The US, the UK and Euro area diverge in their approaches.

All 3 Central Banks , the ECB, Bank of England and Fed, made the same mistake of creating too  much money, buying too many bonds and keeping interest rates too low and ended up with a high inflation. China and Japan didn’t do these things and kept inflation down.

All 3 Central Banks that got it wrong now are making their publics pay by hiking rates and trying to generate a recession or slowdown. Only now they are starting to diverge. The ECB is going easier on their economies, afraid of too deep a recession and worse financial and banking problems if they tighten more. They are not selling bonds at big losses and stopped hiking rates at a lower level. The Fed which is doing the same as the Bank of England had to reverse policy and plump $400 bn b ack into markets to avoid a regional banks collapse.

Now the US Treasury has opened up and is in effect fighting the Fed. Where the UK Treasury goes for a falling deficit, the US has just doubled its deficit when adjusted for the accounting of student loans from fiscal 2022 to fiscal 223 to September year end. The deficit soared to $2 trillion.

No wonder the US has 4.9% growth and we  have practically none. A $400 bn course adjust by the Fed and a huge fiscal boost kept the economy going. Who is right?

 

103 Comments

  1. Mark B
    November 8, 2023

    Good morning.

    The US Fed can afford to double their debt as, for now at least, the US Dollar is the reserve currency. There is also a Presidential Election to consider next year and the Biden Administration needs good news.

    The UK has less wriggle room and so in order to combat inflation generated by the government allowing the BoE to print too much money rises in taxes and interest rates seem to be the weapon of choice. But these only affect those that work and pay taxes and who have borrowing. It does not affect those who rent or are on some sort of support.

    The main problem for the UK is the cost of government and spending. We have touched on this before but it is worth noting as it seems that this is a bit of a Sacred Cow. It is, along with MASS IMMIGRATION the biggest failing of the Conservative Parties tenure.

    There will be much wailing of, “Oh why did we not listen ?”

    1. Peter Wood
      November 8, 2023

      Yes, a very distorted view from our host. Yes, there will be trouble with the US treasury issuing so many new bonds, concern is well reported, but the Fed. Res. is not buying them, in fact the Fed is selling Treasuries, see here: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm. New money printing is NOT going on (so far).
      The big question is, who will buy those new Treasuries and at what price. The money is going to come from the existing money supply so something else is going to be sold, IF the yields are high enough to attract buyers. Interest rates are going higher, or Biden’s plan is going to fail.

    2. Mickey Taking
      November 8, 2023

      ‘We have touched on this before’
      It needs shouting from the rooftops, before the authorities might listen.

    3. Hope
      November 8, 2023

      JR,
      Why are you and your MP colleagues going along with it? At what point do any of you say enough this is utterly stupid and against everything I believe in and what I stood to be elected for. Either the two stupid treacherous boring twins, Sunak and Hunt, go or we all do at the next election.

      Or is this plan by Gove and co to change your party when it loses? Interesting commentary by IDS in Dorries’ book about his demise as leader.

      1. jerry
        November 8, 2023

        @Hope; What’s the alternative, for the Tory MPs you suggest, vote against their own Leaders Kings Speech, their own Chancellors budget – What then?

        I’ll tell you, the resignation of the Govt, and with no prospect of forming another, the King will be advised to authorize a general election… The fact is, there are many more ways to run a county than how you think it should be, how I think it should, how our host thinks it should, but first one of us needs to (still) be in Govt!

    4. Lifelogic
      November 8, 2023

      Indeed you say “But these only affect those that work and pay taxes and who have borrowing. It does not affect those who rent or are on some sort of support.” nor indeed those on fixed mortgages for a few more years. The best solution is to cut the vast government waste, ditch net zero for far cheaper energy and cut sales taxes to directly reduce inflation. But they do so love wasting other people’s money.

    5. Ian B
      November 8, 2023

      @Mark B – The US has an economy that is earning to pay its way. The UK’s 2 Chancellors have ensured that the UK economy where ever it should raise its head is sold off and banished from contributing to UK. The UK under their watch just as it has been for the last 14 years is to be devoid of its existence and as such doesn’t need an economy.

    6. Ian B
      November 8, 2023

      @Mark B
      Yes, while we have a weak Government that is compliant to the wishes unelected unaccountable bureaucrats it is the Conservative Party along with their CCHQ that has foisted on us and maintain the weakest Government in living memory. The electorate count for nothing and they will be lied to and reneged on next time around as well as it stands today.

    7. Margaret
      November 8, 2023

      No …that would be too humble and honest.

  2. Lynn Atkinson
    November 8, 2023

    A deficit of USD 2 trillion stopped me in my tracks. Add in a debt of touching USD 34 trillion and they have their work cut out to ‘keep the economy going’ once the death of the petro-dollar and the loss of the Reserve Currency kick in. As the oil-rich countries (and us I hope!) sell US bonds, all this debt is going to come crashing down on the US population. They will need some growth rate and extremely low taxes to survive – or will the USA default? How will Britain manage and reduce the hit we take?

    The EU is basically a dead duck, so whatever they do, including buying massive amounts of Russian energy, is moot. This is just an oxygen tank attached to a corpse. We should be asking how the European ex-Euro countries are going to relaunch their currencies and divide the debt – or will they just leave the EU debt in the bankrupt EU Estate and start from scratch? How will Britain manage and reduce the hit we take?

    Crushing the life out of the goose that lays the golden egg as the British Treasury/BOE are doing is equally shocking. With debt and huge spending/financing-of-waste how can the government continue without more borrowing? Who will lend/invest in the U.K. economy with a ceased engine? Even the British seeking to invest abroad in the stable and growing economies of the east where you get a real-term return?

    1. Lifelogic
      November 8, 2023

      “Crushing the life out of the goose that lays the golden egg as the British Treasury/BOE are doing” indeed this is what the Tories are doing with monetary policies, fiscal policies, net zero policies, regulatory policies, piss money down the drain policies, low skilled open door immigration policies, coerced net harm vaccines policies and lock down policies (these irrationally even surely criminally for children, the young and people who had already had Covid).

    2. Lifelogic
      November 8, 2023

      Exactly right.

      Sorry JR this is rather long but is just most of the Kings rather wet and misdirected (Sunak’s governments) Kings speech with my comments in brackets.

      The impact of Covid and the war in Ukraine have created significant long-term challenges for the United Kingdom.

      (Not really Covid or the war that was the main problem it the total mismanagement of Covid with the net harm lockdowns, fraud, net harm vaccines, vast government waste & corruption, over taxation and net zero energy lunacy being pushed.)

      That is why my Government’s priority is to make the difficult but necessary long-term decisions to change this country for the better.
      (Well you have had 13 years are you only starting this now?)

      My Ministers’ focus is on increasing economic growth and safeguarding the health and security of the British people for generations to come.
      (This while exporting steel production and much other manufacturing – a great plan for defence)

      My Government will continue to take action to bring down inflation, to ease the cost of living for families and help businesses fund new jobs and investment.
      (Inflation Sunak and the BoE caused with their vast QE tax, borrow, print and waste, net zero high taxes and lockdown agenda.)

      My Ministers will support the Bank of England to return inflation to target by taking responsible decisions on spending and borrowing. These decisions will help household finances, reduce public sector debt, and safeguard the financial security of the country.

      (So a vast 180 degree U turns here then responsible spending even.)

      Legislation will be introduced to strengthen the United Kingdom’s energy security and reduce reliance on volatile international energy markets and hostile foreign regimes. This Bill will support the future licensing of new oil and gas fields, helping the country to transition to net zero by 2050 without adding undue burdens on households.

      (Well you need to ditch net zero for energy security a huge and an entirely counter productive burden.

      Alongside this, my Ministers will seek to attract record levels of investment in renewable energy sources and reform grid connections, building on the United Kingdom’s track-record of decarbonising faster than other G7 economies.

      (Why on earth are we “decarbonising” at vast expense when a bit more CO2 is A not a problem and B a net benefit?)

      My.Government will invest in Network North to deliver faster and more reliable journeys between, and within, the cities and towns of the North and Midlands, prioritising improving the journeys that people make most often.
      .
      (More usually misguided investment in trains)

      My Ministers will strengthen education for the long term. Steps will be taken to ensure young people have the knowledge and skills to succeed, through the introduction of the Advanced British Standard that will bring technical and academic routes into a single qualification. Proposals will be implemented to reduce the number of young people studying poor quality university degrees and increase the number undertaking high quality apprenticeships. 

      (So a new name for A levels, forced maths for people not interested & no good at it to 18 and reductions in the number of duff degrees than Sunak has been paying for with soft loans for years. Circa 75% of currently degrees are not remotely worth what they cost. Great plan Sunak?)

      My Government will promote the integrity of the Union and strengthen the social fabric of the United Kingdom.
      (So a U-turn on the Windsor Accord Lunacy then?)

      Working with NHS England, my Government will deliver its plans to cut waiting lists and transform the long-term workforce of the National Health Service. This will include delivering on the NHS workforce plan, the first long-term plan to train the doctors and nurses the country needs,

      (Sure waiting lists still going through the roof despite all the dishonesty in recording them. So Hunt in his 5 years as Health minister did not have a workforce plan?)

       My Government will introduce legislation to create a smokefree generation by restricting the sale of tobacco so that children currently aged fourteen or younger can never be sold cigarettes, and restricting the sale and marketing of e-cigarettes to children.

      (Sure you cannot even stop hard drugs)

      My Ministers will bring forward a bill to reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of homeowners through punitive service charges. Renters will benefit from stronger security of tenure and better value, while landlords will benefit from reforms to provide certainty that they can regain their properties when needed.
      (Theft off landlords to try to by votes just like Ed Miliband and his tomb stone! Totally immoral socialism does not even help tenants in the end)
      My Government will act to keep communities safe from crime, anti-social behaviour, terrorism and illegal migration.
      (Sure that is going well like your other pledges Sunak)
      A bill will be brought forward to ensure tougher sentences for the most serious offenders and increase the confidence of victims. My Ministers will introduce legislation to empower police forces and the criminal justice system to prevent new or complex crimes, such as digital-enabled crime and child sexual abuse, including grooming.
      (Except the prisons are full and the police do nothing about nearly all crime)
      My Government will deliver on the Illegal Migration Act passed earlier this year and on international agreements, to stop dangerous and illegal Channel crossings and ensure it is the government, not criminal gangs, who decides who comes to this country.
      (Sure we need action not another pointless bill Sunak you decided and you have an open door and encourage more policy)
      My Government will continue to lead action on tackling climate change
      (Why the climate has always changed and will continue to do so CO2 is not a devil gas but is vital for life and a new good).
      The United Kingdom will continue to lead international discussions to ensure that Artificial Intelligence is developed safely.
      (Sure they cannot even stop children stabbing each other).
      My Government will host the Global Investment Summit, the European Political Community, and the Energy Conference, leading global conversations on the United Kingdom’s most pressing challenges.
      (Why bother think of all the energy you will save in private jets if cancelled?)

      My Government will, in all respects, seek to make long-term decisions in the interests of future generations.
      Another 180 degree U turn..
      My Ministers will address inflation and the drivers of low growth well this is driven by your tax, borrow, currency debase and vast waste agenda Mr Sunak
      I pray that the blessing of Almighty God may rest upon your counsels. (Which God is this then Charlie (protector of faiths and King of Climate hypocrisy? They all seem to have rather different and usually entirely conflicting agendas. Is there a God for the new CO2 devil gas religion or just St Greta?)

      (In short, absolutely misdirected and rather pathetic! Is Sunak actually trying to throw the election with as large a swing as possible?

    3. Ian+wrag
      November 8, 2023

      Stop selling bonds but don’t follow the Yanks.
      Lower interest rates and cancel IR35.
      Cut benefits to those that can bur won’t work, my stepson included.
      Get off our backs and watch us flourish

    4. Hope
      November 8, 2023

      Starmer attacking Tories for high tax and no growth. How pitiful for an alleged Tory govt to be ridiculed by an extreme left wing socialist party for their economic incompetence!

    5. Ian B
      November 8, 2023

      @Lynn Atkinson – “Crushing the life out of the goose that lays the golden egg as the British Treasury/BOE ”
      They are punishing you, me, us for wanting to live in a proper democracy and not be ruled by unacoutable, unelected bureaucrats, after the are bureaucrats from the same mold, and we have a government that is to complacent to care

    6. Mitchel
      November 8, 2023

      Oilprice.com.16/10/23:”Crude oil is set to become the largest export item for the United States this year for the first time in history.”

      “Gas station with a country attached”?!

    7. jerry
      November 8, 2023

      @Lynn Atkinson; “A deficit of USD 2 trillion stopped me in my tracks. Add in a debt of touching USD 34 trillion”

      So a total debt of less that 1.5 times GDP (2023 estimate $26.950 trillion PPP), now compare that to the debt taken on by the average average UK or US mortgage holder, never mind their ‘credit card’ debt, the $36 trillion debt that stopped you in your tracks really is not that great. You should be far more worried about a repeat of the 2007 US mortgage default crisis.

      “and they have their work cut out to ‘keep the economy going’ once the death of the petro-dollar and the loss of the Reserve Currency kick in.”

      But is there any realistic prospect of that happening, given the world will still be highly reliant on the perto-chemical industries with Net-zero, perhaps more so. Something the “Just Stop Oil” protesters can’t seem to grasp.

      “The EU is basically a dead duck ..//.. just an oxygen tank attached to a corpse”

      Not when the EU27 has a combined GDP of $25.399 trillion, yours is just wishful thinking, and the EU27 seems to be coping with their energy crisis better that the UK is coping with our own.

  3. DOM
    November 8, 2023

    Did these macroeconomic obsessions dominate the political landscape when the industrial revolution (loathed to use a Toynbee expression but unavoidable) was taking off in Britain in the C18th ie a time when Britain ruled the industrial world? I doubt it very much

    It is my naive belief that we are victims of idiots in charge who enjoy experimenting with ideas and strategies, applying their worthless, economic models on the human world. Playing with money flows, rates of monetary return and public spending when the real economy gets on with the ever arduous task of producing more material goods and services that serve domestic and international consumption in the face of dickheads who spend their days talking and spouting bollox that they learned at Oxford, Cambridge or Harvard.

    Thank god for private business who deliver our ‘daily bread’ to feed and nourish us all

    Brain-dead politicians and parasitic bureaucrats along with tedious think-tanks should leave business alone, remove the burdens and let them get on with doing what they do best.

    Create a culture of business entrepreneurs that embrace risk and desire to build business from nothing..that’s the way forward

  4. Sakara Gold
    November 8, 2023

    Central banks globally bought about 800 tonnes of gold in the nine months to September, with 337 tonnes purchased in the third quarter alone, according to the World Gold Council.

    The People’s Bank of China regained the title of the largest buyer globally, increasing its gold reserves by 78 tonnes during the quarter. Since the start of the year, the PBoC has increased its gold holdings by 181 tonnes to 2,192 tonnes (equivalent to 4% of total reserves).

    The National Bank of Poland continued its buying spree in Q3, adding a further 57 tonnes to the 48 tonnes it bought in Q2. This brings it’s YTD gold accumulation to 105 tonnes, in line with its previously stated aim of adding 100 tonnes to it’s gold reserves

    But they may not stop there. In early October, NBP President Adam GlapiƄski stated: “This makes Poland a more credible country, we have a better standing in all ratings, we are a very serious partner and we will continue to buy gold. The dream is to reach 20 percent”

    For context, the NBP currently holds 334t of gold, equating to 11% of total reserves.

    Britain now owns so little gold that a figure is not included in the Treasury’s data for foreign currency reserves. Apparently, over the past 13 years we have sold it all. Of all the bad mistakes that the BoE and the Treasury have made, this will prove the worst.

  5. Richard1
    November 8, 2023

    Biden’s $2 trillion deficit is not sustainable. He only gets away with it because of the US$. How long it can continue no one knows. But as we saw in the catastrophic Liz truss episode, we have no such luxury here. Public spending, now 45% of gdp though the economy is larger than ever, needs to be brought under control in order that borrowing can be controlled and taxes cut, so we can get growth. No sign of mr hunt wanting to do that, so Labour will win the election. Whilst the same constraints will then still apply, we will at the margin get even more spending and waste, even more tax and a bit more borrowing, for no benefit. And of course forget Brexit, which will be surreptitiously reversed.

    1. JoolsB
      November 8, 2023

      +1

    2. Lifelogic
      November 8, 2023

      “Public spending, now 45% of gdp” indeed and it is largely wasted so producing so little or any real value. Much is spent doing positive harm like net zero, the net harm vaccines even for the young, HS2, road blocking, propaganda lies & adverts, pointless masks, test and trace, motorist muggings, endless red tape, bonkers employment and tenant laws, over restrictive planning


    3. John Hatfield
      November 8, 2023

      So the message is clear. Don’t vote Conservative, Labour or Liberal.

  6. Donna
    November 8, 2023

    Neither are right.

    We need targeted tax cuts for businesses and individuals; far better incentives (carrot AND stick) to get benefit claimers back into work; stop the mass importation of poverty; remove the Net Zero ball-and-chain on our economy and cut the size of the State by scrapping regulations and at least half of the Quangos which create and enforce them.

    1. JoolsB
      November 8, 2023

      +1

    2. jerry
      November 8, 2023

      @Donna; “get benefit claimers back into work; stop the mass importation of poverty”

      Unless the government introduced Soviet style direction of labour, they can not make people do jobs they do not want to do, even if they make them take the interview, have you ever been an employer or manager, it soon becomes very obvious who are in the interviews just to make the number up.

      Ask yourself, why is it some sectors of the UK economy became filled predominately migrant employees in the last 25 years, yet tens of thousands of fit British born youths who could have done such jobs but chose the easier life of College by day and flipping burgers or pulling pints by night, even though they leave College with massive debts and (for many) pretty worthless qualifications?

      Sound-bite politics is easy, creating workable policies, less so…

  7. Dave Andrews
    November 8, 2023

    It doesn’t matter if they crash the UK economy, as Brexit will get the blame, which for the fifth column constitutes a result.

  8. Sea_Warrior
    November 8, 2023

    Who is right? Dunno. But I do think that central banks, in seeking to curb inflation, have used typical measures to solve an atypical situation – and governments have done too little. The result is that the voter – particularly the mortgage-payer – is being squished. If prices go up, they buy fewer items. They don’t then need the Bank of England to increase any interest rates they’re paying. The fight against inflation has been waged on the demand-side with too little done on the supply-side.
    The King’s Speech was disappointing. The Autumn Statement had better be a tax-cutting one. My advice to Sunak remains to see out this parliamentary term. A second Autumn Statement will be needed to reinforce in voters’ minds that the government will do what it promises.

  9. Hat man
    November 8, 2023

    SJR: You mention that the ECB is going easier on its policies, trying to spare European economies a recession. Perhaps it is showing more concern for the economies of its member countries because its Governing Council comprises only Europeans. Unlike our BoE’s Monetary Policy Committee, it has no foreigners as part of the body that decides policy.

  10. David Andrews
    November 8, 2023

    None of the central banks have got it right. Getting out of the debt traps looks next to impossible for the US Fed as the US government keeps spending as if there is no tomorrow. The huge re-shoring of US manufacturing will be inflationary as much of it must be financed with expensive debt and operated by expensive labour. By contrast the UK acts as if it can drive business away with impunity and import what it needs without consequences. It too is stuck in a debt trap. For the EU the outlook is dire as the era of cheap energy ends with no obvious means of escape from its own debt trap. Each needs unflinching political support to get debt and inflation down. That looks unlikely if not impossible with elections looming.

  11. Denis Cooper
    November 8, 2023

    Off topic, tidying up I came across an article in the Evening Standard headlined:

    “Elite squad targets the gangs behind people smuggling”

    That was on September 6 2001, and yesterday, twenty-two years later, it is still:

    “ensure it is the government, not criminal gangs, who decides who comes to this country.”

    So have they ever really wanted to solve this problem?

    1. jerry
      November 8, 2023

      @Denis Cooper; “That was on September 6 2001, and yesterday, twenty-two years later, it is still:”

      Five days later the world was changed for ever, and we all had far more worrying issues to think about and deal with, some of which have kept those ‘gangs’ busy [1]. But hey-ho, Denis, nothing like a bit of political opportunism, even if the hay is being made some 22 years later… 🙄

      [1] by gangs, in the context of 2001, as was common back then, these were groups of migrants helping each other to stow-away on lorries and trains destined to cross the Channel, not the organized crime it has become

  12. Narrow Shoulders
    November 8, 2023

    $2 trillion deficit to drive growth of 4.9% and increase inflation

    So borrow 8% to grow 5% and make things cost more and pursue more redundant renewables which need ever more back up.

    I’ll take a short sharp recession here please without the borrowing (if only) – cut government spending, stop taking so much of our money of us and move on.

  13. formula57
    November 8, 2023

    Certainly the U.S. approach has allowed for a more vibrant economy (although there is a wide discrepancy between GDP and GDI that when resolved may blot the record).

    One is left to wonder if Sir Starmer is correct in saying (quoted by Guido Fawkes) that the “Tory recipe for British decline: low growth, high tax, crumbling public services with the prime minister serving up more of the same”.

    1. Ian B
      November 8, 2023

      @formula57 – the infered Starmer quote does seem to be playing out in real time. The Conservative Party, CCHQ? its in their gift to correct things and they refuse.
      As noted elswhere the US has an economy, it has not been sacrificed by stupidity. The UK has used stupidity to sacrifice its economy.

  14. formula57
    November 8, 2023

    O/T lacklustre King’s Speech – I note Boris “getting the big calls wrong when not missing them altogether” Johnson’s notion of granting mortgages to those living on welfare was not included. Was it not seen as a vote winner?

    1. Christine
      November 8, 2023

      I agree. I’ve also never heard such a lacklustre King’s Speech. If Sunak thinks things like banning smoking and allowing automated cars on our roads will win him the next election, even with all the woes the Labour Party has, then he is wrong. He needs to follow Sir John’s tax plans to get the country growing. He also needs to reform the charities in this country. I’m sick of my taxes paying for people who hate this country.

      1. paul cutbertson
        November 8, 2023

        The “king”? is following the globalist agenda.

  15. Mike Wilson
    November 8, 2023

    Who is right? Sounds like China and Japan.

    But we are where we are. On a day to day basis most people are oblivious to our deficit and debt. Ask 100 people ‘what’s the difference between government deficit and government debt?’ and I’d be surprised if 10 people knew the answer.

    Surely the only way out of this mess is to gradually reduce the deficit to zero and then gradually pay down the debt. Control government spending and immigration. It will take a lifetime from now – if our government actually started.

  16. Lifelogic
    November 8, 2023

    “No wonder the US has 4.9% growth and we have practically none”

    The US has a far cheaper, non green crap driven, energy policy too and rather better economies of scale. Energy is often 1/3 of the UK prices. Sunak’s and Hunt policies are directly against growth. Very high taxes, over regulation, open door migration, very poor often virtual monopoly public services, expensive intermittent energy due to net zero, little incentive to invest or to work hard, large incentives to leave and work or invest elsewhere.

    1. Ian B
      November 8, 2023

      @Lifelogic
      Only 6 Countries have made ‘Laws’ that must be obeyed to achieve Net Zero, the rest look after their economies first.
      The top 10 polluters below have not made Laws for NetZero
      1. China, with more than 10,065 million tons of CO2 released. 5.22 metric tons
      2. United States, with 5,416 million tons of CO2 14.67
      3. India, with 2,654 million tons of CO2
      4. Russia, with 1,711 million tons of CO2
      5. Japan, 1,162 million tons of CO2
      6. Germany, 759 million tons of CO2
      7. Iran, 720 million tons of CO2
      8. South Korea, 659 million tons of CO2
      9. Saudi Arabia, 621 million tons of CO2
      10. Indonesia, 615 million tons of CO2
      Rishi Sunak and his Conservative Government is rewarding the big polluters with UK Taxpayer money to close down UK manufacturing, and import from those same polluters rather than manufacture at home. Its a big loss of jobs and resilience for the UK economy. That is, he is giving the polluters our taxes as a reward for making the UK dependent and less secure. Then some wonder which Country he and his Conservative Government are working for and serving
      All because of Laws no one else would be stupid enough to make and uphold. What is a point in having a Parliament to look after our interest, when they instead fight the UK People.

      1. Lifelogic
        November 8, 2023

        Exactly, but CO2 is net beneficial, vital for life, tree and plant food not pollution!

  17. Ian B
    November 8, 2023

    “All 3 Central Banks that got it wrong”
    The thing that comes to mind is Socialist WEF Group think. It is clear they have been in direct communication and instead of working for the Countries that pay and empower them, they have been trying to manipulate a new World Order. This digression from their formal functions has led to punishment of everyone that is forced to pay for their mistakes.
    Yet elected Governments and their Parliaments now live in fear of doing what is right, what they have been elected to do, to serve their people, they are now in fear of this higher power they refuse to manage as such they find themselves bowing down to it instead. Even more galling these entities are more in the wrong than in the right. This is the WEF war, the ‘Great Reset’ and democracy is losing.

    Democracy is not perfect, but it is 100% safer than the alternatives.

    Why do we have the semantics of elected representatives, when those that get elected refuse to represent their electorate, refuse to hold Governments to account? why has power been passed on and away from democracy?

    1. Ian B
      November 8, 2023

      All the UK’s weaknesses is not from its people, but from their elected representatives not stepping up and serving.
      Constant riots and the terrorist plaguing our streets are as a result of the refusal to Govern, the refusal of MP’s to think and step up.
      Our dysfunctional Education system being manipulated by perverse cults is the result of the refusal to Govern, the refusal of MP’s to think and step up.
      Likewise, our health system, our transport infrastructure, and after 14 years still no secure resilient energy available – all the result of the refusal to Govern, the refusal of MP’s to think and step up.
      Our Parliament, the lack of a real Government, the refusing of Democracy has made the UK a dangerous place for it inhabitants. Why because the higher power not elected, not accountable elsewhere wants to shape the World in their image. And, this Conservative Government is the most detached this or any country has to endure by it not wanting to serve its electorate.
      So it it any wonder these Central Banks have seen it as an open door for them to dance to a different tune.

      1. Ian B
        November 8, 2023

        What do you call a gang that has foreign sponsors (that have no connection to the UK) being funded to disrupt ordinary law-abiding folks going about their business, Terrorists or Just Stop Oil?
        Where is the Government? It would appear they have checked out getting their new lives in foreign lands sorted. Destroy the UK, destroy its economy and leave it to the mercy of the rabble with no way to pay for a future. What did the so-called ‘Kings Speech’ have to do with the UK?

        1. Mickey Taking
          November 8, 2023

          what do you call? answer: A protected species.

  18. agricola
    November 8, 2023

    Basically it is governments choosing to spend way beyond their tax take, and then when the proverbial hits the fan, forcing the tax paying public to pay even more by devaluing their earnings, making their homes more expensive to buy and generally allowing the cost of living to explode.
    Does it never occur to you politicians that it is your spending of other peoples money that is the root cause of the suffering you so generously spread. Add to this the on cost of illiterate spending on everything you might be judged to spend legitimately. Government both political and civil service are not fit for purpose. You are abysmal without a crisis but catastrophic with one.

    1. Ian B
      November 8, 2023

      @agricola The Conservative Government give the appearance of haveing checked out and have enough personal offshore wealth to be comfortable, while we are left and get punished by paying down their debts, their lunacy and malicious destruction of the UK .
      All allowed under the watch of a Conservative Party with a diminishing 80 seat majority

  19. Everhopeful
    November 8, 2023

    But isn’t the US “boom” because of the “Green New Deal”? Encouraging uptake of greencr*p with subsidies? Like the Chinese have done.
    Is doing that sustainable?
    And in what I just read they say gleefully that it will help to do away with fossil fuel more quickly. ie US will be more quickly left stranded with no viable energy.

    1. Ian B
      November 8, 2023

      @Everhopeful – Probably not but they do have economies, growing economies that have a chance of funding those dreams. Mean while our Conservative Government has paid with taxpayer money the Chinese and Indian companies to close down production in the UK, with the intention of the UK having to import the same products causing double the pollution all under guise of NetZero. Whose NetZero? Or are those high polluting countries on another Planet. This Conservative Government is cancelling the UK economy so the US and Chinese initiatives are not an option. They cant thing beyond the soundbite and next media headline.

      1. Everhopeful
        November 8, 2023

        +++

  20. Bloke
    November 8, 2023

    Whoever is right at any stage, the Bank of England is revealed as wrong and stays wrong.

  21. Lifelogic
    November 8, 2023

    Crime is hugely up but “reported crime” is often down. The reason is this from the Telegraph:-

    One in three victims won’t report crime to police again
    CHARLES HYMASHome Affairs Editor
    VICTIMS are losing trust in the criminal justice system, as more than a third said they would not report a crime to the police again because of their experience, research by the victims’ commissioner will reveal.

    Police inaction, lack of information about the progress of cases and lengthy court delays contributed to 34 per cent of victims saying they would not report their crime to police again.

    1. Everhopeful
      November 8, 2023

      Based on past experiences ( and anecdotes) I would now not be happy about reporting anything.
      I see that the King’s Speech included something about the police no longer needing search warrants.

      1. Mickey Taking
        November 8, 2023

        start a new business, fixing sledgehammered-in front doors.

      2. Clough
        November 8, 2023

        The police would need ‘reasonable proof’ that there were stolen goods inside. Who decides what counts is reasonable proof, I don’t know. Why in such situations the police couldn’t get a search warrant, I don’t know either. The premises could be kept under observation to ensure no goods are removed until the search warrant is obtained, I would’ve thought.

      3. paul cutbertson
        November 8, 2023

        Everhopeful – equals CONTROL of ther MASSES.

      4. Lifelogic
        November 8, 2023

        I missed that!

  22. Keith from Leeds
    November 8, 2023

    You have repeatedly said to cut taxes to grow the economy. But the PM & Chancellor don’t want to listen.
    Everything they do seems to squeeze the life, energy and motivation from people. How do we end up with a Government and MPs with no vision, boldness, or belief in the UK and its people?
    Recent information shows Brexit was the right decision but still, the Government seems reluctant to take advantage of the freedoms. The UK succeeds in spite of the Government, not because of it.

    1. Ian B
      November 8, 2023

      @Keith from Leeds – the PM & Chancellor are very good at sending our tax money abroad to pay for the removal of UK Industry and take up being just an importer

    2. Gongoozler
      November 8, 2023

      What “recent information” would that be? Sounds like weasel words.

  23. Everhopeful
    November 8, 2023

    Not at all sure about this but

    When Germany had hyperinflation and “people took their wages home in wheelbarrows” did those people have enough notes to pay for the escalating prices?
    Here I am seeing bars of soap for £32 and Christmas Turkeys ( of decent size) for £180. Are there really many people earring enough to easily pay that? After all
 tax is eye-watering. Charity shops donations are down.
    I notice that many companies have offers and sales. Assuming their goods are really too expensive
how long can they keep going?
    So what will happen?
    Who will earn enough money to pay the taxes to pay the benefits and hotel bills?

    1. hefner
      November 8, 2023

      Bars of soap for £32, decent size turkey for £180 
 yeah right.
      At Waitrose, turkey is ÂŁ90 (fresh, 6kg, 8 persons) and the most expensive 100g bar of soap (from Tisserand Aromatherapy) is ÂŁ6.00.

      1. Mickey Taking
        November 8, 2023

        there needs to be a general move away from turkey, a rather bland base where the pleasure of the meal is actually everything else!

      2. Martin in Bristol
        November 8, 2023

        Yeah right….maybe search that well known posh shop in London hefner.
        Lots of soap at that price and higher.

        Then search “expensive turkey” and have a look.

    2. IanT
      November 8, 2023

      Escalating prices? Well, the first time I ever saw “Optional Service” charges was at a Michlin starred restaurant many years ago. Now the practice is widespread. A local ‘Pub’ restaurant menu offers a Sunday Roast Beef at ÂŁ22, with pudding (e.g Sticky Toffee) at ÂŁ8.50 – but they automatically add an “Optional” 12.5% SC – so that’s really ÂŁ24.75 for the roast and ÂŁ9.56 for the pud! Add drinks and it really starts adding up to a very expensive Sunday lunch (not Michlin standard for sure).
      The psychology of course is that people either won’t notice the uplift or will be too embarressed to ask for it to be removed. We enjoy treating our family but for four adults and three children it’s getting a very expensive ‘treat’ these days. We certainly won’t be taking them back to that particular pub in a hurry – once bitten, twice shy etc…

      1. Mike Wilson
        November 8, 2023

        Indeed. Sunday lunch for 6 in an (admittedly) very nice pub came to £36 per head and only a couple of us had two courses. Cost me over £200. Don’t do that very often. But the pub was heaving.

    3. Gongoozler
      November 8, 2023

      What country are you shopping in?
      In the UK a 100g bar of Imperial Leather soap, a good brand, costs just under a pound.

    4. Narrow Shoulders
      November 8, 2023

      The wealthy are not affected by recessions.

    5. Lifelogic
      November 8, 2023

      Surely a hotel size bar of soap costing circa 10p is enough to last someone a couple of years!

  24. Original Richard
    November 8, 2023

    Of far greater concern is the Government’s adherence to the false CAGW delusion and consequently implementing our unilateral economy destroying Net Zero Strategy. Since the offshore wind industry refused to make bids for AR5 and have requested a doubling of their CfD price to produce bids for AR6 we can expect the Government to be doubling the price of carbon to get them out of the hole that offshore wind is not cheaper than hydrocarbon generated power even with the added carbon tax. This will ramp up inflation further still. The irony is that wind energy is parasitic and worthless because it cannot provide either baseload or dispatchable power and needs hydrocarbon generated power to exist at all.

    Of further concern is the Government’s policy of mass immigration. As explained by the ex Chancellor, Philip Hammond in June this year, mass immigration is intended to bring in cheap foreign labour to reduce inflation and avoid a recession. But instead it brings immediate and unaffordable costs and long-term will eventually bring social unrest. Neither China nor Japan have mass immigration as seen in the EU, UK and the USA.

  25. Ralph Corderoy
    November 8, 2023

    Rishi Sunak was very persistent in a recent interview with Laura Kuenssberg. He insisted inflation is a tax and a tax which hits the poorest the most. So why then does the Government have a price-inflation target of 2%?

    This recent bout of price inflation will be followed by two more over the next few years, each bigger than the last. That’s the typical pattern.

    The USA, UK, and EU have enormous debt and large deficits. None of them will cut the major cost: all the benefits, Medicare, Medicaid, … The next largest cost has become debt interest. None of them will default because of reputational harm. All of them will print and print and print to keep the fiat money notionally afloat. Inflation will lessen the debt.

    1. Mickey Taking
      November 8, 2023

      the National Debt can be likened to the worst kind of Loan Shark – if you don’t start paying it off it only gets bigger.

  26. Bryan Harris
    November 8, 2023

    None of them are right – they’re all working to the ruination of the West and the global economy.

    They certainly shouldn’t be selling Bonds at a loss, and neither should they be so determined to create a recession.

    We keep on hearing about a pending banking crash, one that will cause earlier ones to pale into insignificance, yet this will only be achieved because the USA,EU and UK are working together to destroy the global economy.

    Before anything can be rebuilt the existing has to be wiped out!

    1. paul cutbertson
      November 8, 2023

      BH – Exactly but when you refere to the USA you mean the DEEP STATE USA?

  27. paul
    November 8, 2023

    Well if know something about money you would know that putting up interest rates increases inflation because companies and bussinesses have to increase their prices when looking at their debt, now if yoou doing it to get rid of ZOMBIE companies and bussinesses thats fine but if doing it to bring down inflation it is the wrong move in this cycle of inflation. Most inflation is made by the governments and is a tax.

  28. Christine
    November 8, 2023

    We as a country need to produce more of our own resources. This includes growing more of our own food, mining our own coal and minerals, drilling for oil and gas, fishing, and exporting high-value finished goods. I remember as a child every day on the news they would show the balance of trade figures and the consternation if it ever showed in the red. Back then we tried to live within our means. I bet they wouldn’t dare show this figure now. We have become a sick society where too many people are lazy and expect the state to support them.

  29. Bert+Young
    November 8, 2023

    Our host once again highlights the stupidity of allowing the BoE to play a key role in the management of our economy . His voice from the back benches is all wrong ; the Sunak/Hunt relationship do not listen to dissent believing that a miracle will pop out of their hats . Public attitude is now firmly against our leadership and although cracks have appeared in the Labour stance in the last few days , I do not foresee a Conservative u-turn big enough to save them .

    1. glen cullen
      November 8, 2023

      The tories don’t u-turn they just delay ….delay ….delay

  30. Donna
    November 8, 2023

    Never mind ….. at least the Not-a-Conservative-Party is going to make it illegal for a great, big, ugly 50-yr-old to legally buy a packet of cigarettes in 25 or so years’ time, if he was unlucky enough to be born one day after the “cut off date” for buying them legally.

    So you don’t smoke (neither do I, and never have) and don’t think that’s important. In which case I suggest you re-read Pastor Niemoller’s poem. Because they’ll start with cigarettes and then the next target will be alcohol and then meat …..all for our own good of course.

    Basically, it’s tyranny.

  31. ChrisS
    November 8, 2023

    Who is right ?

    Well, the establishment in the form of Andrew Bailey, The Treasury and various financiers decide between them that Liz Truss was wrong to go for growth. They then engineered her removal from office by rendering her financial policies unworkable. Yet just this morning, we read that Hunt has ÂŁ90bn available to spend in the Autumn Statement and the OBR was comprehensively wrong in its belated assessment of Ms Truss’s plan.

    I always though that Bailey and Co engineered a coup and subsequent events seem to confirm that that was the case. They lost when they tried to stop Brexit, but they did manage to get rid of a Prime Minister who was the choice of party members and replace her with their preferred candidate.

  32. Ian B
    November 8, 2023

    Who does the BoE work for and with? From todays Media ‘Bailey’s push against rate cuts backed by Irish bank governor’ the BoE’s backing is all from competing nations – why?

    1. Hat man
      November 8, 2023

      The Governor of the Bank of Ireland is also on the European Central Bank’s governing Council. Do we think he wants Britain to be more competitive than the EU?

    2. paul cutbertson
      November 8, 2023

      Ian B – Ireland is the most corrupt country within the EU.

      1. Mickey Taking
        November 9, 2023

        I have little evidence, but think there are several candidates.

  33. XY
    November 8, 2023

    The concerning part is what the 3 banks all still have in common…

    Analysing the root causes suggests that they are all led by incompetents and/or those with a political axe to grind.

    And I believe we can infer from the questions posed frequently here, by our host, that he agrees (but feels unable to say so explicitly).

    I also infer that the existence of this blog and the questions and subjects it raises suggest that our host has resigned himself to being on the back benches for the rest of his career. In my personal opinion, that would be a terrible waste of his experience and abilities.

    1. Mickey Taking
      November 8, 2023

      your last paragraph is a political tragedy. Even at the 11th hour Sir John could step away and regain the contribution he should be making in current affairs.

    2. Margaret
      November 8, 2023

      Now this is the problem.The blogs and comments have been similar for a couple of years.I don’t need to add anything as it has already been said by those with more financial knowledge than myself however ,root cause analysis is something I attempt every day. Putting a sticking plaster over problems and not addressing the issues which we all can see ,cannot ever work.I feel sorry for anyone in power who tries to correct all the countries abuse we have been subjected to.

  34. Ian B
    November 8, 2023

    Is it the BoE, the OBR that are wrong? Or is it those empowered to manage the Country?

    It’s that season of the year again and I am reminded that ‘Turkeys don’t vote for Christmas’ Into next year the Conservative Party, CCHQ will be once again hit their platforms/doorsteps telling, promising even, us all something they know they are refusing to deliver a ‘Conservative Government’. The assumption is that the Electorate will once again vote to be destroyed.

    Conservative Party, CCHQ have it in their gift to rectify their past lies – but will they?

  35. Mickey Taking
    November 8, 2023

    and now for something we could have guessed:
    Mark Sedwill confirmed that the cabinet – which is made up of elected politicians – is supposed to be the ultimate decision-making body. Sedwill insisted that cabinet ministers made many of the “key” decisions in the early stages of the pandemic but weren’t as “fully participative” as they should have been.
    Others have suggested that the cabinet was sidelined – with too much power in the hands of unelected advisers, particularly Dominic Cummings.
    As a result, some have argued that too few perspectives were heard and mistakes were made as a result.
    Boris Johnson is certainly not the first prime minister to face criticism for not properly involving cabinet ministers. But given the seriousness of the decisions being taken – and the effect those decisions had on millions – the issue is likely to play a key part in the inquiry’s conclusions.

    1. Richard II
      November 8, 2023

      There was a ‘Quad’ group of four ministers who were responsible for the key decisions during the Covid crisis. They included Hancock, Gove and Sunak as well as Johnson. Sedwill was a civil servant and should not have been taking any decisions, nor should the likes of Dominic Cummings and Neil Ferguson. We’ve learned just how influential on decision-making these two were, of course, but it’s doubtful whether they should even have been giving advice. Cummings had no relevant expertise, and Ferguson’s track record was one of abysmal failure with each of his earlier epidemic predictions. If Sedwill and the other civil servants were saying at the time we should’ve stuck to the existing 2019 pandemic plan, good on them and they should’ve been listened to, but I strongly doubt that was the case.

      1. Mickey Taking
        November 9, 2023

        ‘ it’s doubtful whether they should even have been giving advice. ‘
        It is also doubtful that those advice was aimed at were capable of making realistic decisions!

  36. glen cullen
    November 8, 2023

    As at April 2023, there were 458,000 In-Work people receiving Working Tax Credits (WTC) 
why are we funding employees subsiding their wage bills
    https://www.gov.uk/government/statistics/child-and-working-tax-credits-statistics-provisional-awards-april-2023/

  37. Roy Grainger
    November 8, 2023

    Independence of the BoE hasn’t worked well at all but it gives politicians the chance to shift the blame so I suppose it will continue.

  38. Mickey Taking
    November 8, 2023

    How absurd?
    The RMT’s dispute with rail companies has been going on for nearly 18 months already, with workers calling for better job security, pay and conditions.
    Last month members voted for a new six-month mandate to hold fresh strikes.

    They want better security so are constantly losing employers ÂŁmillions and pissing off their gradually walking away customers.
    What sort of strange universe do they live in?

  39. Ed M
    November 8, 2023

    I can’t believe Sylvia Braverman wants to become next Tory leader. She knows nothing about business. She’s a lawyer. Probably has never done a business plan in her life ..

    The only way to fix this country is by a strong leader with strong, proper business experience (i.e set up their own brand / employs quite a few people / high skills / exports abroad / proper business leadership) who has an effective political mission and who works closely with churches and people in education and the arts and media to change the culture of our country so as to instil people with:

    1) Work Ethic (the poor get off their backsides and the rich aren’t greedy)
    2) Rely on family instead of state
    3) Patriotism etc ..

    That’s the only way to do it. Not get a lawyer like Sylvia Braverman who’s a light-weight politician but trying to act all tough and macho (like Liz Truss …).

    1. Ed M
      November 8, 2023

      In other words, the country needs someone like a (British) Michael O’Leary. Sylvia Braverman is like light years behind him …

      Also, even a Michael O’Leary isn’t enough. Someone like him can only do so much politically. He would still have to join forces with the churches and people in the arts, education and media to change the culture of this country so people actually worked hard, supported their families in tough times, patriotism etc ..

      So the Tories have to figure out a way of attracting a (British) Michael O’Leary into the party instead of all these lawyers and PR ‘gurus’ and journalists and wot-nots.

    2. Mickey Taking
      November 9, 2023

      ‘Sylvia Braverman wants to become next Tory leader. She knows nothing about business. She’s a lawyer. Probably has never done a business plan in her life’
      So which of the last PM jokers has?

  40. outsider
    November 8, 2023

    Dear Sir John,
    Of your options, the ECB is nearest to correct. Short-term Bank Rate is just barely sufficient given the rate of inflation but the authorities should not be cutting money supply further. Rather, they should be nudging long-term interest rates for investment as low as possible – so no sales of long-term gilts.
    The situation is frustrating mainly because those in power (or Opposition) are not prepared to admit to people that we are (almost) all poorer as a result, particularly, of the Covid years of high spending and low output.

    The trade deficit shows that demand remains excessive; inflation remains more than double the target, unemployment remains low despite record immigration
    and there are widespread skill shortages ranging from construction to medicine. The goverment deficit is already highly stimulative, even if less than the OBR forecast. So there is no case for further Keynesian fiscal stimulus, either in higher state spending or net tax cuts.

    Output is the issue. In the short run, your suggestions on IR35 and the VAT threshhold could be helpful in getting more self-employed back in the saddle. But these need to be matched by more tax from elsewhere (City trading? Online sales?).
    In the long run, as you say, growth in output and productivity can best be boosted by shrinking the public sector and unleashing the private sector.

    Exploiting what is left in the North Sea is good. Yet most current legislation, such as the Online Safety Act, the tenant reform Bill and the compendium housing and regeneration Bill all introduce more regulation, require more administration and staff to do it, more committees, more data collection and more annual reports and reviews. This, it seems, is also Mr Sunak’s long-term vision for a better Britain.

  41. iain gill
    November 8, 2023

    dont know about your analysis John, but… in the US the car market is crashing, consumers are simply not buying cars, all this is visible from social media from the car dealers. in the UK only cheapie cars are selling, bigger more prestigious cars are seeing their values crashing. so seems like both sides of the pond are in trouble.

    1. glen cullen
      November 8, 2023
  42. Ed M
    November 8, 2023

    Sen Lindsey Graham hinting at war with Iran is an ideological p—y. In the same vein as Rumsfeld and Dick Cheney (and Blair and co) who initiated the daft stupid Iran and Afghan wars. And surprise-surprise Graham is another lawyer. Trying to be macho.

    (Cheney btw had no business experience and was a draft-dodger .. Rumsfeld also had zero business experience – see the pattern here)

    There is a serious dearth of proper leaders in this world. Netanyahu is another.

    If Israel played it cards right, it could be strong and independent (and I certainly support Israel – I support Zionism but not crazy-dog Zionism). Look at how Israel was becoming relatively popular recently in the Middle East (and well done to them for that). But it loses its head. And goes way over-board. Because of a lack of self-control. Aggressiveness is the polar opposite – in negative sense – of passiveness.

    A strong leader knows when to use force and when to use other means.
    A real man knows how to control his aggression for when it’s really needed.

    1. Ed M
      November 8, 2023

      Chesney, Blair etc (and Netanyahu) – all p—–s (when it comes to proper political leadership)
      What a price our countries and the world had to pay for the stupid, daft Iraq / Afghan wars – with this new lunatic p—-y Graham now hinting at more to come.

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