Macroeconomics, the economy, inflation etc. *likely to be very dull*
Comments
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Also, increases in the base rate discourage banks from lending - why take the risk of lending when you can earn more by depositing if with the BoE? This reduces the money supply, so there is less money in existence.0
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Nice to know that all is required to get us out if this mire is a graph.
It will all be over in a couple of months and we can pop the champagne. Oh...The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
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Increasing taxes to reduce spending? No unintended consequences? What about people who don't have any discretionary spending? Luxury taxes from the tories?rick_chasey said:
One of the main reasons they raised tax in WW2 was to keep people spending too much as inflation would have gone nuts.pblakeney said:Nice to know that all is required to get us out if this mire is a graph.
It will all be over in a couple of months and we can pop the champagne. Oh...The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
Yeah inequality and especially poverty does narrow the policy options before there are serious moral problems.pblakeney said:
Increasing taxes to reduce spending? No unintended consequences? What about people who don't have any discretionary spending? Luxury taxes from the tories?rick_chasey said:
One of the main reasons they raised tax in WW2 was to keep people spending too much as inflation would have gone nuts.pblakeney said:Nice to know that all is required to get us out if this mire is a graph.
It will all be over in a couple of months and we can pop the champagne. Oh...
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I know there's a lot of graph hatred around here, but it's a really nice illustration of what's happening. Over simplistic sure, but that chart basically underpins 90% of macro-economic thinking.pblakeney said:Nice to know that all is required to get us out if this mire is a graph.
It will all be over in a couple of months and we can pop the champagne. Oh...
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Do you have a source for that as I would have thought it muh more likely that Govt spending had increased so they had to raise revenuerick_chasey said:
One of the main reasons they raised tax in WW2 was to keep people spending too much as inflation would have gone nuts.pblakeney said:Nice to know that all is required to get us out if this mire is a graph.
It will all be over in a couple of months and we can pop the champagne. Oh...0 -
https://www.waterstones.com/book/two-hundred-years-of-muddling-through/duncan-weldon/9780349144276surrey_commuter said:
Do you have a source for that as I would have thought it muh more likely that Govt spending had increased so they had to raise revenuerick_chasey said:
One of the main reasons they raised tax in WW2 was to keep people spending too much as inflation would have gone nuts.pblakeney said:Nice to know that all is required to get us out if this mire is a graph.
It will all be over in a couple of months and we can pop the champagne. Oh...
The context is they raised taxes much more heavily early on in ww2 to avoid what happened in ww1 which was trying to do both and ending up with mega inflation.
But yes, they were also trying to raise revenue, but the tax rises they did had a minimal impact on the deficit.0 -
Extra tax would not cheer me up, I am a small state kind of a guy.rick_chasey said:Given central banks spent a decade failing to juice inflation, why are we all so confident they can rein it in?
Might need a bit of extra tax to take some heat out of consumption. Would help appease people like SC too
Your policy prescription for a lack of demand (even in lockdown) was fiscal expansion. To remain consistent you should be cutting Govt spending but nobody likes doing that, especially in a rcesssion.
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
I would leave interest rates where they are as one off impacts willdropout out of the numbers but will probably get sticky around 5% so more rises will be needed to push it lower0 -
a) fair. I'm ok with the rate raises / taxes, so you're not wrong there. I'd rather some taxes on consumption rather than rate rises, for the same reasons you don't like a lot of debt.surrey_commuter said:
Extra tax would not cheer me up, I am a small state kind of a guy.rick_chasey said:Given central banks spent a decade failing to juice inflation, why are we all so confident they can rein it in?
Might need a bit of extra tax to take some heat out of consumption. Would help appease people like SC too
Your policy prescription for a lack of demand (even in lockdown) was fiscal expansion. To remain consistent you should be cutting Govt spending but nobody likes doing that, especially in a rcesssion.
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
I would leave interest rates where they are as one off impacts willdropout out of the numbers but will probably get sticky around 5% so more rises will be needed to push it lower
b) UK inflation is really sticky at 10% despite wholesale energy prices not reaching the painful heights we were expecting with a mild winter and better-than-expected transition to LNG on the continent, so I think team transitory, of which I was a fully signed up member, are wrong there. Plus, Chinese demand coming online is not going to slow down global inflation much either.
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Another contributory fact for me, is that the East is becoming far more developed and consequently their populations now want the latest and greatest. This is bound to drive the price up for Blighty. Supply and demand, companies have greater demand so they can play around with pricing and see what people are prepared to pay.
It's a similar situation for Russian Gas, they have other options, demand. Not great for us.0 -
We have only in the last few days reached the anniversary of the invasion of Ukraine. A lot of the increases that happened to push inflation to 10+% will now start to drop out of the figures.rick_chasey said:
a) fair. I'm ok with the rate raises / taxes, so you're not wrong there. I'd rather some taxes on consumption rather than rate rises, for the same reasons you don't like a lot of debt.surrey_commuter said:
Extra tax would not cheer me up, I am a small state kind of a guy.rick_chasey said:Given central banks spent a decade failing to juice inflation, why are we all so confident they can rein it in?
Might need a bit of extra tax to take some heat out of consumption. Would help appease people like SC too
Your policy prescription for a lack of demand (even in lockdown) was fiscal expansion. To remain consistent you should be cutting Govt spending but nobody likes doing that, especially in a rcesssion.
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
I would leave interest rates where they are as one off impacts willdropout out of the numbers but will probably get sticky around 5% so more rises will be needed to push it lower
b) UK inflation is really sticky at 10% despite wholesale energy prices not reaching the painful heights we were expecting with a mild winter and better-than-expected transition to LNG on the continent, so I think team transitory, of which I was a fully signed up member, are wrong there. Plus, Chinese demand coming online is not going to slow down global inflation much either.
The consensus I have been hearing is inflation will drop to 5-6% during 2023, and be back closer to target during 2024.0 -
I would describe inflation as peaking at 10% rather than sticky. As it is an annual number so long as fuel prices don't go higher then then the impact will fall out of the numbers.rick_chasey said:
a) fair. I'm ok with the rate raises / taxes, so you're not wrong there. I'd rather some taxes on consumption rather than rate rises, for the same reasons you don't like a lot of debt.surrey_commuter said:
Extra tax would not cheer me up, I am a small state kind of a guy.rick_chasey said:Given central banks spent a decade failing to juice inflation, why are we all so confident they can rein it in?
Might need a bit of extra tax to take some heat out of consumption. Would help appease people like SC too
Your policy prescription for a lack of demand (even in lockdown) was fiscal expansion. To remain consistent you should be cutting Govt spending but nobody likes doing that, especially in a rcesssion.
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
I would leave interest rates where they are as one off impacts willdropout out of the numbers but will probably get sticky around 5% so more rises will be needed to push it lower
b) UK inflation is really sticky at 10% despite wholesale energy prices not reaching the painful heights we were expecting with a mild winter and better-than-expected transition to LNG on the continent, so I think team transitory, of which I was a fully signed up member, are wrong there. Plus, Chinese demand coming online is not going to slow down global inflation much either.
I think it will get sticky at 5%0 -
Hearing from head of investment management at big private bank last week, saying last 6 or better 3 months inflation is nearer target (1-3%). Last 12 still double digit.
His concern is is that FED will continue to push interest rates over 5% and force a recession.0 -
surrey_commuter said:rick_chasey said:
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
I'm surprised there hasn't been much talk around expectations. i did make a flippant remark earlier but didn't get any bites. There is a seductive logic to the rational expectations crowd' arguments - people don't make systematic forecast errors when thinking about inflation - but even if we could lower expectations, the reality is that most people's real wages (mine included) have fallen dramatically and I'd quite like that back thanks, regardless of what I think about future inflation.0 -
mr.b-campag said:surrey_commuter said:
There is a school of thought that if you forecast the same as this year you would beat most sophisticated models. So at the end of 2023 what will rate of growth, inflation, FTSE level etc.rick_chasey said:
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
There are many causes of our latest burst of inflation and just as many cures. As a good Thatcherite I, of course, believe that people need to expect inflation to fall.
I'm surprised there hasn't been much talk around expectations. i did make a flippant remark earlier but didn't get any bites. There is a seductive logic to the rational expectations crowd' arguments - people don't make systematic forecast errors when thinking about inflation - but even if we could lower expectations, the reality is that most people's real wages (mine included) have fallen dramatically and I'd quite like that back thanks, regardless of what I think about future inflation.
As always I like to take extreme examples. If eveybody thought inflation was going to be 50% by the summer they would not settle for 5-10% now0 -
I think that's self explanatory off the backdrop of Covid/Lockdown, but, it doesn't change the fact wage inflation in contributory.
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focuszing723 said:
All I know is there is a lot of debt and it's BoE's remit is to curb inflation.
It does make me wonder too if some companies are just increasing prices to see what they can get away with and if it's questioned chalk it up as inflation.0 -
The evidence is that currently it's literally not.focuszing723 said:I think that's self explanatory off the backdrop of Covid/Lockdown, but, it doesn't change the fact wage inflation in contributory.
My firm is a good example. They've held back junior bonuses until as late as possible so they can see what 2023 revenue is like.
2023 is not looking good so they're probably gonna pay them less to keep profits...(despite inflation).
It is also relevant when we hear BoJo talking about cutting corporation tax.
Clearly, it's in corporate profits that we're seeing the inflationary pressure, so perhaps, if we're interested in managing down inflation, higher corporate tax might be more effective....0 -
Average weekly earnings, including bonuses in the UK, climbed by 5.9% year-on-year to GBP 630 in the three months to December of 2022, the least since the same period to July, below an upwardly revised 6.5% gain in the three months to November, and market estimates of 6.2%. On the other hand, regular pay, which excludes bonus payment, went up 6.7%, the biggest rise since records began in 2001, except for the peak of the coronavirus pandemic. Adjusted for inflation, total pay dropped 3.1% and regular pay fell 2.5%, amid a squeeze in UK living standards. This is smaller than the record fall in real total pay we saw in February to April 2009 (-4.5%), but remains among the largest falls in growth since comparable records began in 2001https://tradingeconomics.com/united-kingdom/wage-growth0 -
The remit target for the BoE is 2%.
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Like I said contributory.0
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there is no doubt in my mind that we are going to get comparatively poorer in the next decade… the decision to make is whether we will all get poorer, or only some… it would make sense that those who can afford to get poorer should be first in line, rather than viceversa.focuszing723 said:Another contributory fact for me, is that the East is becoming far more developed and consequently their populations now want the latest and greatest. This is bound to drive the price up for Blighty. Supply and demand, companies have greater demand so they can play around with pricing and see what people are prepared to pay.
It's a similar situation for Russian Gas, they have other options, demand. Not great for us.
Taxation should be radically different… you can think of a higher threshold but much steeper after that and definitely 50% above 6 figures
How about bands for capital gain?
left the forum March 20230 -
just hope they are not focussed on post tax profits.rick_chasey said:
The evidence is that currently it's literally not.focuszing723 said:I think that's self explanatory off the backdrop of Covid/Lockdown, but, it doesn't change the fact wage inflation in contributory.
My firm is a good example. They've held back junior bonuses until as late as possible so they can see what 2023 revenue is like.
2023 is not looking good so they're probably gonna pay them less to keep profits...(despite inflation).
It is also relevant when we hear BoJo talking about cutting corporation tax.
Clearly, it's in corporate profits that we're seeing the inflationary pressure, so perhaps, if we're interested in managing down inflation, higher corporate tax might be more effective....
Corporation tax should have a ten year lock so potential movements don't hinder investment decisions0 -
Then you have the exceptions of Public sector wage increases.
Pensioners with triple lock pensions with get inflationary increases.0 -
I remember off the top of my head (no Google cheating) the cost of using shipping containers went through the roof during Covid, this was/is bound to increase the overheads for business.0
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You know what really caused this inflation though. I tell you what, interest rates being historically at their lowest levels.
!!Debt was cheap!!
At some point it was going to happen.0 -
You can't look at chart and say things were normal.0
