Bets on what our Govt will do to combat inflation

[Endofanera22]

I'm no economist and don't know too much about history but I'm super worried about hyperinflation.

I know Germany suffered it pre WW2 and got round it by setting up a Republic and a new currency I think?!

Then there was the Dawes Plan, but don't know much about that?

Are we going to have a new currency, the 'Brexitling' ?! 🤔😂

They will fiddle while Rome burns.

This farce of a leadership contest is a classic choice of activity.

Well I actually didn't sleep much last night because of this. I'm seriously worried.

The problems are in part causes by the government doing things in the first place. A financial system will go through recession and boom cycles. Trying to always avoid a recession will only kick the problem down the road and make it bigger.

Printing more money to bail everybody out is not the answer. Small and targetted help and letting people adjust their consumption is best long term.

What started all this? The governments plan to pay people to sit at home during a flu pandemic. We are now reaping the rewards. For those who want to strike, be careful what you wish for

100% agree

I am really surprised that the public aren’t protesting in their 000’s . Perhaps the reality hasn’t sunk in yet and winter will trigger this.
I think I can cope with the coming winter but certainly cannot if it goes up to £5k next April.
our next pm is chosen by white middle class, posh boys from the south of England, that doesn’t sound very democratic. Truss or Sunak are both bad options. Tax cuts is not going to make much difference to the lowest paid.

@LimboLass I'm not talking about a big standard recession...we're heading for utter economic meltdown setting us back half a century... where the old and ill die from a cold and people pass out in the street from malnutrition and their kids steal milk bottles from the doorsteps.

I completely agree that striking won't help.

I completely agree Sunack threw the baby out with the bathwater during covid, throwing all our money at a problem for it not to go away but cause a bigger one.

If Truss wins the race to be PM then she will buy a new hat and take lots of Instagram photos of herself looking serious behind a big desk, looking at a screen with a graph on it and shaking the hands with someone in a suit. Sorted.

I'm not talking about a big standard recession...we're heading for utter economic meltdown setting us back half a century

Define setting back.

We are an ecomomy heavily relaint on people being in debt to pay for things that they do not need much of which is imported. Starting from scratch will be painful but is long overdue.

Will the rich and elite hang around too long in the Uk if things get bad?

The currency will reset some time in the future.
Always happens apparently.
Currency would then instanly lose 50% of its value.
Something like that.

You would think and hope and expect so.

But depends on who is really pulling the strings.
And depends what they are getting out of it all.

Banks for instance make like a whole heap of repossessed houses?

fwiw, I never think MN is hot on economics.

"Germany’s post ww1 inflation was caused by the banks printing more money to pay the striking workers."

This is total misinformation tbh. Germany ran up huge debts to pay for the war figuring they could recoup it to nice they won but they had to pay huge reparations instead which they did by printing money.

T

Plus a gov does not want high interest rates themselves.
They are very heavily in debt themselves.

Do nothing
Tell us we are not working hard enough/long enough hours
Tell us we need to tighten our belts/ride it out
Piss about on holiday
Do more nothing

Nothing. And belittle people by referring to financial help as ‘handouts’.

Oh I’m thinking they’ll make it worse and pretend it’s from incompetence. Liz Truss is being set up to be the next scapegoat for the Tories just like Theresa May was. She is obviously economically illiterate. Everything she’s said about what she’d do to help the economy is painful to watch- Rishi Sunak’s only mistake was in pointing out how stupid the ideas she’s parroting are. That’s why he’s not the favourite to win, he’s too smart and educated on economics to be a puppet PM to the party. I hope he does win though it’s not like I have a vote as I’m not a conservative. Which is unfair and not Democratic at all. How many failed governments does a party get before it’s game over player 1?

Around 3,000 people already die every year specifically from being unable to afford to heat their homes. Usually these victims of state neglect are the over 65s as older people are more susceptible to hypothermia but also disabled/vulnerable people as well- such as the heartbreaking case of the disabled mum who froze to death while her DC were at school. They’ll be secretly chuffed if that number triples this winter because that’s a savings to the state pension and disability benefit costs. The Tories didn’t care when a UN report delivered to the U.K. government laid out the stark violation of disabled human rights and the link between PIP roll out and 10,000 deaths of disabled Brits. So honestly a cold winter is an Act of God, or a Freak of Nature/Climate Change so that they can pretend any excess deaths was just rotten luck.

Banks for instance make like a whole heap of repossessed houses?

Only if property prices stay up. If they correct or crash, then banks will be short selling properties for less than what they’re owed.

Well the Government clocked up £450 billion of debt from their Covid spending sending total Government debt to over £2 trillion.

This is not sustainable as a greater and greater percentage of Government spending goes on just paying the interest on that debt leaving less money for things like health, education, state pensions etc.

So the three options to pay back the debt are:

1. Increase taxes - this tends to be politically unpopular and you won't get voted in / back in on these policies
2. Cut Government spending - again politically unpopular
3. inflate it away with inflation at 10% plus - whilst blaming it on Putin.

Guess which one they are going for?

Indeed this is how the post WW2 debt was inflated away during the 1970s.

Nothing until we kick them out...

As you say inflate it away, promising faithfully it must never happen again.

However, with the government issuing so much indexed linked gilts it will not be as handy as it was in the mid-seventies

For those who are interested...

Under the Dawes Plan, Germany's annual reparation payments (from WW1) would be reduced, increasing over time as its economy improved; the full amount to be paid, however, was left undetermined. Economic policy making in Berlin would be reorganized under foreign supervision and a new currency, the Reichsmark, adopted.

German politicians like Adolf Hitler and Alfred Hugenberg attacked the Dawes Plan because it did not reduce the reparations total. They also disliked the idea that foreigners would have control over the German economy. The Dawes Plan was initially a great success.

Not sure how this is relevant to the UK...

Again, for interest;

Harold Wilson, Edward Heath and Jim Callaghan all lost elections because of their inability to control inflation. A central feature of the two general election campaigns in 1974, and even of that of 1979, was the use of a shopping basket to show how the Government had failed. Don’t be in any doubt as to who pays the price for a failure to control inflation.