The government’s first resolution for 2011 should be to get inflation down.
The government’s own budgets show it cannot afford all the inflation it is assuming. 10 departments of the government show increases in spending in published plans over the five years of this government, but only four show increases after adjusting for forecast inflation. Overall spending (current and capital) goes up by £44 billion a year over the four years, but this is presented as a cut owing to expected price and wage increases. Current spending will be £93 billion a year higher than in the last Labour year in 2014-15, yet this requires cuts.
For individuals and families inflation is also a bane. If you have saved or have been prudent, you see the value of your money falling by almost 5% a year at the current level of RPI inflation. 5% halves its value every twelve years. Current low levels of interest rates, and the withdrawal of inflation linked National Savings products, leaves you no easy or reliable way of protecting the value of your savings.
Government should look again at the public spending figures and admit they cannot afford the inflation built into the numbers. They seem to be assuming a little under 10% inflation over the four years 2011-15. That’s another ten per cent on public spending they need to raise from us in taxes, and a ten percent on spending which does not yield any improvements in services. It’s ten per cent despite the policy of a wage freeze for part of the period, and the policy of buying better throughout the four years.
So what could the government do to bring inflation down? It could let the Bank of England know it is not best pleased with their poor performance on inflation so far. It could show that it regards inflation as public enemy number one. The Bank could put interest rates up a bit to signal its intention to take curbing price increases seriously, and to stop any further devaluation of the pound which is the source of much of our inflation. It could work more closely with public sector managers to plan for a low or no inflation world where the public sector can do more for less because some wages and prices are not always leaping up in the way they have in recent years.
Higher public sector pay should come from improved efficiency and be a reward for excellence and achievement. That type of pay award is self financing. Lower costs of purchase should not be difficult to achieve across the public sector, given the poor record of much public procurement in recent years. Better procurement may well entail inviting in a new range of suppliers to add more competitive edge and to help more emerging UK businesses who have found selling to the public sector difficult, given the scale and the complexity of many of the contracts on offer.
The government’s aim is to rebalance the economy. It wants more saving and investment, and less consumption and borrowing. That requires a better reward for savers in the form of a real return on low risk savings. Taking control of inflation more seriously is central to achieving that shift. It will also help deliver more for less in the heavily indebted public sector.
Cash increases by department, 2014-15 compared to 2010-11
Health £11.1 billion
Education £3.1 billion
Defence £0.4 billion
International Aid £3.1 billion
Work and Pensions £0.8 billion
Scotland £0.6 billion
Wales £0.2 billion
Northern Ireland £0.2 billion
Cabinet Office £0.1 billion
Intelligence £0.1 billion
Reserve £0.5 billion
December 30, 2010
Whilst I recognise the potential risk of a double dip, I support John Redwood’s argument on bringing inflation down.
Q1 2011 will be very painful for many, many people & increased inflation will only aggrevate matters.
The current Government’s economic policies seem removed from reality. There seems to be an increasing case for independent risk assessment & independent validation of costings.
December 30, 2010
Yes with 50% tax you need about 10% interest just to stand still as the pound devalues at 5% and a week currency is a sign of a week government. Capital deserves a real return or you will not attract it.
December 30, 2010
Perhaps I meant weak but they at this rate do they really deserve to last more than a few weeks.
December 30, 2010
Current low levels of interest rates, and the withdrawal of inflation linked National Savings products, leaves you no easy or reliable way of protecting the value of your savings.
Proof of the plan. You’re going to screw the saver by inflating
Reply: Not me – I am arguing against it!
December 30, 2010
All very laudable stuff, but there is a huge flaw in your arguments. Namely, the Government does NOT want to get inflation under control.
(1)They want to reduce our overseas debt by inflation.
(2) They want to encourage us to spend freely to give the impression of prosperity. They do this by rewarding debtors by unrealistically low interest rates
(3) They think they can cheat savers by inflating away the real value of their savings. The savers will complain, but the sort of people who save up for things they want or save for their old age aren’t likely to riot.
(4) They want to fool us by telling us printing money (‘Quantitative Easing’) will not cause inflation. Common sense decrees otherwise.
(5) They allow the MPC to fiddle around month after month whilst happily letting the inflation rate target to be missed. What’s the point of the MPC if not to get inflation under control?
(6) They know that this country’s financial position is continuing to get worse, not better. They know the awful truth is unpalatable. Most of their ‘savings’ are cosmetic and nullified by increased expenditure elsewhere. They think a bit of inflation will help mask the terrible truth.
December 30, 2010
Broadly seconded.
One point, inflation is a function of money, not prices. Price rises are a result of inflation not its cause. QE is inflation. To ‘solve’ inflation we have to deflate, that is reduce the quantity of (funny) money.
December 30, 2010
Mr. Redwood, As I have posted previously here, Keynes is absolutely right ” by a process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens”. The logic being applied now seems to be we have to spend so that more flows to the Treasury in taxation. That cannot be right but how does one do anything about it?
December 30, 2010
Easy to say interest rates should go up, and so they should. Base rates should clearly be at least at 5% to ward off inflation right now.
Can you analyse the other side of this coin, though?
a/ the government having to pay more for its debt
b/ the government having more debt per se whilst it is being paid down
c/ the indebted paying more for their debt. Would mass repossessions of residential property actually happen? My guess is that the banks would arrive at a moritorium with repayment regimes stretched back for indebted mortgage holders, repossession only happening on death of the mortgagee. A major benefit would be real estate here which is sensibly priced vis a vis wages.
December 30, 2010
“Can you analyse the other side of this coin, though?”
Nowhere, anywhere among the mainstream political class is the other side of the coin discussed. CUTTING GOVERNMENT SPENDING.
Redwood advocates increasing government spending below the rate of growth. Expectations of GDP growth are wildly optimistic, the US will sometime be forced to reduce it’s government spending, probably before that we will too, likely in a similar manner to Ireland.
And still there has been NO ACTUAL CUTS in government spending, in fact the government has increased its spending overall, and intends to increase it further.
Not only are this lot not Conservative, they are not even economically conservative.
December 30, 2010
With total debt of the UK at around 460% of GDP, and a withered manufacturing sector, the financial politburo has decided that inflation it will be. They will throw the prudent onto the bonfire. They have their backs to the wall and have chosen the dishonest route.
There is one other option and that is a Financial Big Bang. Have a flat tax of 15-20%, no tariffs, no vat, get rid of the City parasite that is sucking productive resources dry, there are various ways of achieving that. It is not how much tax the City keep telling us that they pay, it is the larger productive tax base they have destroyed that is the problem. Start a European Hong Kong right here. It is the only honest alternative.
December 30, 2010
I was at university in the mid-1970’s when inflation was really allowed to get out of control. One of my friends following the same course (we were young and had no money in those days) once said that inflation is “a wonderful way of transferring the savings of the elderly into the property portfolios of young executives”. This gentleman went on to become a founding partner of Accenture and he is of course a multi-millionaire now, as well as being one of the recent intake of new Conservative MP’s. My question is: why do Messrs. Cameron and Osborne appear to feel that this transfer of wealth, which is nothing more than government-sponsored theft by stealth, is perfectly acceptable? It doesn’t seem a very Conservative stance to me, but of course many political columnists do keep banging on about how Mr. Cameron is not in fact a true Conservative at all. I assume that with his wealth he has professional advisers that we ordinary plebs can’t afford, and so his money will be well protected from the ravages of inflation. As many people say, he and Mr. Osborne are simply not aware of how ordinary folks have to live.
I should also point out that the notion that the government can inflate away the country’s debts is ludicrous in itself. A recent estimate showed that some 70% of total (on- and off-book) debt is index-linked in one way or another. All those public sector pension liabilities, for example. Does the government actually realise this? Shouldn’t Mr. Osborne be calling Mr. King and the MPC to No. 11 and reading them the Riot Act? Why is there such apparent nonchalance towards the plight of the elderly and savers at the top of this government? I find it quite disgraceful, and politicians should remember that it is the impoverished elderly who are more likely to vote at the next election than the young executives who will be too busy polishing their portfolios.
December 30, 2010
John
You have outlined many times on this site, and I am sure elsewhere, about the increases in Government expenditure over the next five years.
You have warned against inflation and a rise in the cost of imports as the result of devaluation caused by printing money.
You have said that the present interest rates proffered by the Bank of England bear no relationship to the real World, and that businesses and savers are being screwed.
Are you alone in these thoughts, or do many other MP’s likewise understand the situation.
Does anyone in the Cabinet share your views?
Clearly not asking you to give away State secrets, but I am just absolutely dumbfounded that with the real problems we have as a Nation, we continue to just drift along, as if nothing is wrong.
I know you go shopping because I have seen you in Town doing the rounds, and shopowners have often remarked in the past that you ask questions about the current state of their trade and take an interest in their business, but do wonder if any other MP’s make purchases or pay bills with their own money.
I ask the question simply because if they never have to spend their own money, then they do not have a clue what is going, on and are divorced from reality and thus live in a different World to the rest of us, which would explain the reason for little action.
Reply: All that is true – and it is true that the government does not seem to share my understanding of what is happening on public spending, because they have believed the spin based on “real terms” cuts four years out in certain programmes and have not studied the cash figures for the next couple of years which are more reliable. They leave inflation to the Bank of England.
December 30, 2010
Doesn’t the government authorise public spending? How can they not understand what is happening on public spending? I think you are being too generous to your colleagues. My view is that they are cynically spinning just like the last lot.
December 30, 2010
John
Thanks for your reply.
Looks like we are in the brown stuff then, until either the next election, or until someone gets clued up !
December 31, 2010
And I shan’t be voting at that next election. Mr Cameron has failed on his most crucial election promises.
The cap on immigration turned out to be a con as I said it would.
December 30, 2010
As we’ve often said, in a good business turnaround plan far more weight is given to the cash flow and bottom line in the next 2 years than in the subsequent ones. This further underlines the shortage of business experience in this government, even if an improvement on the last.
December 30, 2010
I doubt that bringing down inflation is even on this government’s wish list. Many of us will take a lot of convincing that inflation is in fact an unannounced part of the plan to reduce the debt after reducing the deficit by taxation. Whichever party is in office the government of this country seems wedded to ever increasing public expenditure. It is like a drug with many horrible consequences but the user can’t give it up. The economic management by the coalition is little better than under Labour. I still need persuading that we shall not be like Ireland by the middle of next year.
December 30, 2010
I am sorry that in the second sentence I inadvertently omitted the word “not” after the words “inflation is”. It should read “inflation is not an unannounced….”
December 30, 2010
So, effectively you are arguing for a restriction of monetary growth by encouraging the Bank of England to raise interest rates? It is what the markets are expecting, and to be fair even the economists the beeb has on seem to envisage this consensus.
I’m not entirely convinced as yet because the banks themselves are still not being open and honest about the amount of bad stuff they have floating around on their books…the stuff they have already boked as profit and paid out bonuses for. The correction still needs to come, and when it does it could actually result in major house and commercial property price deflation. Whilst I understand this does not feed into the government’s prefered statistics, the effects could be quite simply stunning. Many folk could be left with huge negative equity and this will knock onto the banks (again), but all those business people waiting offshore with cash could actually rush in for the bargains
I also think that interest rates will hurt those businesses which are already having a torid time with their bankers
On a separate, but related note I notice that there appears to be mass immigration of the Irish into the UK (even picked up by R4), and the Telegraph today reports the possible need of an EU bail out for Italy.
Reply: I am suggesting higher official interest rates. Banks are already charging far more than Bank Base rate anyway for private sector loans.
December 30, 2010
“I’m not entirely convinced as yet because the banks themselves are still not being open and honest about the amount of bad stuff they have floating around on their books…the stuff they have already boked as profit and paid out bonuses for.”
At one stage it was mooted (perhaps only by himself) that (Lord) David James keep a close watch on the fate of the written-off assets owned by the taxpayer. The implication was that someone other than the taxpayer might gain the benefit of buying them at over-advantageous prices and/or they might well be booked back as profits having been written off entirely, thus qualifying bank traders for a second bite at the bonus biscuit!
Does anyone know what controls are in place as we doubt that James has been officially given the task?
December 30, 2010
I don’t pretend to know all the intricacies of this or that theory of economics but I have a Micawberesque rule I apply to inflation.
Inflation 5%, GDP growth 3%, result misery. Inflation 3%, GDP growth 5%, result happiness.
December 30, 2010
“devaluation of the pound which is the source of much of our inflation”
Well that is how it appears, but it’s not the cause. The pound’s exchange value just reflects how our domestic prices are rising faster than those abroad. Our inflation is not imported from abroad, it is home-grown, and entirely the government’s responsibility.
December 30, 2010
Agreed. The devaluation of the Pound doesn’t ’cause inflation’. It is a result of inflation. the £ has declined in purchasing power because it has been debased by 13 years of G Browns epic mismanagment and QE. If you double the supply of a commodity it (roughly) halves in price, all things being equal.
December 30, 2010
Depressingly true. We now have gold, silver, copper, platinum, the Swiss Franc and the Aussie Dollar trading at record highs against Sterling ( and the Dollar). We, as a nation have been hung out to dry by Blair, Brown, King and Bean et al. Our regulators completely let us down, our central bankers and commercial bankers have driven us as a nation into bankruptcy, while paying themselves large salaries (inflation linked at the Bof E) and huge bonuses. Somehow SIR Fred Goodwin and SIR Tom McKillop managed to hang on to their titles. We took on their bankrupt bank and they have walked away with millions. It is completely outrageous. Then, the B of E came in with QE and have done an excellent job of destroying our currency.
Our whole political system is to blame. It is not in Cameron’s or Osbourne’s interests to make the electorate unhappy with budget cuts. Much easier to screw us all with a rapidly depreciating currency and the consequent inflation. (Excuse my language , but I can’t think of better way of expressing how bad things are.)
There is a point, however, in the perhaps not too distant future when price inflation will cause a reaction from the general population.
December 30, 2010
Yep we love that Aussie dollar!
A good decision by one of our girls to leave money there 10 years ago when it was $3 to £1. Today it’s $1.52 – that’s a 100% increase in her savings.
As a good pal she talked us into it too and the interest rate on those value-added savings is cvurrently 6.2%. for a 7-month term,
We Brits tend to lose sight of the big picture when the media concentrate on the US dollar and Euro in their bulletins. The £ is a disaster zone and has got no better under this government. When Labour came to power in 1997 the US dollar to £1 was $1.67. Today the £ is 9% lower against a vastly devalued $US.
Are the markets REALLY convinced that the Tories have the answers?
December 31, 2010
Essex Girls
Good move.
But we come home with the Ashes !
What price the picture on Aussie faces.
December 31, 2010
“Are the markets REALLY convinced that the Tories have the answers? I (and you) are part of ‘the market’, and I am entirely unconvinced, and you seem to be also. So, no.
January 10, 2011
Private Banks are not to Blame – it’s like leaving expensive items in your unlocked car with the keys in the ignition and the engine running, not to mention your wallet or purse sitting on the drivers seat open and full of £50 notes – of course somebody will steal it, eventually.
The Bank of England has effectively shown all the Private Banks the UK’s Car – it’s full of easy money – everywhere and the engines running, there’s even an expensive mobile phone on the passenger seat and the petrol tank is full – they were encouraged to steal our money ; so they did. ( I trust this is an analogy – banks did not steal our money – they were encouraged to create more credit-ed)
Now the BoE says it needs “MORE REGULATION” and paints itself as the White Knight in shining armour riding to rescure us.
And some people have fallen for it.
If the State keeps on bailing out Banks and inflating the money supply we are going the same way as the Soviet Union.
The News Media focuses on how bad the Private Banks are and not on how irresponsible the Bank of England is and how complacent and accomodating the Government is – especially Gordon Brown and JP Morgan’s new kid on the block -Tony Blair.
The basic message presented by the Government and BoE is:
– Private Sector: BAD
– Public Sector: GOOD.
If you allow yourself to get mugged by making it easier for the mugger to take your cash, then you must share the blame. The BoE made it really easy for the mugger to take our money – if it hadn’t made it so easy, the problem would not have occurred.
De-regulate Banking and remove the Bail out safety net. Let the market decide Interest Rates – not the Bank of England. Tax payers have had enough.
January 12, 2011
“( I trust this is an analogy – banks did not steal our money – they were encouraged to create more credit-ed)”
Yes – this is an analogy.
By “Stealing” I refer to the way the Bank of England created the £200 billion and added this to the money supply. The effect of this is inflation – stealing Purchasing Power from the existing money in the system.
The Private Banks were given first use of this money which means they get Full Purchasing Power. They are allowed to create even more money from this £200 billion through the Fractional Reserve System.
I mean they Steal Purchasing Power through credit creation and money supply expansion.
December 30, 2010
This seems far too simplistic. If it is possible to reduce inflation by increasing imports of cheaper foreign goods, as has been happening over several decades while Eastern nations became industrialised, it must be possible to import inflation as their cost competitiveness reduces.
Price increases, hence inflation, can clearly be caused by too great a money supply, but it can also be caused by non-monetary factors. There is something perverse therefore about having interest rates set to keep inflation low as if money supply were the entire story. That is true only in a highly protectionist economy.
Low interest rates set when inflation was import-suppressed was a chief cause of the credit bubble.
December 30, 2010
All inflation is government theft from savers and owners of non-inflating assets. I believe those are the messages you push Mr Redwood, and I agree whole heartedly with you. Therefore as some of the correspondents have mentioned our own Conservative Party is joining in robbing various section of the country. This must stop.
Regarding the main thrust of this posting about why government departments build in inflation into budgets, therefore making it a self fulfilling prophecy; they will have to do what I have done in over 30 years of setting budgets in the commercial world and set budgets with zero inflation, taking action to mitigate any inflation that does occur while holding services up the highest levels in order to keep our customers with us. Thus Mr Cameron and team have to do the same or allow the robbing to continue.
December 30, 2010
Exactly my thoughts – forget inflation accounting work to cash budgets. If they look like being overrun reduce expenditure.
December 30, 2010
“they will have to do what I have done in over 30 years of setting budgets in the commercial world and set budgets with zero inflation, taking action to mitigate any inflation that does occur while holding services up the highest levels in order to keep our customers with us. Thus Mr Cameron and team have to do the same or allow the robbing to continue.”
Well done TF! We’ve expressed the same proposal here in the last couple of days.
It’s a business common sense mindset eh?
December 30, 2010
John you are fantastic at pointing out the obvious.
December 30, 2010
Javelin
Seems obvious to most of us here, on this site, but not too obvious to those who could take action, and do something about it.
December 30, 2010
I agree with everything you said in your post.
Sadly, Mr Cameron seems to be blithely unaware of any of it (or perhaps he simply doesn’t care).
December 30, 2010
Mr Cameron and Mr Osborne should remember what happened to Mr Heath after his failures on inflation and the near 20 years of pain the UK had getting rid of the inflation.
December 31, 2010
In a little noticed announcement just before Christmas the BoE confirmed that it was extending its swap facility with the US Fed:
http://www.bankofengland.co.uk/publications/news/2010/149.htm
This permits unlimited amounts of US Dollar borrowing against a very wide range of collateral listed here:
http://www.bankofengland.co.uk/markets/money/wideromocollateral.htm
(OMO washes whiter?? or is it a square deal? I tried to surf for the answer)
We should remember that the UK banking system imported some £800bn of mortgage funding between 2000 and 2008: it is not clear where the currency risk associated with that borrowing lies (since we no longer have an overseas sterling area to borrow from there must be currency risk), but the list of collateral and the unlimited nature of the facility does offer a broad hint. That overseas borrowing represents a highly inflationary increase in money supply – as does the ~£220bn increase in overseas holding of gilts over the same period, which now stand at £275bn out of a total of £1,024bn of gilts in issue, of which a further £198bn are the inflationary QE element held as a potential shelf issue by the BoE (although there is no UK currency risk for gilts).
The BoE is trying to persuade us that mortgage equity withdrawal has been negative: however, its choice of measure is spurious, since it regards spending on repairs as equivalent to investment in new housing – failing to account for depreciation of the housing stock (see box on p6 in the BoE inflation report for Nov 1999 for details of their methodology). The reality is that stock of mortgage lending remains broadly static, although there was (subject to revision) an apparent £3bn reduction in October. The banks are in the early stages of rolling over the £800bn of funding that falls due over 2010-12.
It was disappointing to see Grant Shapps suggest in the FT that banks should be encouraged to pump out more mortgage lending, even in the face of this severe funding problem. It suggests that the intention is to flirt with hyperinflation by allowing incomes to rise rapidly to reduce the house price/income ratio (for if house prices are to be pumped up – and he declared the nominal price correction to be complete – incomes will have to rise even faster to make houses affordable). He should re-read the history of the 1970s, and see what had to be done by Margaret Thatcher’s government to tackle the problems.
I hate to think what even 10% RPI would do to the new student loan regime: borrowing of say £45,000 inflating at 13% a year would require a very high income of £86,000 to cover the interest.
The only silver lining might be if Osborne stuck to the published nominal cash spending limits. That would result in very real cuts, and perhaps we might see the deficit reduced. However, the continuing regime of subsidising the banks and mortgages by over £100bn a year (and MUCH more in an inflationary world where interest rates need to be above inflation to suppress it) cannot be afforded much longer. The UK cannot afford the Irish solution of putting all the bank problems on its debt.
December 31, 2010
In Russia the government announces that there will be no changing of the currency. The next day an announcement of the changing of the currency is made and a deadline set to change to the new notes. The banks however do not have enough of the new notes or any other currency for that matter. You loose your money. Better just to drink or change to dollars as you get it. How many bags of sand does gold cost this week?
I paid off my mortgage this week as the interest rates are dead and inflation is soaring as wages stay the same for the last ten years. After being made redundant under the Tories for the second time, got a part time job walking distance and have spent some savings on house improvements over the years. Fortunately I never believed the Labour economic miracle and saved some cash for these events.
Always said during the next Tory government I’d come out fighting…
December 31, 2010
The US continues to print large amounts of $, while we and the Eurozone have, apparently stopped. But , if an economy as big as the US is buying imports with forged dosh, then there will less for the rest of the world and prices will rise generally. Perhaps with commodities priced in $ this may be corrected for the countries which do not print money. However, for the UK this does not seem to be happening.
January 2, 2011
So let us instruct the Govenor of the Bank of England to bring down the rate of inflation from 2.5% to 0% over 5 years, in steps of 0.5% per annum, beginning with this year so that 0% is achieved by 2015.
Let us also tell him to use a sensible inflation target, e.g. RPI with all taxes & duties (VAT and excise) removed, that is appropriate to monetary management.
House prices are about 15% down from their 2007 peak in nominal terms (Source: BoE November inflation report), i.e. getting on for 25% in real terms. There is likely to be a further decline in real terms over the next 5 years, which would make the above inflation target easier to achieve.
January 4, 2011
In the sleepy village where I live we have decided to take on the recession in a novel way. We’ve created a website that allows locals to share pretty much everything about their lives and also potentially, rent it out! Now when locals are travelling somewhere they are advertising the fact that they would take another local, people are renting out their own personal equipment like vacuum cleaners (!), and also skilled local people are offering to carry out tasks for other local people at non-commercial rates. Everyone is helping each other and its totally fantastic: http://www.taskedo.com We’re now getting lots of media coverage and would encourage everyone to join us in this recession-busting initiative!
January 9, 2011
Mr Redwood,
1966
Total money supply was £19 billion.
Increase in money supply that year was approximately £1 billion.
2007
Total money supply was £1,668 billion.
Increase in money supply that year was approximately £788 billion.
An increase of 8,700%.
Do you honestly expect us to believe that there is in any way, shape or form, a desire for the Government to reduce it’s spending while the Bank of England provides the mechanism for creating the money for the Government to spend while hiding the fact that this way of creating money is a stealth Tax.
The highest Inlfation usually follows major military expenditure. This pattern has repeated since 1694.
The only way the Government will reduce the deficit and the national debt is to inflate the money supply – thereby creating more debt.
Is it also true that it is not permitted to raise questions in the House of Commons about the Bank of England and it’s inner workings?
With Ruth Kelly joining the HSBC Bank, and another socialist icon; Tony Blair “working” for J P Morgan, isn’t now a perfect opportunity in History to slay the socialist nightmare which misleads the public – is bought by the Banks and rewards failure while punishing prudence?
“The government’s aim is to rebalance the economy. It wants more saving and investment, and less consumption and borrowing” – I agree with the gesture.
It will never happen with the Bank of England artificially manipulating interest rates – a free market would adjust interest rates automatically. Allowing Fractional Reserve Banking – which causes inflation and deflation cycles – allows the paradox of over priced Housing during a recession, with stagnant wages and increasing unemployment.
Even honest Ministers have to play a dishonest game, if they don’t spend and provide the excessive public services (and Wars) that we’ve all become accustomed to, then someone else will. We have to remove the easy credit provided by the Fractional Reserve System and completely redifine what the Bank of England does. Otherwise. there will be the same arguments on the economy in a hundred years from now.
January 9, 2011
My apologies…
A correction to my previous comment (£788 bn changed to £178 bn – increase money supply):
“2007
Total money supply was £1,668 billion.
Increase in money supply that year was approximately £178 billion” <—-
The money supply has still increased by 8,700% – this figure I did get right.