Is the Bank of England for real here?

[TheWhalrus]

So, just now the Bank of England announces that to combat inflation, employers should be looking to not increase staff salaries (www.theguardian.com/business/2022/feb/04/bank-of-england-boss-calls-for-wage-restraint-to-help-control-inflation). So at a time of massive inflation, we're apparently not supposed to be trying to earn more or aspiring for a higher salary in order to maintain our own living standards? Rather the Bank of England expects us to knuckle down and accept these circumstances because they can't control inflation.

Has this guy (annual salary £575,538) been smoking something? Or does he really have no grasp at all of reality?

I might be more inclined to listen to someone who hasn't spent the last decade and a half merrily printing money while keeping interest rates at rock bottom, thus creating an asset owning class whose riches outstrip even high earners by a factor of thousands, while regular employees' wages have been frozen "because austerity".

@forinborin,

I don't think you really get it.

People don't do that sort of job for current earnings, but as a combination of public service (as they have already made plenty of money in the private sector) and to get the experience to earn (lots) more in the future.

Even our PM gets that one!

@InnaSpace

I might be more inclined to listen to someone who hasn't spent the last decade and a half merrily printing money while keeping interest rates at rock bottom, thus creating an asset owning class whose riches outstrip even high earners by a factor of thousands, while regular employees' wages have been frozen "because austerity".

^this

Low interest rates suits those who finance through borrowing and can grow wealth as a result.

I think he's right in the sense this inflation is the economy reigniting post-Covid. So in effect should be temporary (1-2yrs) in some sectors.
However, wage growth has been poor for over a decade now.

It’s going to be tough for many

The impact of pandemic will hit like this for years

Unfortunately it will be like a whirlwind, ask for wage rise, firm puts up prices, inflation goes up, interest rates go up, people want more wage rises, never ending, back to the days of 10-20% inflation and 10-15% base rate, that’s why he said what he did

Where I live employers can't get people to work for them. They are going to have to offer more if they want workers, plenty of people can't afford gas to get to work!

@forinborin

The fact is, it's the job of government and the BoE to control inflation. And this is exactly what he is asking the general population to think about and help with. They cannot control the inflation with an iron fist, the UK is not a dictatorship with a centrally planned economy running off five-year plans.

I cannot really see the contradiction?

...whilst earning a 600k+ a year salary.

You and I getting a 3% increase on fuck all doesn't cause out of control inflation.

@Unphased

Unfortunately it will be like a whirlwind, ask for wage rise, firm puts up prices, inflation goes up, interest rates go up, people want more wage rises, never ending, back to the days of 10-20% inflation and 10-15% base rate, that’s why he said what he did

There is sense to it although it’s not great and some will likely not get hit in the same way

[quote TheReluctantPhoenix]@forinborin,

I don't think you really get it.

People don't do that sort of job for current earnings, but as a combination of public service (as they have already made plenty of money in the private sector) and to get the experience to earn (lots) more in the future.

Even our PM gets that one![/quote]
I get it. And if they are paid waaay below what they could have received in the open market for their skills, you are immediately disqualifying a lot of talent from competing for that position, restricting the pool only to people who don't have to earn to live. And even amongst world-class economists and financiers, there's plenty of people like that - academics, for example. The current governor being one of them, by the way - first academia, then civil service all the way.

I think the PM pay is on the low side as well, but at least the PM gets a lot of perks / expenses paid in addition to it. The governor of the BoE, however, is just a very high profile civil servant.

If there is too uch spare money floating about the economy try stop printing it you utter hypocritical shower of shites?!

Or tax the fuckers whose assets have ballooned massively due to quantitiative easing instead of the rest of us. I've had the public secotr wage freeze for a decade but yeah, sure it's time for 'pay restraint'.

You and I getting a 3% increase on fuck all doesn't cause out of control inflation.
The thing is, it does, as there's millions and millions of "you and I".

@TheReluctantPhoenix he could be paid the same a the PM or Chancellor, seems sensible.

Rather than wage hikes maybe the tax allowance could be raised to cover for that rise in the cost of living. Maybe by about 7% of the median salary, so by a bit more than £2K

Then extra tax can be collected from those in the top 5% or so who have spare.

On paper it makes sense - wages go up - prices go up as a result as employers pass cost on to consumers - spending goes up to cover prices - inflation soars people need more wage rises and a vicious cycle ensues. Less money swilling about = lower inflation and things gradually move into equilibrium. Well I believe that's the theory in outline.

When you're the one balancing the household budget and trying to pay for everything it makes a lot less sense and understandably so.

If there is too uch spare money floating about the economy try stop printing it you utter hypocritical shower of shites?!

Exactly! Might as well be paid in fucking coconuts or bitcoin or some fucking thing for what money is worth after 14 pissing years of this shit.

The problem is the global economy is competing against each other for raw materials post covid.
Mrs. Hr was saying some raw material costs have risen by 900% since covid began. This kind of inflation is bleeding into the wider economy.

It will settle, but this idea, the economic backlog can be caught up is nonsense, the answer is to write off the damage caused.
Start again.

If there's one institution in this country that should be telling us the economic "facts", then it's the BoE. There are more than enough people and institutions ready to just tell us what they think we want to hear, instead of what we need to hear.

Also, it's irrelevant how much the guy who said it earns - what he says is either right or wrong, it doesn't magically change when his salary moves past a certain point.

He didn't deliver the message well

But, keeping control of inflation is their job. Lots and lots of wage rises at a time when companies are struggling to control costs will lead to higher prices. Which then limit how much your increased wage actually buys. Which then further increases pressure on household budgets

But it's really difficult; and in a decent society people shouldn't go cold or hungry due to lack of money. We need better ways of supporting each other

@forinborin

You and I getting a 3% increase on fuck all doesn't cause out of control inflation. The thing is, it does, as there's millions and millions of "you and I".

Oh well that makes it all ok then.

If they'd shown an ounce of restraint they could have saved billions through the PPE debacle. Instead they couldn't help lining their pockets.

If they'd shown an ounce of restraint they could have saved billions through the PPE debacle. Instead they couldn't help lining their pockets.
Who are "they"? The Bank of England? Andrew Bailey personally?

@forinborin

If they'd shown an ounce of restraint they could have saved billions through the PPE debacle. Instead they couldn't help lining their pockets. Who are "they"? The Bank of England? Andrew Bailey personally?

The government who are pissing up our taxes and then trying to justify NI rises.

The government who are pissing up our taxes and then trying to justify NI rises.
But you do understand that the Bank of England is not the government... don't you?

Think it was a totally out of touch comment. From an economics point of view higher wages do cause higher inflation so will just continue the issue but the BoE could have taken steps before to stop inflation reaching the level its at and that is their job, to keep inflation as close to the 2% target as possible. Obviously exceptional circumstances but pretty obvious this would happen. I am a bit stunned that no-one in the BoE management realised how inappropriate this comment was or maybe letting him dig his own grave. Its got to be up there with telling people they have never had it so good as an inappropriate comment.

If there is too uch spare money floating about the economy try stop printing it

The overwhelming majority of new money is created by commercial banks, not central banks like BoE. Bank of England bulletin explains this here: www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

Further discussed here: www.sciencedirect.com/science/article/pii/S1057521914001070 and www.sciencedirect.com/science/article/pii/S1057521914001434

@Whammyyammy

I wonder if parliament listens to this advice and MPs go without their usual way over inflation annual payrise 🤣🤣🤣

The will close their eyes and stick fingers in their ears