To think inflation is used to Scare us?

[Tinkerblonde1]

Wondering other people's opinions, really.

Also how many of us just don't understand. I am no economics expert. I am not stupid. I have a Physics degree so not totally stupid, anyway, but I have tried to read about economics. It is really difficult.

I have read a lot about modern monetary theory. Ok it's a theory, which economics is! It's a man made concept. So all theory but I do feel the government oversell the fact the economy is like a household budget so we think there is no money.

They don't want to increase the minimum wage. They are worried about inflation. They don't want to increase wages for rail staff, barristers. Inflation!

We are a rich country with a solid infrastructure and a fairly well educated population. We are not Zimbawe.
AIBU to think inflation is a big excuse to keep us in our places? It doesn't need to be this way?

Does it?

But of course. How rude!

Ok it was 20 odd years ago. Give me special relativity, Shrodinger or Smith charts any day.
Economics a minefield! I have read a lot recently and still it's worse than quantum mechanics.

Are you absolutely sure you have a physics degree OP?

this!!

@notlabled, has got it spot on. A couple of years of bad policy can be reversed quite quickly. Expecting tax payers to pay tax credits instead of businesses paying a decent wage was a bad policy. It is now ingrained. Large companies like Amazon pay low wages then expect government to top up workers wages, then they pay little tax so double whammy. We should have invested in nuclear power 20 - 25 years ago. Successive governments have ignored the problem and now it is critical. The global power crisis is causing inflation to spike. We need to build reactors and try to economise on using so much energy by better insulation. The government was way too generous during furlough giving 80 percent salary. Many other countries offered 65 or 70 percent. Also Sunak gave self employed too much money that we later find they were not entitled too, by not running proper checks on where funds were going. Now sky high pay rises will make inflation worse.

Runaway spiralling inflation is something to be concerned about

The trouble is once inflation gets going, it's very hard to stop,

I earn £100 but prices are going up by 10% a year, so I want £110 to maintain my standard of living. I get a payrise, which puts up my company's product prices by 10%.

All the companies who buy from my company, need to earn 10% more in order to be able to afford supplies from my company, so they put their prices up by 10%. And all of their staff also need a 10% pay rise in order to maintain their standard of living, and so it goes on, snowballing year on year.

It happens when countries print money, like during Covid, to pay for all the things we needed. The countries are perceived as less wealthy because they have racked up so much debt, so they are a bigger risk, so are charged more interest.
Tax take needs to go up to pay the extra interest.

The only ways out are either for everyone to have less (shareholders, employees, taxman) until the country's debt is paid down (not popular or comfortable) or to increase national production by 10% more than costs (not easy).

It is a long and miserable process, involving bitter wrangling between govt, employers and employees.

Why are people questioning my intelligence without looking into it themselves? Really weird. I have found MMT to be really interesting.
Plus whether you agree or not you can't argue we currently have a particular choice of austerity. There are better ways than what we are currently facing.

Glad everyone is an economics expert though.

Thank you to those who have given sensible interesting replies.