Beware of Central Banks who want things to be “normal”

In recent weeks there has been a big outbreak of pessimism about the future of the world economy. The US stock market has led the way down, just as it powered the optimism a year ago. Wall Street watchers turned worriers are alarmed at the way the Federal Reserve Board is tightening money in the name of creating a more normal policy. Their money supply growth has slowed noticeably. The Fed has put through a number of interest rate hikes to make borrowing dearer, and has started a big programme of Quantitative tightening, reducing the amount of government bonds it owns. This is double banking the monetary squeeze.

On the other side of the world the Chinese too are busily tightening their money supply. Worried by past build ups of debt and bad debts, they are requiring their banks and other financial institutions to go easy on the new credit and tidy up the old credits that have gone wrong at a faster pace. Money supply growth has fallen by a third as they adjust policy.

The Euro area too is slowly wanting to look a bit more” normal”, so it is cancelling all new money creation to buy bonds under Quantitative easing. Even the Japanese who can be relied on to print and buy bonds until the end of time are easing up on the amount of such bonds they buy and the money they create to do so.

The UK has put through two rate rises, ended all new Quantitative easing and has presided over a large drop in money growth, with credit for car and home purchase affected as we see in the output and transaction figures. These toughening monetary measures have reinforced the negative effects of higher taxes on car sales and some home transactions.

The danger is the pursuit of an old normal, with no QE and base rates above 3%, is not compatible with reasonable growth and is not necessary to contain inflation. The Central banks should be data dependent, and note the cooling of inflationary pressures with oil and commodities weak and plenty of global spare capacity and excess supply of many goods.

It is good news that despite the squeezes the latest UK PMI for manufacturing showed a decent rise and is indicating continued expansion. Demand is increasing, real wages are rising and businesses can expand. Those who wish to see everything through negative I don’t like Brexit glasses say this is just stock building ahead of a possible no deal exit in March. There’s an irony there. If as they think demand will fall on exit, why would anyone wish to increase their stocks ahead of such an event? If demand did fall – which I disagree with – stock levels would automatically be higher as a precautionary measure anyway without buying more stock. It is also interesting to see that the people who say the good PMI is just the result of people preparing for a no deal exit, are usually the same people who tell us no deal is not going to happen.

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  1. Mark B
    Posted January 5, 2019 at 5:58 am | Permalink

    Good morning.

    Historically low interest rates and massive QE (money printing) has done a lot of harm to ordinary savers. It has to a large part, created a boom in house prices and most definitely increased stocks and shares. A reduction in money and the slowing down of the economy is a natural reaction and I for one would favour small but sustainable growth over an long period than follow the get rich quick method that has only benefited the big corporate banks.

    Someone here mentioned that in previous times we had to learn to go without or work a little harder and save. Today everybody wants it now !

    The value and buying power of Sterling has shrunk compared to many of the other economies. I remind our kind host and others what over excessive QE does to a currency. You go all either Zimbabwe or Venezuela. I want the Pound in my pocket to have real value thank you and not debased any further.

  2. Peter Wood
    Posted January 5, 2019 at 6:09 am | Permalink

    Dr. Redwood,

    What is most definitely NOT normal is the size of most central banks balance sheets, since 2007.
    What is happening now is a predictable consequence of 9 years of pumping cash into western economies, causing unsustainable asset values. In the UK house affordability (asset price inflation) is a national disgrace, largely caused by low interest rates. We must expect a severe reversal in asset prices as ‘free’ money goes away.

  3. Dame Rita Webb
    Posted January 5, 2019 at 7:15 am | Permalink

    “The danger is the pursuit of an old normal, with no QE and base rates above 3%, is not compatible with reasonable growth and is not necessary to contain inflation.”

    Thanks to Osborn and Hammond with their doubling of the national debt and their couldn’t give a toss attitude to deficit spending its inevitable base rates will be way above 3%. Ignoring BREXIT Carney is completely correct to say we are living due to the kindness of strangers. At some point in the near future there will be a sterling crisis as those strangers worry about the ability of the UK to pay its debts. The current account deficit started to widen again last year as well. It’s not as if we have much family silver left either to sell off to sort that out either.

    • Sir Joe Soap
      Posted January 5, 2019 at 9:53 am | Permalink

      The family silver is the productive capacity of the UK company, and so long as we sort that out by creating a low tax, business friendly, low regulation environment we’ll be fine. Alongside that we need to remove the low productivity element by setting up a points based system for those who come here, tighten up stupid border questions, and remove the incentives for people to risk their lives because hand-outs in Dover are so much more generous than in Calais. Once they’re also going the other way in boats we’ll know we’ve got the balance right.

    • Newmania
      Posted January 5, 2019 at 11:07 am | Permalink

      Good lord you sound like an actual Conservative ! Agreed (ish), but Osborn planned to top out at 80% and, by now, have debt well down. That was abandoned as was normalising interest rates, to avert a Brexit-vote recession.
      We can ( IMHO) probably risk more borrowing but no-one knows how far out on the ice we can go. Corbyn can hardly point at the grim state of our finances given his spending addiction .
      Who will speak for our children when our Victorian Parties are infested by extremists united in their disregard for the prices of anything .

      …….Things fall apart; the centre cannot hold;
      Mere anarchy is loosed upon the world,
      The blood-dimmed tide is loosed, and everywhere
      The ceremony of innocence is drowned;
      The best lack all conviction, while the worst
      Are full of passionate intensity.

      Yup I am dragging our Yeats for the 1000th time but it is so apt

      • Mitchel
        Posted January 5, 2019 at 3:21 pm | Permalink

        Another slice of Yeats that “Andy” might add (from “Sailing to Byzantium”):

        That is no country for old men.The young
        In one another’s arms,birds in the trees,
        -These dying generations-at their song,
        The salmon-falls,the mackerel-crowded seas,
        Fish,flesh or fowl,commend all summer long
        Whatever is begotten,born and dies.
        Caught in that sensual music all neglect
        Moments of unageing intellect.

      • dame rita webb
        Posted January 5, 2019 at 3:53 pm | Permalink

        Avoid a brexit led recession you have got to be kidding! Osborn promised to eliminate the deficit by 2015.

    • Denis Cooper
      Posted January 5, 2019 at 12:03 pm | Permalink

      Do you suppose Osborne and Hammond doubling the national debt may be in some way connected with Brown having got the government into the position where it was having to borrow a quarter of all the money it was spending?

      • Lifelogic
        Posted January 5, 2019 at 2:34 pm | Permalink

        It was certainly significant that Brown left such a mess, but Osborne & Hammond both did nothing to cut the state down to size or get out of the way of the hardworking and productive.

        • Captain Peacock
          Posted January 6, 2019 at 1:09 am | Permalink

          Alas the old different party same government.

      • Richard1
        Posted January 5, 2019 at 4:06 pm | Permalink

        Indeed. Of course if you have a budget deficit of 10% of gdp where labour left it that can’t be closed overnight, so even though the Conservatives have reduced it to almost 1% it still there has been net borrowing every year since labour got the boot. So of course total debt and debt/gdp is up, and of course if the budget deficit is larger as a % of gdp than growth there is an increase in total debt / gdp. It’s very odd that leftists, and indeed eurofederalists, who for some reason see this as an anti-Brexit point, have such trouble with the concept.

      • acorn
        Posted January 5, 2019 at 6:22 pm | Permalink

        Denis, the government didn’t borrow a penny of it. Where would it have borrowed its own unique monopoly currency from?

        Consolidated gross debt hit £3,000 billion in mid-2011. Less than a third of that was for the Household/Private Sector economy, the rest went into the Banking economy; a totally separate animal where there is no such thing as a budget deficit or austerity.

        Did the Treasury issue Gilts to “borrow” the £2,000 billion extra that went into the Banking economy?

        • Denis Cooper
          Posted January 6, 2019 at 10:54 am | Permalink

          Obvious, the government would borrow the money back from some of those who were holding it at the time, having previously been given it in exchange for goods and services required by the government, or indeed in exchange for another currency. Of course if you were correct in your contention then Dame Rita would not need to fret about a doubling of the national debt, as none of that was ever really borrowed …

  4. Anonymous
    Posted January 5, 2019 at 7:52 am | Permalink

    And why haven’t Andy and Newmania sold their houses at peak value, banked the money in ‘safe havens’ and gone into rented ?

    • Dame Rita Webb
      Posted January 5, 2019 at 11:05 am | Permalink

      Unfortunately there is a certain proportion of the population that is extremely gullible. The sort who believed, a since struck off GP, that the MMR jab caused autism and now they are strangely silent about the problems caused by measles.

      They need to open their eyes. A quick walk around the supermarket should do the trick. There will be no food shortages. Most of the vegetables for sale now come from inside the UK. While if they are concerned about an asparagus shortage there seems to be plenty available from Peru. Similarly in the fruit section as much seems to come from North Africa as it does Spain.

      As these types are always ready to preach to the lower orders about how they must eat a healthy diet. A shortage of imported German salamis ands sausages is something to be welcomed. All that cancer causing sodium nitrate is something to be avoided.

      For those concerned about animal welfare they should also welcome an end to Danish and Dutch meat imports too. Do some googling on welfare standards on their farms in comparison to ours. That should explain why meat bought with Danish krone still manages to be far cheaper than British pork, despite BREXIT causing a massive loss in sterling’s value.

    • Lifelogic
      Posted January 5, 2019 at 2:36 pm | Permalink

      Rather large in and out costs on buying a decent house now, thanks to Hammond’s up to 15% of stamp duty, legal costs, valuations, mortgage costs and all the rest.

  5. ColinD.
    Posted January 5, 2019 at 8:01 am | Permalink

    You warn of the ‘old normal’, with base rates above 3%. However, under the old normal, savers received a positive return on their savings. For a decade, savers have been cheated and debtors rewarded. If society want people to save for their future rather than call on the State to subsidise them, then you should be recommending a more principled normal, whereby interest rates are set to ensure that money saved retains its purchasing value.

    • Lifelogic
      Posted January 5, 2019 at 9:56 am | Permalink

      Base rates are low but bank margins have increased hugely and inflation is quite low too. Commercial and development property lending used to be available at about base +.8%-1.5% now they can get away with base plus 3% to 8%. plus large fees and often a new few after five years too. Banks (even the major ones) are getting away with with paying less than .5% interest on deposits yet charging up to 68% on approved overdrafts in the form of disguised daily charges. Where is the fair competition in banking. The bank are in effect (through bad regulation) another arm of government.

      Get the government out of banking as far as possible. Also as far as possible out of education, housing, health care, farming, fishing & energy. They have made a complete mess of all of them.

    • Adam
      Posted January 5, 2019 at 12:27 pm | Permalink


      Savers aren’t cheated. They choose what to do with their own savings. Confining themselves to banks is self-destructive when alternative purchases deliver higher values as investments.
      A person ‘investing’ in a bank is providing it with a loan, which the bank then offers to some other mug willing to pay more to borrow the original investor’s own dosh.

      • Lifelogic
        Posted January 5, 2019 at 2:39 pm | Permalink

        The fact that nearly all the banks can get away with such massive margins shows clearly the lack of much real competition in the UK banking market.

      • acorn
        Posted January 5, 2019 at 4:53 pm | Permalink

        Banks do not lend retail customers’ deposits, they become part of the banks’ capital reserves. Commercial bank loans create deposits in customer accounts; not the other way around.

        At times like now, Banks can get retail deposits to bolster their capital reserves by offering next to no interest. If they can’t get enough of them, they will offer more interest to customers.

        As the Treasury is offering the Banks really cheap money via the Term Funding Scheme which is inside the Asset Purchase Facility; they can give retail savers the finger.

        BTW. The government never has to borrow its own unique, monopoly money from anybody; it is the currency issuer for Sterling, you can’t get Sterling from anywhere else.

        Government Bonds do not fund government spending, they are “risk-free” (in Sterling) savings instruments that pay interest. The interest is basically a form of welfare payments for Pension and Insurance companies. Of those interest payments, the government gives away £240 million a week to foreigners who bought UK government Bonds with the bags of Sterling they got from our huge trade deficit with them.

        • Caterpillar
          Posted January 5, 2019 at 11:05 pm | Permalink

          Yep, banks borrowed until they wanted no more from the TFS. It did finish earlier this year but banks have four years to repay, it will keep savers rates down for a couple more years … and of course Carney/Hammond might just decide to do it again.

        • Adam
          Posted January 6, 2019 at 9:50 am | Permalink


          “Commercial bank loans create deposits in customer accounts; not the other way around.”

          The other way around could be:
          Consumer bank loans create deposits in the bank’s account.

          Do the banks not borrow from customers? Applying labels for account categories does not alter the money’s path & destination.

      • John Hatfield
        Posted January 5, 2019 at 7:37 pm | Permalink

        I’m sure that many folk are unaware of investment alternatives and automatically open a “savings” account with their bank. I see that cash ISAs offer 1.8% which may be less than inflation currently.
        Many shares are offering 6%. Many much better.

  6. Alan Jutson
    Posted January 5, 2019 at 8:03 am | Permalink

    All this well above my pay grade, but if we constantly need to borrow and print more, simply to get some average growth, is not something wrong with the system somewhere.

    The danger in all of these financial manoeuvres is surely making too much change at any one time, be it cut backs or stimulus, which then introduces a sense of panic.

    Likewise Government financial policy needs surely to be somewhere near a certain consistent percentage level in its tax take and spending programme., and for it to work on historic figures rather than future forecast/guesses, which are inevitably wrong.

    Constantly increasing the tax take percentage reduces the amount consumers have to spend

    • Lifelogic
      Posted January 5, 2019 at 10:02 am | Permalink

      To get more growth we just need lower taxes, a real Brexit, far, far less government and government waste, cheap non green crap energy, easy hire and fire, relaxed planning, competitive banks and a bonfire of red tape. So the complete opposite of the May/Hammond agenda and indeed the even worse Corbyn/Mc Donnall one. This surely is fairly obvious to anyone sensible?

      • John Hatfield
        Posted January 5, 2019 at 7:41 pm | Permalink

        There is no-one sensible in government, Lifelogic. Sadly JR is not in government. Would that he were.

    • Bob
      Posted January 5, 2019 at 1:53 pm | Permalink

      You’re taxed when you earn it, you’re taxed when you spend it and you’re taxed when you die.

      The govt should stop squandering our money.
      UKIP’s manifesto is the best I’ve seen, abolishing overseas aid, stamp duty and IHT.

      • Lifelogic
        Posted January 5, 2019 at 2:42 pm | Permalink

        At best perhaps 40p of value delivered by government (from every pound of tax they raise in tax). And that ‘value’ will not be the thing you actually wanted in general plus it will probably go augment and encourage the feckless to be even more so.

      • L Jones
        Posted January 5, 2019 at 6:09 pm | Permalink

        You’re right, Bob. It’s a great pity that UKIP has been discredited. Its manifesto is impressive. What a shame it won’t be able to deliver on it. But might some other party step unto the breach?

        • John Hatfield
          Posted January 5, 2019 at 7:45 pm | Permalink

          It is sad that Nigel Farage has publicly come out against UKIP and Gerard Batten, its current leader. If Farage is going to start a new conservative party, he will need UKIP.

          • Richard1
            Posted January 5, 2019 at 10:33 pm | Permalink

            No one has ever got elected to Parliament on Gerald battens sort of politics. The closest was Sir Oswald Mosley in the 30s but he converted from Labour.

          • Bob
            Posted January 6, 2019 at 11:17 am | Permalink

            A UKIP govt would grant asylum to Asia Bibi, because she is a genuinely deserving case, something the Tories will not do. They prefer to flood the country with returning jihadis.

            I know which party I would prefer to run the country.

        • Timaction
          Posted January 5, 2019 at 7:55 pm | Permalink

          We’re waiting for Sir Nigel.

          • margaret howard
            Posted January 5, 2019 at 11:46 pm | Permalink


            “We’re waiting for Sir Nigel.”

            Nothing is impossible these days.

            After all we now have a Dame Twiggy!

  7. oldtimer
    Posted January 5, 2019 at 8:09 am | Permalink

    It seems to me that the, apparently co-ordinated, moves by central banks to end QE and raise interest rates is the really significant global economic event to watch. The world is grossly overborrowed. By contrast Brexit is a small event and the UK is better placed than many to navigate the rocky years that lie ahead – provided it has the political will and leadership in place to manage Brexit. May is not that person.

    • Bob
      Posted January 5, 2019 at 1:56 pm | Permalink

      “provided it has the political will and leadership in place to manage Brexit. May is not that person.”

      neither is Philip Hammond. Sir John Redwood would be an excellent choice for Chancellor.

      • John Hatfield
        Posted January 5, 2019 at 7:47 pm | Permalink

        Phillip Hammond, enemy of the people.

  8. agrictola
    Posted January 5, 2019 at 8:20 am | Permalink

    What is done internatilnally is beyond my pay grade to comment on. What happens at consumer level I find disturbing. When holding customers money the banks pay 3% to 0% interest and charge you for the service on top. If you borrow from the myriad banks it could cost you from 10 % to 1300 %. When will government sort it. As long as government can borrow money for little or less they will do nothing.

    • Stred
      Posted January 5, 2019 at 1:31 pm | Permalink

      HSBC has so much spare cash that it took 3 pages in the Standard and other papers to tell us that we are an island but also part of the wider world. Presumably, the overpaid bosses think that all the dimwitted customers don’t know this an need to be reminded. Two of the pages were almost blank, saving printers ink. HadI been a customer, I would have closed my account in response to the insult.

      • Bob
        Posted January 5, 2019 at 2:00 pm | Permalink

        I have business accounts with HSBC and the deposit account interest rate is 0.03% p.a.

        So what should I do with spare cash?

        • Lifelogic
          Posted January 5, 2019 at 2:48 pm | Permalink

          Indeed I had a premier account with a £10K overdraft that used to charge Base plus 2.5% when I took it out. Now I see it is nearer base + 12%. So they charge you about 400 times what they give you for deposits (less the tax on it too).

          So what should I do with spare cash? Cut out the rip off middle man and lend directly perhaps (taking suitable security).

  9. Mike Stallard
    Posted January 5, 2019 at 8:47 am | Permalink

    The world economy – surprise! – is a world economy.
    My car is Japanese. My neighbour’s car has Korean brakes. A lot of my food comes from Europe – like the excellent Brie in the fridge. My wife wants to go to Portugal in the summer.
    When a massive economic power like UK (second most powerful country in the world according to Guido Fawkes) is suddenly ripped out of the EEA, that must have some effect?
    Will it be negligible?
    Will it prove catastrophic?
    Place your bets…

    • ian wragg
      Posted January 5, 2019 at 10:43 am | Permalink

      Get a life Mike, there’s a big wide world out there.
      Get your holiday booked, we are away over freedom day and have booked again for October.
      Life will go on after Brexit and btw, South Korea and Japan are not in the EU and manage very nicely, they don’t have mass immigration either.

      • acorn
        Posted January 5, 2019 at 2:28 pm | Permalink

        South Korea and Japan have extensive trade agreements with the EU. Japan is the largest FTA the EU has built so far, nearly a third of world trade by value. The UK will lose access to these FTA on Brexit. They have lesser immigration problems principally because they are not English speaking.

        Foreign holidays are imports in the main. Might be wise to stockpile a few holiday’s worth of the necessary foreign currencies.

        • Jagman84
          Posted January 5, 2019 at 8:53 pm | Permalink

          Who’s to say that these agreements haven’t been discussed and carried over to our post Brexit trading? None of us really know what is actually happening behind the scenes, regarding non EU trade.

        • Zorro
          Posted January 5, 2019 at 9:32 pm | Permalink

          Yes acorn, and the EU has a massive trade surplus with us, we have a 90 bn pounds trade deficit with them and they are not going to want preferential trade terms with us? Give me a break!


          • acorn
            Posted January 6, 2019 at 9:55 am | Permalink

            Agreed, our trade deficit keeps a lot of EU citizens employed making them BMWs, kitchen appliances and cheeses, so beloved of the Conservative voting UK middle classes.

            Woe betide a Conservative government that makes them more expensive and/or difficult to acquire, particularly at election time.

            OBR reckons the current account deficit will halve to 3% from its 2016 high of 6% as the government continues to reduce spending towards its 2025 budget surplus, and the household sector continues with maxed out credit cards.

    • backofanenvelope
      Posted January 5, 2019 at 10:43 am | Permalink

      Don’t keep Brie in the fridge!

      • Steve
        Posted January 5, 2019 at 7:24 pm | Permalink

        “Don’t keep Brie in the fridge!”

        Don’t buy it in the first place, it’s french.

        • L Jones
          Posted January 5, 2019 at 11:58 pm | Permalink

          Buy Welsh brie! Delicious!

          • Bob
            Posted January 6, 2019 at 9:02 am | Permalink

            It’s like Dairylea triangles with mould instead of foil.

    • Denis Cooper
      Posted January 5, 2019 at 12:49 pm | Permalink

      Ask the Germans, Mike.

      “The study simulates the effects of eight different Brexit scenarios on the German and the EU economy.”

      “In the scenario where the U.K. and the EU fail to strike a trade deal and fall back on World Trade Organization rules, the study predicts the U.K. economy would lose 1.7 percent of economic output over the long-term … ”

      Going the other way round, that is to say looking at the gross economic benefit the UK previously obtained from the creation of the EU Single Market rather than the loss that it might experience by reverting to WTO terms, from the table on the front page of the German report here:

      that was estimated as a 1.0% increase in per capita GDP, which would convert to a slightly higher increase in total UK GDP taking into account the population growth over the two decades being covered.

      So there is some consistency here; before taking into account its high costs we may have gained a bit more than 1% of GDP from the creation of the EU Single Market, and if we now reverse that and default to WTO terms we may lose a gross 1.7% of GDP over the long term, but save on costs.

      • John Hatfield
        Posted January 5, 2019 at 7:54 pm | Permalink

        Analysis of the trading relationship between the UK and the EU dispels the myth that the Single Market is vital for the British economy.
        The researcher, Michael Burrage demonstrates that growth of UK exports to the EU has been lower during the era of the Single Market than it was during the common market decades between 1973 and 1992. Our export growth to the EU lags far behind much of the world. We are surpassed by many countries that trade with the EU on WTO terms.
        We do not need the EU. It needs us.

  10. Andy
    Posted January 5, 2019 at 9:01 am | Permalink

    A scenario.

    Imagine you are parent with a sick child who relies on medication to keep your child alive. You have seen the guidance some pharmacies are now sharing (Robert Peston tweeted it) about possible drug shortages which may affect your family. You also know about the Forrester Effect – which leading economists say has already been triggered by your Brexit. So do you try to stockpile your child’s drugs anyway?

    Clearly you are concerned. The government has admitted there may be risks to supplies. The Health Secretary has chartered planes and has become the world’s largest buyer of fridges. He at least seems semi-competent – if there is such a thing in this Brexit government – unlike Failing Grayling who appears to have awarded a multimillion pound shipping contract to a failed pizza entrepreneur with no ships. And who is preparing for Brexit by deliberately making traffic jams in Kent.

    So do you try to stockpile your own drugs for your sick child Mr Redwood?

    Reply The NHS can continue to import the drugs it needs and should do so.

    • Andy
      Posted January 5, 2019 at 10:24 am | Permalink

      Should being the key word. I doubt a parent would risk a child’s life on the word should. This is hypothetical for most of you – but is not for some people. Indeed, it is a choice some are now actually facing already.

      I said it more than a year ago and I say it again now. It is just a matter of time until the death of a member of the public can be directly linked to Brexit. For Brexiteers the questions will not get any easier but the answers will get an awful lot more scrutiny.

      • Denis Cooper
        Posted January 5, 2019 at 12:58 pm | Permalink

        I have an extremely low opinion of Theresa May, but even I do not believe that she would actually carry out her vile threat and instruct UK customs officers to unnecessarily hold up imports of vital medicines. Which would presumably be imports of vital medicines, apart from the insulin that she needs. Is that what you are imagining, Andy? That she would allow children to die for the sake of her devotion to the EU, possibly as intense as your own?

        • Lifelogic
          Posted January 5, 2019 at 2:53 pm | Permalink

          Well perhaps not, but she is still immorally running project fear and has outrageously failed to prepare for a clean Brexit.

          She is an appalling, disingenuous, socialist, Brexit mean nothing woman. She cannot be trusted in the slightest.

      • margaret
        Posted January 5, 2019 at 1:52 pm | Permalink

        The should is advice to keep going and is not a speculative forecast. The can speaks of the ability without barriers to do so.

      • Richard1
        Posted January 5, 2019 at 2:02 pm | Permalink

        How many deaths do you think the euro has caused with the misery of c 50% youth unemployment in Greece, and zero economic growth in Italy since it joined?

        • Andy
          Posted January 5, 2019 at 5:23 pm | Permalink

          We are not in the Euro. I am sure you can get information about Italy from the sovereign Italian government. And about Greece from the sovereign Greek government.

          You like to blame all problems in EU member states on the EU. Who is to blame for problems in non-EU member states? Just interested as I think you’ll find the problems elsewhere are even worse.

          • Edward2
            Posted January 5, 2019 at 8:51 pm | Permalink

            Your odd logic Andy is that every good thing that happens in member states is due to the EU but anything bad is the fault of the member states themselves.

        • margaret howard
          Posted January 6, 2019 at 12:17 am | Permalink


          “How many deaths do you think the euro has caused with the misery of c 50% youth unemployment in Greece, and zero economic growth in Italy since it joined?”

          “Youth Unemployment Rate in Greece decreased to 36.60 percent in September from 36.80 percent in August of 2018. Youth Unemployment Rate in Greece averaged 35.47 percent from 1998 until 2018”


          “But national output per head in Italy is only 4% higher than it was 15 years ago.”

          You should stick to facts if you want to be taken seriously.

          • Edward2
            Posted January 6, 2019 at 1:44 pm | Permalink

            Oh only 36% youth unemployment.
            Hilarious you present this as an achievement margaret.

          • margaret howard
            Posted January 6, 2019 at 5:22 pm | Permalink


            “Oh only 36% youth unemployment.
            Hilarious you present this as an achievement margaret2”

            If you want your postings to be taken seriously you should read the item before replying.

            I was correcting Richard1’s claim that youth unemployment in Greece was 50%

          • Edward2
            Posted January 7, 2019 at 11:06 am | Permalink

            You set it out as if were an achievement.
            The situation in EU states like Cyprus Greece Italy Spain Portugal and others is a disgrace.
            Real austerity.
            Caused by the Commissions economic policies and their determination to rule from the centre, to defeat local democracy and create their United States of Europe.

      • Steve
        Posted January 5, 2019 at 7:42 pm | Permalink

        Tut, tut. So now you are claiming people’s children will die because of brexit.

        What a disgusting thing to do, and very cheap.

    • Caterpillar
      Posted January 5, 2019 at 10:37 am | Permalink

      Andy, don’t just drop the bullwhip effect into a comment unless you know about system dynamics modelling and ops management… it just feels like a letter to the Guardian or a research funding application. I am very confident that there are other contributors on here that know about this and will clear things up for us. I think one mistake in raising this is that the reason for any downstream demand volatility is understood and can be built into models and hence forecasting (where push is still a component of the supply chain…maybe some German supply chains??), so does not need to cause misinterpretation of underlying demand. Secondly stock being bought as safety buffers in the supply chain is to decouple, if the supply chains are intra firm then this will be understood, if inter firm but integrated the firms will exchange information (bullwhip effect has been discussed for more than half a century), if inter firm but not integrated then dropping tariffs on components to increase sourcing flexibility would be a worthwhile Government action.

      BTW lumpiness is occurring elsewhere due to US and China ongoing trade discussions (firms changing order timings due to tariff uncertainty).

    • ian wragg
      Posted January 5, 2019 at 10:46 am | Permalink

      Get off over to Europe Andy. There’s plenty of drugs over there and I bet plenty of companies wanting to sell them to us.

      • Andy
        Posted January 5, 2019 at 5:23 pm | Permalink

        Indeed. But that was before people like you voted to erect trade barriers.

        • Jagman84
          Posted January 5, 2019 at 8:58 pm | Permalink

          We want free trade with all. The EU wants free trade that isn’t actually free and is akin to a protection racket. You wish the UK to fail as you are a person full of hate.

        • mickc
          Posted January 5, 2019 at 9:13 pm | Permalink

          Nobody voted to erect trade barriers. We voted to make our own decisions on that and other matters.

    • Dave Andrews
      Posted January 5, 2019 at 11:08 am | Permalink

      Life-saving drugs should be manufactured in this country as a matter of national security. In the meantime, we can import from manufacturers who will be only too pleased to supply.
      We wouldn’t need so many drugs if the country wasn’t so obsessed with acquiring lifestyle diseases.
      Rather than sick children, I suspect far more drugs are for the old people you want to get rid of. Perhaps the NHS needs to have a default DNR on anyone who looks old.

      • Andy
        Posted January 5, 2019 at 5:25 pm | Permalink

        If an old Brexit voter dies as a result of Brexit related drug shortages then I will shed no tears. They voted for it. If a child dies as a result of Brexit related drug shortages then expect several leading Tories to end up in prison.

        • Richard1
          Posted January 5, 2019 at 10:43 pm | Permalink

          Young people in Italy are overwhelmingly opposed to the EU. Why? Because of the misery of zero economic growth after 20 years under the cosh of the euro. A policy you support. How many have died, old and ill people who are poorer than they need to be? young people who have seen no future for themselves? No one has gone to prison because of the terrible consequences of the euro, and Leave politicians in the UK are far too decent to argue that the fools who argued successively for the ERM and then the euro should be imprisoned. Unlike you.

        • Edward2
          Posted January 6, 2019 at 12:18 am | Permalink

          Are you going to go to Dover and stand in front of lorries to stop them coming in?

    • libertarian
      Posted January 5, 2019 at 2:45 pm | Permalink


      Be specific, WHICH drugs, for what from where ?

      • hans christian ivers
        Posted January 10, 2019 at 7:32 pm | Permalink


        I have given you a clear explanation of what sort of clients were paying for us to stock up for them and you still called in nonsense, how can we really take your comments seriously , when you do not undertake a real debate. It is all rather sad but predictable, LECTURING

    • Denis Cooper
      Posted January 5, 2019 at 4:48 pm | Permalink

      Well, Andy, I suppose I should thank you for providing the inspiration for another letter that I have just sent to our local newspaper, which as I have mentioned more than once is also Theresa May’s local newspaper, as follows:

      “Dear Sir

      The World Trade Organisation, WTO, is founded on international treaties, one of the most recent being the Trade Facilitation Agreement which came into force on February 22 2017.

      The EU collectively, and each of its member states individually, are all parties to this treaty, which can easily be looked up on the internet.

      Just as with the WTO as a whole the purpose of this agreement is to remove obstacles to trade, not as some imply to impose irrational rules that unnecessarily impede trade.

      Hence its Article 7.4 requires each member to “adopt or maintain a risk management system for customs control”, based on a wide range of factors including the country of origin of the imports, with the aim of concentrating its controls on high risk consignments.

      Why, therefore, should Theresa May – incidentally herself a diabetic – order UK customs officers to unnecessarily hold up consignments of insulin and other medicines from well-known companies on the continent, which will be no more risky after we have left the EU than they are now?

      And if she really believes that French customs officers may arbitrarily delay such consignments on their way to the UK, as well as arbitrarily delaying the clearance of our exports which will present no higher risk to the EU Single Market after March 29 than they did before, when they were almost all just nodded through, why is she not publicly protesting to the French government and pointing out their obligations under that treaty article?

      Yours etc”

      Of course the answer is that she knows it is all a load of tosh, as do you.

    • L Jones
      Posted January 5, 2019 at 6:13 pm | Permalink

      Oh, Andy. You have certainly been spooked by Project Fear. Try doing some in depth research of your own. You may be surprised at how golden the future looks! (And no-one is going to let people die through lack of medications – you really should read a little more rather than rely on Facebook for your ”information”.)

  11. Billy Marlene
    Posted January 5, 2019 at 9:04 am | Permalink

    Great appearance on Today.

    Measured tones in contrast to Mr Clarke who simply couldn’t resist referring to ‘car crash’ exit and – the ultimate insult – that the Referendum was ‘one opinion poll’.

    It is becoming laughable.

    • Steve
      Posted January 5, 2019 at 7:55 pm | Permalink

      Billy Marlene

      Clarke is on record as saying that the brexit referendum result should have been ignored.

  12. BenD
    Posted January 5, 2019 at 9:15 am | Permalink

    Problem John is that nobody knows for sure what’s going to happen. Business might be stocking up just to ensure that they have continuity of contract with customers, it might not be JIT continuity, but some kind of continuity. Secondly we are looking only at ourselves in all of this- in the case of a no deal exit nobody knows how various continental businesses in the EU are going to react to the possibility of hold ups of stock at the borders. Business will do as business does- and without clear political leadership here everyone is preparing the best way they can- am afraid that it is local politics that is letting us all down

    • Steve
      Posted January 5, 2019 at 7:59 pm | Permalink


      More likely they’re preparing to hike prices and make a killing.

  13. Dominic
    Posted January 5, 2019 at 9:27 am | Permalink

    I have never been convinced by monetary arguments. Prosperity is a condition of industry not have prevailing monetary conditions. It is the industry and entrepreneurial vigour of a nation’s people that determines national prosperity not the actions of governments and central bankers

    So, yes central bankers will act politically and annoy their political paymasters but mostly those self same central bankers are themselves political stooges.

    Carney is a EU stooge as is Draghi. They act in the interests of a political project, the EU. Carney should be replaced with someone who acts in the interests of the UK economy

    In the final analysis a nation’s prosperity is determined by the industry, entrepreneurial drive and vigour of its people. The political class and central bankers should act to assist that wealth creation process with policies adopted to further entrench an entrepreneurial culture and depoliticise the wealth creation process. Socialism, the politicisation of all things, will kill that process stone dead

    Britain is prosperous today as a consequence of the industry of its people and the revolutionary nature of change encouraged by MT who when elected in 1979 took away the dead hand of the state and released the energy of its people to create and prosper

  14. oldwulf
    Posted January 5, 2019 at 9:42 am | Permalink

    Maybe interest rate changes should be +/- 0.1% and not +/- 0.25%

  15. Newmania
    Posted January 5, 2019 at 9:46 am | Permalink

    Recession is back.2008 was not New Labour`s fault, but they left the roof unfixed. We entered that period with Debt at 35% of GDP and interest rates at 5%. They are now 83% and 0.75% respectively. We have gambled at odds every authoritative body warned against, at the worst possible time, without the means to lose safely.
    Half of us have been frog marched to the unlimited stakes Fruit machine against our every belief and instinct, by a mob, drunk on cheap lies and worse This is not democracy; this is quite simply not fair.

    • Andy
      Posted January 5, 2019 at 10:28 am | Permalink

      Well said. Though the irony is that although stormy waters are ahead most of the Remain voters I know are in much better shape to navigate those waters than most of the Leavers.

      • Caterpillar
        Posted January 5, 2019 at 1:11 pm | Permalink


        How is this ironic? Those who have benefited from the EU might have been more likely to vote remain, whilst those who have borne the cost will more likely to have voted to exit. This supports the logic and result of the wisdom of the crowd approach of a referendum. It seems that you might finally be moving to understand this.

        • Andy
          Posted January 5, 2019 at 5:34 pm | Permalink

          The flaw in your argument is that we have all benefited from EU membership – though I accept many do not believe it.

          I feel great sympathy for those left behind. It is not me arguing that they should receive less help and fewer services so my rich mates can pay less tax.

          • libertarian
            Posted January 5, 2019 at 7:58 pm | Permalink


            No, we haven’t, The EU has cost non exporting ( 92% of all businesses ) SME’s vast sums of money for nothing in return . The EU has caused costs and no benefits for all businesses through stupid, poorly thought our regulations such as GDPR

            The UK has gained nothing of value from the EU

          • Steve
            Posted January 5, 2019 at 8:02 pm | Permalink


            My my, you have got a chip on your shoulder haven’t you.

            Grow up Son.

          • John Hatfield
            Posted January 5, 2019 at 8:03 pm | Permalink

            we have all benefited from EU
            No we haven’t.

          • Caterpillar
            Posted January 5, 2019 at 10:53 pm | Permalink


            1) That is not a flaw in the argument e.g any unnecessary compliance costs, but there are many others
            2) Even perception cases as you suggest are costs, these effect quality of life.

            I am saddened that you don’t recognise the referendum consulted the electorate and everyone who voted or knowingly abstained contributed to the overall advice to leave. Some of course,.so-called remainers may not believe they contributed.

          • margaret howard
            Posted January 6, 2019 at 12:28 am | Permalink


            “The EU has caused costs and no benefits for all businesses through stupid, poorly thought our regulations such as GDPR”

            Cost of UK EU membership per person per day – 37p.

            Benefit of UK EU membership per person per day – £3.35.

          • Edward2
            Posted January 6, 2019 at 3:05 pm | Permalink

            More cut n pasted dodgy statistics margaret

          • margaret howard
            Posted January 6, 2019 at 5:17 pm | Permalink


            “More cut n pasted dodgy statistics margaret”

            Cold you let us have your REAL figures?

          • Edward2
            Posted January 7, 2019 at 11:08 am | Permalink

            You keep repeating these figures despite having them trashed many times previously.
            It is you that needs to get some real figures instead of cutting and pasting out of the Guardian or some EU paid for think tank

      • libertarian
        Posted January 7, 2019 at 4:59 pm | Permalink

        Margaret howard

        I said businesses , they aren’t individuals, your figures are wrong and even the EU commission themselves admitted that EU regulations cost businesses 600 billion Euros

        The costs incurred by businesses are far in excess of the billions we actually pay into the EU . Clearly you’ve never run a business

    • Anonymous
      Posted January 5, 2019 at 10:31 am | Permalink


      Anyone would have thought that there hadn’t been a national debate and a vote.

      The biggest lie ever ? “You’re only joining a common market.”

    • dame rita webb
      Posted January 5, 2019 at 11:45 am | Permalink

      If you worked in financial services in 2007/8 you would know about Gordon Brown’s “light touch regulation”. Despite Mandelson’s claim that it all started in America, educate yourself and do some research on AIGs activities in London. Ten years later however nothing has changed much and the City is still less regulated than Wall St or Frankfurt

      Posted January 5, 2019 at 11:57 am | Permalink

      Newmania more than half of us are being frogmarched in John Redwoods constituency. There is also no majority for anything in Parliament. Article 50 now needs repealing as it is evident we are not ready. The government is giving shipping contracts to firms with no ships and with Ts and C’s cut and pasted from takeaway shops. Its a complete shambles.

      Reply No-one is being frogmarched. Clearly no MP can both vote for and against leaving the EU, though all of us have constituents on both sides of the argument. I will carry on voting to leave as I promised – as did the whole Conservative party in the last GE – when I received 57% of the vote. The Lib Dem candidate offered a second referendum and opposition to Brexit and got around 15%.

    • Richard1
      Posted January 5, 2019 at 2:10 pm | Permalink

      It was most certainly Labour’s fault. They went into the crisis with a Budget deficit of c 5% of GDP (once you add back browns Enron style financing), despite a decade and a half of growth before then and record tax revenues from the boom bit of browns boom and bust economic policy. They then proceeded to invest £80bn or so in the equity of bust banks, needlessly, and to underwrite their liabilities. It was at the time clearly explained by a number of people, including our host, that the banks could and should have been restructured at the expense of their shareholders and creditors. Indeed it is now accepted internationally that this is what will happen in any future banking crisis.

      Imagine if the UK had been in the euro, as urged for years prior to the great labour recession by many of today’s prominent Continuity Remainers! Either the UK would have been crushed by Greece-style treatment or it would have brought the whole euro system down. Good thing we didn’t listen to you lot then!

  16. BOF
    Posted January 5, 2019 at 10:20 am | Permalink

    OT Thank you John for your considered, and sensible contribution this morning on Today. Unlike others, who were gratuitously disingenuous in their desire to reverse/overturn the referendum result to prevent the UK properly leaving the UK.

    I note they were given a great deal more airtime than you were.

  17. acorn
    Posted January 5, 2019 at 10:32 am | Permalink

    It is worth having a read of The Natural Rate of Interest is Zero by Warren Mosler* and Mathew Forstater** Working Paper No. 37 (Google it)

    Quantitative Easing does not create new “money”; it just swaps government bonds back into cash (reserves in bank language) that bought them from the government in the first place. There is no increase in the net FISCAL assets in the economy.

    The cash will most likely continue to be saved by buying shares in companies, which pushes share indexes to new highs increasing the borrowing capacity of such companies. Quantitative tightening does the opposite. Bonds with higher interest rates are issued to pull cash out of the spending cycle to control inflation.

    The moment the government bond is swapped to cash, the bond is worthless and can be put in the shredder; it does not have to pay out interest any more but the treasury pretends it does, paying interest to itself. The US Fed just lets them quietly disappear at there maturity dates.

    Monetary policy is a throwback to the days when the world was on the Gold Standard and is counterproductive in modern floating fiat currency economies. The biggest problem the latter has is politicians who don’t know how it works or how to use it.

    But, if you want an example of a totally screwed up system, look no further than the Eurozone.

  18. backofanenvelope
    Posted January 5, 2019 at 10:45 am | Permalink

    I would us all to make a New Year’s resolution. Use of the word “fair” is banned!

    • Everhopeful
      Posted January 5, 2019 at 3:55 pm | Permalink

      That’s my resolution. That word…Grrrrrrrrr!

  19. ian wragg
    Posted January 5, 2019 at 10:49 am | Permalink

    QE has been a disaster fuelling asset price increases whilst savers have been fleeced.
    I calculate that since 2008 it has cost me the best part of £100k.
    Still none of the perpetrators of the crash have been prosecuted and most are still in post.

  20. Caterpillar
    Posted January 5, 2019 at 11:01 am | Permalink

    As we are moving to a period of divergence I think the PM has been dealt another good hand, her and maybe the UK’s last chance to play them correctly – managed no deal at the end of March. EU economy is heading for recession and the ECB has limited tools to use to stimulate and the EU will limit members wishing to use fiscal approaches. China is slowing, but does have the capability to increase credit as well as to build more infrastructure. US is slowing but still growing above trend (great job and Labour force participation numbers yesterday), looking at least 2 years out from recession. Tailwind from POTUS tax cuts winning over trade uncertainty. Moreover the US has dry powder, the Fed can back away from balance sheet normalisation and can wait and see on direction of next rates move, it has space either way. What an opportunity the PM has, now is the time to cut free from the stagnating EU without transition arrangement, make a fast trade deal with the US, don’t pay 39bn giving fiscal policy space! The govt cannot miss this chance, this is falling in its lap.

    • Sir Joe Soap
      Posted January 5, 2019 at 12:06 pm | Permalink

      Sorry to disappoint you, but this won’t even be on her radar. This one doesn’t spot an opportunity and capitalise on it when it’s a blinding flash in front of her. It’s all about keeping people onside. Whether what they’re saying is rubbish or not doesn’t matter, which is more than worrying.

      Give Blair some credit, he could spot trouble or opportunity from a mile away.

    • Man of Kent
      Posted January 5, 2019 at 12:31 pm | Permalink

      Yes , ‘what an opportunity ‘ but is it in her heart to do what is best for Britain rather than the EU ?

      I could not bear to see her ‘deal’ passed in the House of Commons on the back of reassurances on the backstop but without legal force , while quite forgetting about trade deals , the ECJ , customs union and imposed rules , £39bn , and a sham independence dragging on for year after year after year .

      Brexiteers – stick to your guns and defeat this dreadful act of self harm .

  21. Fed up
    Posted January 5, 2019 at 11:35 am | Permalink

    Off topic but important. Who authorised the hiring by the government of 150 lorries to demonstrate what “might happen at Dover with a no deal Brexit?” for “Operation Brock”?
    Is there anyone, let alone any MP, who doesn’t know what has happened in the past when French workers go on strike?

  22. Sir Joe Soap
    Posted January 5, 2019 at 11:56 am | Permalink

    “The danger is the pursuit of an old normal, with no QE and base rates above 3%, is not compatible with reasonable growth and is not necessary to contain inflation.”

    Problem is that we’ve suffered effective inflation in the private sector by any other means than the official indices over the past 10 years, i.e. look at the inflation in the tax take here, in house price rises, imported goods, cars and so on. Inflation indices have been contained by importing cheap labour, demand reduction by limiting spending power based on those low wages and higher costs.

    We don’t need or want an economy based on ten million more imported “baristas” serving us coffee for 20p in wages but taking a further £1 from our tax benefit and welfare systems.

  23. Adam
    Posted January 5, 2019 at 12:00 pm | Permalink

    Consumer actions dictate economies.
    Unless their preferences demand something & assess its price as worth exchanging their money for, no commerce exists.
    Banks make feeble attempts to forecast the actions of billions of individual consumers, yet the majority of those, even themselves, may not know what they would choose at some future date, & many purchases are made on a whim.
    Giant factories, industrial machinery, employment contracts & much else are founded on whether someone happens to accept a bag of crisps.

  24. Ian Pennell
    Posted January 5, 2019 at 12:07 pm | Permalink

    Dear Mr Redwood

    I totally agree that the Bank of England should be adopting a more pro- growth agenda whilst inflation is low. Do keep up the pressure on Mr Carney to accommodate growth, although I would venture to suggest that this should be done in the following way:

    1) Central Bank Interest Rate raised to 3% -to help savers and help to boost the value of the British Currency.
    2) The Bank of England should buy £20 billion of bonds from banks contingent on them lending at rates of no more than 5%: That way businesses and households that need to borrow are not starved of credit, banks still make a profit and their existing debts remain manageable.

    In addition the Government needs to get on with leaving the European Union so that we save £10 billion annually to fund economy- boosting tax- cuts. We should also slash Foreign Aid so that an extra £10 billion can be spent on boosting Public Services. With the Deficit virtually eliminated now is the time to borrow an extra £15-20 billion annually to fund further Income Tax cuts and to upgrade the national infrastructure.

    All these efforts will help to boost economic growth and help the British economy over any short- term issues with a managed WTO “No Deal” Brexit. Stronger economic growth means increased pay- packets and higher share-prices, both of which keep the British Public optimistic about the future.

    Crucially, people felling better about the future under a Conservative Government will also stop Labour getting ahead in the polls and cow them (and other opposition parties) from their desire to derail Brexit.

  25. Everhopeful
    Posted January 5, 2019 at 12:15 pm | Permalink

    Look at the country. Read the news. Behold the results of Crony Capitalism!
    And who has paid the price for “salami slicing” since 2008? Why course!
    All initiative sucked out of the system..the stranglehold of rules and regulations. They aren’t there to protect us but to stifle competition.
    The govt should butt out and let the economy flourish.
    And what on earth is all this about a “No Deal” lorry drill???

    • John Hatfield
      Posted January 5, 2019 at 8:11 pm | Permalink

      Who pays EU tariffs? In the rest of the world, the company doing the trading naturally pays the tariff. But for the UK the tariff is being paid by the taxpayer. To put it crudely, every company in the UK trading within the single market is getting an extra unearned profit of 7.3 per cent from the long-suffering taxpayer. This explains why so many UK companies are complaining about leaving the single market. For years they have been quietly sucking a 7.3 per cent bonus from the public teat, and now see it being snatched away.

      • Everhopeful
        Posted January 6, 2019 at 1:05 pm | Permalink

        Ah ha! Explains a great deal. Thanks.

  26. lojolondon
    Posted January 5, 2019 at 12:48 pm | Permalink

    John, it appears I am far more cynical than you are – I believe the Fed is getting involved in politics and trying to stop Trump’s towering success in growing the economy from becoming a runaway success. The UK BOE, in collusion with the Chancellor is trying to show that “Brexit is bad”. The EU is really the odd one out, they have embraced QE like no other economy ever has, but perhaps there is a limit to everything.
    Bring on the 1st of April, a new PM and a new Chancellor and I hope for a bright new future for Britain.

    • Chris
      Posted January 6, 2019 at 12:19 am | Permalink

      Lojo, I believe that the Fed’s days are numbered, and the banking structure will be reformed for the better by P Trump.

  27. Whaddyasay
    Posted January 5, 2019 at 12:52 pm | Permalink

    No comment..i’m just gonna sit back and watch the sparks fly over the next few weeks..should be better than ringside

  28. ian
    Posted January 5, 2019 at 1:36 pm | Permalink

    Great article in the paper today John, sums up how I feel with the majority of the people in England.
    My man Mr Trump seems to be starting a crest of a new wave for the USA people with tariff money coming in and Europe to pay for its own defence, another big saving for the people with wages and jobs picking up for small businesses, these new Ideas counld save the USA people 250 billion a year.

  29. Sue Doughty
    Posted January 5, 2019 at 1:56 pm | Permalink

    There is worry and uncertainty but it is nothing to do with Europe. China’s rapid growth was supported by borrowing now due for repayment but with world demand not as high as they wish they will not be able to repay. Stats show that 90% of Chinese live on $2 a day – not much consumable income and no surplus there.
    There economic data is not to be trusted. Hence nervousness about investing and falls in equities. China is heading for a credit crunch!

  30. Den
    Posted January 5, 2019 at 2:46 pm | Permalink

    It is still amazing that there are so many people out there who have little faith in Britain being able to manage on its own, without the rigid Bureaucracy, the Laws, Rules, Regulations and EU Directives to guide us.
    They must be totally captivated by Brussels and suffering from a new form of the Stockholm Syndrome and/or suffering from a psychological bias to change from their norm. Given Britain’s standing in the World and its Global history, I wonder just what they are afraid of.
    With regards to the CBs it is they who have created the world debt that now reaches circa $250 Trillions and represents around three times total Global GDP. I believe they had initiated their QE programmes without any thought of how and when they would stop them. Consequently, debts over the past decade have soared along with the bubbling equity markets. A reality check of this is using Gold Price as the currency with say the S&P 500. The Chart clearly displays the S&P 500 priced in Gold peaked in 2000.

    That infers that the ensuing Crash and stunning recovery from 2009 are down to The Fed manipulating the paper currency rather than real investment strategies. QE has done nothing but support the failing banks and corporations and increased borrowings but has robbed the savers of better returns and the best run companies of future potential planning. Interest rates should have been raised years ago after a year of QE but better late than never because stormy times are ahead and NONE of it was caused by Brexit.

  31. rose
    Posted January 5, 2019 at 5:21 pm | Permalink

    Very good clear points on Radio 4 and LBC this morning. You are getting expert at dealing with the hostile environment. I notice the No Deal petition is now picking up again after a Christmas lull. Even in Lady Hermon’s constituency.

    When is the investiture so we can address you in your new style?

  32. Ronald Olden
    Posted January 5, 2019 at 5:53 pm | Permalink

    The Dow was up well over 3%, on Friday and is barely changed (0.4% down) on March 23rd 2018).

    It’s higher than it ever was prior to November 2017, and 35% -40% up on where it was less than three years ago.

    The Fed and the Bank of England have been quite justified in moving towards a more ‘normal’ monetary policy.

    Inflation is still above target in the UK, (the target number is too high anyway), house prices in the UK are astronomic and need to fall substantially to make them remotely affordable for people, unemployment is at an historic low, labour shortages abound, and wages are rising sharply

    The is NO CASE for interest rates being artificially even lower than they now are, ripping off savers, or for printing yet more money.

    The UK banks are already close to their safe lending limits.

    The Bank of England, should however, now stop any further tightening until at least May and sit on its substantial QE ammunition in the event that something serious does happen around Brexit.

    There is no danger that the UK is pursuing an ‘old normal’. We are nowhere near anything like ‘old normal’.

    The history of monetary excess and loss of monetary control is littered with politicians telling us that there a ‘new paradigm’ and we can ‘spend – spend -spend’ ‘borrow – borrow – borrow’ and forget about tomorrow.

    It happened in the late 80s and in the mid first decade of the 2000s. We’ll live to pay the same price again, the way we are going now.

    Printing money must NEVER, as John Redwood and John McDonnell, seem to advocate, ever be ‘the norm’. We had that in the sixties and seventies, and look where it got us.

    There might well be global spare capacity, but that’s no concern of the Bank of England. Available capacity in the Sterling area is the determinant of UK monetary policy.

    I myself also noticed the good PMI a few days ago. Curiously enough the BBC barely reported it whereas this voodoo number features full stage when it pessimistic.

    I also noticed that the German PMI was terrible, signalled recession there, and I rocked with mirth when the explanation given for the good UK number was ‘an artificial boost owing to Brexit uncertainty’.

    Since well before the Referendum Remainiacs have been telling us that ‘Brexit uncertainty was going to plunge the economy into recession.

    Now they’re telling us it’s giving us an artificial stimulus and their (by them), long hoped for, recession is now put off till after we’ve left.

    But despite being wrong 100% of the time they’re absolutely convinced that they know best.

  33. hefner
    Posted January 5, 2019 at 6:41 pm | Permalink

    To be watched before Monday 21:00, the real Dominic Cummings on YouTube “Cumming’s – Why Leave Won the Referendum”. 32 mn.

    • rose
      Posted January 5, 2019 at 9:20 pm | Permalink

      At least two things Clever Clogs got wrong:

      1 The public do like Farage – even my left wing remainiac sister likes him. That was a major blunder in the campaign and showed how inside the M25 the official campaign was.

      2 Boris was never going to be a shoo-in because the MPs weren’t going to let him on to the final ballot paper.

  34. BR
    Posted January 5, 2019 at 8:48 pm | Permalink

    Beware of economists who believe that growth is essential.

    Targeting zero growth means the economic levers are different – or at least used differently – and there’s no need for endless immigration to fuel that growth and ever-increasing business profits.

    There are some interesting works by economists who believe that targeting zero growth is the way forward.

    • Edward2
      Posted January 6, 2019 at 12:21 am | Permalink

      You cant stop humans being enterprising and improving themselves and therefore creating wealth.

      It isn’t governments nor economists that create growth.

  35. Honest Dude
    Posted January 6, 2019 at 1:19 am | Permalink

    I have to disagree with you on keeping interest rates ridiculously low. Current BoE interest rates of 0.75% are well below inflation whether CPI or RPI.

    That means savers are getting negative real interest. It amounts state theft of savers money. How can that be justified? Is it Conservative Party policy to rob people of their savings?

  36. Prigger
    Posted January 6, 2019 at 4:07 am | Permalink

    Investors, for want of a better term, are awaiting the Sino-US trade deal.
    Also whether Mrs.May gets away with it.
    It’s all one with global investors about Brexit or no brexit in the short term.
    Mrs May’s unstated love of a United States of Europe is not something to have in ones pension fund as a must invest in. Rather not, unless one intends kicking the bucket in the next decade or less. You can bet your yellow vest on it.

  37. davies
    Posted January 6, 2019 at 1:25 pm | Permalink

    My worry is your statement about the Eurozone. Information I have states that the total value of non performing loans in the EZ is Euro 900 Billion and banks have made provisions for only half of that. Spread mainly between Italy, France, Spain and Greece.

    Add to that they hold huge amounts of European Sovereign bonds which are classed as Zero risk inside the EZ, so dont put anything aside for it – the numbers held by the above countries banks are startling.

    So if QE has ended in the ECB that could really spell trouble for some of these countries because this must accounts for a large chunk of their sovereign borrowing and I doubt any other institutions outside the EZ would touch them.

    We may have BREXIT which is turning out to be a pain in the a*** but I think history will show us yet again dodging a huge bullet by the skin of our teeth with regards to Europe.

    Its a shame the BBC couldn’t repeat their 4 part “Poisoned Chalice” series aired in the mid 90s. Worth a watch, it’s on You Tube.

    • hans christian ivers
      Posted January 6, 2019 at 3:57 pm | Permalink


      The performance of the northern European and eastern European economies and their growth is in total contradiction to your forecast

      • Edward2
        Posted January 7, 2019 at 11:13 am | Permalink

        High unemployment, disgracefully high youth unemployment, huge debt levels, falling share of world trade and low growth with even powerhouse Germany near zero growth.

        As the ECB stops QE and Germany slows the amount it lends to the other 26 then a crisis in the EU is on the horizon on 2019/20

        • hans christian ivers
          Posted January 9, 2019 at 5:08 pm | Permalink


          I see lots of countries in Europe being in completely different situation than the one you describe in northern, eastern and central Europe

  38. hans christian ivers
    Posted January 6, 2019 at 2:23 pm | Permalink


    We who are still in business know that both we and our customers have increased stocks, for a potential no deal scenario due to uncertainty of a potential no deal.

    So, whatever you might think or write is contrary to reality out there ,so please stop pretending you know better

    • Edward2
      Posted January 6, 2019 at 3:03 pm | Permalink

      Sensible precaution which any business might copy, but I will predict it won’t be needed.
      Unless France and Germany decide to play up.

    • libertarian
      Posted January 7, 2019 at 5:03 pm | Permalink


      Who is this WE, what items have you stocked up on? Why ?

      I haven’t stocked up on anything. If the Germans decide to stop selling me stuff I’ll buy it from India, or China or the US. You do talk nonsense hans

      • hans christian ivers
        Posted January 9, 2019 at 5:06 pm | Permalink

        we have stocked up for clients whoo have paid us to do so, mfr. clients primarily

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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