‘last fifty years’ in the opening paragraph takes us nicely back to 1971 when President Nixon closed the gold window, defaulting on the USA’s promise to other countries to turn their US dollars into gold.âThat is not a coincidence.âSir John concentrates on what happened in Great Britain, but other countries were also affected.
The USA default, breaking the tie between the US dollar and gold and in turn between currencies like sterling which was pegged to the US dollar and gold, was the spurt needed for politicians to over-promise at election time to gullible voters funded by printing money through credit expansion.âMany charts showing the inflection at 1971 or soon after are available at https://wtfhappenedin1971.com
Until sound money returns, a country’s finances will only worsen.âA country which, painfully, moves to sound money will see long-term benefits, as many countries did during the era of the gold standard ending with La Belle Epoque.âUntil then, each bailout must exceed the last.
June 29, 2022
A bit of bedtime reading for those interested. “Repeat after me: Central banks can make large losses and who would care”. http://bilbo.economicoutlook.net/blog/?p=49228 (For the record â central banks cannot go broke.) My comment on this site is considerably older than the dates shown.
Also, “Money and Banking â Part 6: Treasury and Central Bank Interactions”. https://neweconomicperspectives.org/2016/02/money-banking-part-6.html A bit of a heavy read.
June 29, 2022
Argentina. Zimbabwe. The Weimar Republic (Germany 1920’s).
So what went wrong ?
June 30, 2022
Indeed Mark, acorn still thinks the magic money tree theory works perfectly despite inflation at around 10%.
The fact you can print and create endless amounts of artificial money doesn’t mean you should.
June 29, 2022
All cause mortality is up by 15% above the five year average according to the government.
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/deaths/bulletins/deathsregisteredweeklyinenglandandwalesprovisional/weekending17june2022
June 29, 2022
Sir John,
I still have a booklet the government sent me in early 2016. It’s amusing to look at it now, six years later. It’s also a reminder of project fear that was widely projected at the time, especially from George Osborne and Mark Carney. If there ever was an enquiry into bad advice and wrong forecasts, that is where I would begin. Fortunately the majority of voters saw through it.
June 29, 2022
Previous busts will be nothing compared to Net Zero with intermittent power, volatile pricing and rationing of energy, food and travel in order to halve our total energy consumption despite a 10m or more increase in population.
June 29, 2022
I have said it before, and I will keep saying it until it sinks in: NOTHING WILL CHANGE until ministers have the ability to hire and fire officials. A lot of civil servants – from the most junior to the most senior – are either incompetent or have a different political agenda to that of the government. The government will never get its way, and rule successfully, until all those civil servants are sacked and replaced by officials who are both 100% loyal and also competent.
There should be no restriction on the ability of a minister to sack an official, or to hire one that he prefers. Ministers must have REAL POWER, or else how can they be held accountable for the failings of their departments?
June 29, 2022
Parliament holds the purse strings. If parliament so wishes, it could just turn round and say no more money until . . . . !
He who controls the money controls the country.
June 29, 2022
+1 X-Tory – not only unsackable, but many are rewarded for failure. Generously rewarded, in addition to the generous pensions and other perks. Obviously, governments and their employees live on a different planet to the proles.
June 29, 2022
Advice is simply that.One can choose to take it or ignore it.
Obsessive arguments from any one with a repetition demonstrating disrespect will cause more problems . Respect for persons is not a difficult road to follow.The loud mouthed people using bad language without social skills will not make changes.A sensible argument, as Dennis formulates makes people listen.
June 29, 2022
âCivil service advise, Ministers decideâ
Civil servants give a limited number of options and they are often poorly constructed. However at a push their shoulders will turn into the down ramp of a roller coaster and will say âbut there were other options available Ministerâ.
So the first questions to any options given by civil servants (in fact letâs make it a signed declaration by the civil servant) whether these are the only options available and whether it is advisable to seek other opinions.
The Ministers must then decide whether they employ other advisers and cut down on the number civil servants offering substandard opinions.
June 29, 2022
All very interesting but nothing works now you have put Boris in charge. All he wants is to have his ego fed while the country goes hungry.
He can rely on support and loyalty from his MPs however.
June 29, 2022
2010 â 2022 The Conservative Party continues and advances the policies resulting from the UN & WEF drive to reduce co2 under the banner of climate change, net-zero and the green revolution.
With the government(s) climate change act and the main parties manifesto(s) to curtail the use of fossil fuels, banning the internal combustion engine, gas fired domestic heater/boilers, shale gas, coal mining and exploration of off shore oil & gas drilling and furthering subsidies to the renewable energy, foreign wind-turbines and EVs its no wonder the economy is down the pan
History will show that the trigger for our cost of living crisis, inflation, industrial strikes and rising taxation is the governments policy of ânet-zeroâ
We donât have an energy or fossil fuel shortage â we have policies that have led to a decline in market confidence and investment in the oil & gas sectorâŠwhich has increased the commodity futures prices due to governments announcement of replacing fossil fuels with renewables, which has led to increased transport and base material costs, which has led to increased manufacturing and retail costsâŠ.which is passed on to the consumer
June 29, 2022
And making people who deal in such commodities very rich I aver đ
June 29, 2022
Sums it up in a nutshell, glen, but in government and political circles it seems to be verboten to even mention any drawback of “net zero”.
June 29, 2022
Why single out the Treasury as providers of bad advice?
They’re ALL at it…… Look at the Home Office, Justice, the Energy Dept, Health, Ag & Fish, Education, there is an ocean of incompetence in all of these departments.
We have a system of government in which nothing, nothing at all, works as it should. We need politicians who can get to grips with the utter uselessness of the Civil Service.
June 29, 2022
+ Absolutely true!
June 29, 2022
Not sure what your intention is today Sir John.
My own reaction is that the so called Conservative Party of today is indistinguishable from the Big State, Tax and Spend Parties, on the Political Left.
May be this does come from the Treasury (civil service) and the Bank of England.
But so what? The Chancellor of the Exchequer is supposed to be ‘Conservative’ and he is responsible, and in control of both.
Privately owned businesses make money, just so long as they are not taxed into oblivion or overseas.
Their employees have to produce something customers wish to purchase at a price they can afford.
Public ‘servants’ tend to produce nothing of any value to anyone.
June 29, 2022
They won’t take Scotland, Ireland and Wales – They don’t make enough money and would be another drain. England on the other hand ?
June 30, 2022
No Mark B they won’t take England – They’ll remember too clearly Widdecombe and Farage behaviour in the Parliament they are never going to want that back again. On the other hand Scotland, Ireland and Wales can measure up very well to a lot of countries already inside the bloc for economy and population size.
June 29, 2022
I see my comment this morning has not made it past moderation. A bit too close for comfort?
June 29, 2022
The world comprises of introverts and extroverts and the post depression era comprised of farmers moving to cities and becoming salesmen. The Dale Carnegie doctrine of loud-is-good, extroversion is to be desired and introversion is not… led to the bullish and gung-ho herd attitude of the banks and the markets.
I see this in my own field (not banking) that bullshitters are followed and get all the respect yet when you analyse their own lives they are abject failures with broken marriages, serial sexual relationships and delinquent offspring.
How many politicians or bankers are excluded simply because they do not have ‘charisma’ ? How many are included because they have the gift of the gab and a sparkle in the eye ?
June 29, 2022
No thanks. If things look bad, the country needs to elect men and women with integrity, imagination and inspiration to lead it. Regrettably we just have inappropriately qualified career politicians.
Local and central government is quite enough; I don’t want yet more people making rules about how I should live.
June 29, 2022
So now we are told that we need troops not cyberweapons or drones!
How EASY it would have been, here for example, to house and train an expanding army.
Shame the MOD sold literally hundreds of army homes, a huge garrison ( with church) all ready to go.
Tons of land and all for a sum that now looks utterly pathetic compared to the true value of those assets.
Too late to reclaim it now.
And where in this God Forsaken land will they find similar resources?
Theyâve given it all away.
June 29, 2022
Oh yes.
And in their utter filthy greed and worse they destroyed a very nice, safe and thriving settlement.
June 29, 2022
Would our courts judge âNapier Barracksâ unfit for our soldiers âŠlike its deemed unfit for immigrants
June 30, 2022
Last year it was stated that significant improvements ( & therefore significant monies spent presumably ) had been made at Napier. There was more needing to be done after the fire & other damage there ( Reported as deliberate actions by residents at the time ) Looking at the report of March 2022 under the heading of the Independent Chief Inspector of Borders & Immigration on the Government’s website – ” A re-inspection of Napier Barracks” to my mind does not clarify why it is deemed unlawful exactly. I suppose there may be additional clarification somewhere I may have missed. However, we could certainly do with this accommodation – with a capacity I believe of around 400. Since this Monday 27/6 we have seen 447 recorded ( MoD formal stats ) with ‘informal’ reporting today, Thursday, of many others arriving since 4am this morning including at Dungeness.
June 29, 2022
All PM’s from 1970’s thereon have had to be Pro this “ever closer” union. MP’s, in general, have since sought to manage away the rights of the UK electorate to other bodies beyond the direct influence of the electorate.
There is no connection between the electorate stated desires and manifestos or pledges by the said parties.
We need the ability to call binding referenda, impeach and or recall errant MP’s who do things contrary to electoral promises , referendums, clearly stated wills and other events. Some were clearly guilty of conspiring with external forces against the UK electorate explicit instructions to just leave the EU, as Article 50 intended.
Who said “Now let’s see how they will implement the principles of democracy,”