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?

@forinborin

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?

So you dont government policy affects any of their policies?

You dont think the government debt has affected their stance on interest rates?

And they are have a printing press where they are printing millions of pounds for the fun of it?

So you think we would be having half the problems if the Bank of England had increased interest rates a couple of years ago?
They are both as bad as each other.

And to the questions about his salary.

No I dont think he is worth that salary- hes obviously hasnt done a very good job has he?

@Porfre
The Bank of England does not print money. There is a good article linked by a previous poster about the new money creation in the modern economy.

Their policies, indeed, are influenced by the government decisions on spending and borrowing. Strangely, I don't hear the same outrage against the NHS, or local councils, who are in a similar position.

Andrew Bailey is in his post for just over a year. He has been the head of the PRA before for 7 years and yes, has done a stellar job there.

400 billion is the amount of money the BOE has injected into the economy since covid.
Production of goods and services took a nose dive due to restrictions all around the world, energy prices have skyrocketed which in turn effects everything else.

Those are the main reasons for the inflation - the effect of discretionary spending won't compare.

As always the people with nothing or little cut back, the people with the most don't have to worry.

The Luxury goods market has continued to experience massive growth over the last couple of years.

We're getting shat on from a great height.
We being us low paid workers who kept stuff going through lockdowns without fucking parties.

The amount of spending depressed me but there seemed there were many keen to go down that path and cite ‘they only care about the economy’ etc

I knew this stage was coming and it’s going to be pants for many - mostly the people not as wealthy

I had to laugh at the idea of average pay rises being 5%, I don’t think my pay rises over the last 10 years added together amounts to 5%, and that was preceded by an 8 year pay freeze.

(b) he's actually worth it,

how so, I don't think he's doing a great job

burble burble vaccines burble burble brexit burble burble labour burble burble peppa pig burble burble burbelous burbelous (burble burble in Latin)

@bindud

(b) he's actually worth it,

how so, I don't think he's doing a great job

Who would you hire who'd do a better job in the current situation? Genuine question.

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

whilst on paper this is correct, how many people get wage rises in reality, look at the suppression of the last decade. Plus the pressure is going to be felt regardless.

@forinborin that's a stupid question, I would need to conduct interviews for a start.

Why do you think he's done a good job? genuine question.

Mrs Hr has had a 20% payrise.
She's still going to leave.🤣🤣
My business has seen a 50% drop in turnover overall. Rallied a bit.
However in the initial lockdown monthly 5 figure turnover went to low 3 figures within weeks.
It recovered but at a level 50% lower.
Shit.

[quote bindud]@forinborin that's a stupid question, I would need to conduct interviews for a start.

Why do you think he's done a good job? genuine question. [/quote]
I don't think hirings at that level are decided via interviews. All people qualified for the job are already more or less in the public eye, so their previous accomplishments, and where they stand on key topics, are well known. So who could be a better person for the job?

The answer why I think he's worth his money is that I worked for many years in the industry that has been supervised by the PRA under his command (previous job), and I rate them very highly. Regarding his new job, I have read through the economic affairs committee report and evidence presented to the house of lords in July 2021 (when it was obvious to everyone that high inflation times are knocking on the door), and the Bank of England has a very clear, rational and tangible position on the matter, despite being faced with very difficult circumstances.

[quote forinborin]@Porfre
The Bank of England does not print money. There is a good article linked by a previous poster about the new money creation in the modern economy.

Their policies, indeed, are influenced by the government decisions on spending and borrowing. Strangely, I don't hear the same outrage against the NHS, or local councils, who are in a similar position.

Andrew Bailey is in his post for just over a year. He has been the head of the PRA before for 7 years and yes, has done a stellar job there.[/quote]
Reading the article- they don't directly create most of the money but their policies influence the amount that can be created.

ultra insanely low interest rates indicate the bank of england are playing a very bizarre game.
Print money.
Inflate house prices with silly cheap lending so people are so massively in debt no one can afford for house prices to drop.

Reading the article- they don't directly create most of the money but their policies influence the amount that can be created.
Indirectly, yes, through influencing appetites for borrowing and lending. It does not have an immediate effect though, and there are other important influencing factors (like government spending, tax policy etc etc).

@forinborin

I think people are venting on this thread because the Bank of Englan have announced a dumbass statement that people shouldn't ask for a pay rise.

I'm sure if the an NHS spokesperson or a councillor came out with a similar statement there would be plenty of threads pulling them apart.

What with Sunaks faux " I feel your pain".

The £200 rebate that's seems to be loan you cant opt out of, and all the other crap this week I'm not surprised people are venting or expressing their disgust at this announcement.

Especially when the Bank of England's monetary policy has directly contributed to the cost of living crisis.

The other thing that tends to go with this higher inflation levels is industrial strife. The first to be hit will be those in the public sector where HMG looks to hold back costs by limiting wage rises to 2%- when inflation is 7% you will lose ground really quickly. Trust me there is trouble ahead.

Cheap money has created a massive problem.

Traditionally, the way to control inflation is to get positive real interest rates (base rate above inflation). However, if they got base rate up to a realistic level, say 3.5%, mortgage rates would double and triple and we would have a massive crash.

So, they are talking about controlling wages. They can do it (for a while) in the public sector, but it won’t wash in the private sector, where there is plenty of bargaining power.

And that means a further brain drain from public sector to private sector, and an eventual crash anyway (they can’t duck interest rates forever).

Cheap money is a continual tax on wage earners and a payment to those with assets (houses and stocks).

That road is rapidly running out.

When I say 'printing money' I mean creating new central bank reserves that are used to buy UK government bonds in Quantitative Easing (which is what has put asset princes up and massively benefitted the wealthiest in society to the detriment of others). article here.

Asset princes!! Whoops, should be asset prices

[quote Porfre]@forinborin

I think people are venting on this thread because the Bank of Englan have announced a dumbass statement that people shouldn't ask for a pay rise.

I'm sure if the an NHS spokesperson or a councillor came out with a similar statement there would be plenty of threads pulling them apart.

What with Sunaks faux " I feel your pain".

The £200 rebate that's seems to be loan you cant opt out of, and all the other crap this week I'm not surprised people are venting or expressing their disgust at this announcement.

Especially when the Bank of England's monetary policy has directly contributed to the cost of living crisis.[/quote]
I can understand, and believe me as a single parent household I am not overly excited about what is to come either.

My point is that getting angry at this statement is somewhat similar to getting angry at a doctor who suggests that a type-2 diabetic patient limits sugar consumption. And then bringing in the doctor's salary as an argument - "of course, the doctor is paid well so can afford to eat as much sugar as he wants!"

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

Ah, but that's passed off as "quantitative easing" - aka the economics of the madhouse

Trouble is, they know the other way to restrict inflation is to raise interest rates and they'd rather not do that because of the sh1tshow it could cause, so it's back to "suck it up, peasants"

Forinborin I would argue 1) it feeds into the rich, white men telling poor people what sacrifices they will have to make whilst earning a fortune narrative (that is enraging the population- see Boris thread, or Sunak thread or antiwork on reddit)
2) on the worst possible day when people have been informed of price rises
3) in the worst possible way whilst being tone deaf to the fact that many haven’t had payrises thanks to austerity for years
I don’t think the B of E intended offence to be fair. But, if people are clearly offended by this- that’s the time to apologise for offense caused. They aren’t annoyed at fiscal policy they are annoyed at the patronising, talking down tone- you greedy plebs better not ask for more- back to your workhouses while billions of money has been squandered. We don’t want to hear a very rich person tell us how greedy and grabby we are after we have suffered through austerity/covid/Brexit/ now the energy crisis. That is the message people have taken from this -whether it was intended or not-

I saw this and was raging. Parents should just tell their kids don’t worry that the house is cold and you’re hungry, at least mummy and daddy’s wages are contributing to inflation. Unbelievable