this post was submitted on 18 Sep 2023

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Liz Truss turned Britain into 'Argentina on the Channel', says ex-Bank of England governor Mark Carney (news.sky.com)

submitted 1 year ago by [email protected] to c/[email protected]

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[–] [email protected] 3 points 1 year ago

This is the best summary I could come up with:

Mark Carney also said Brexiteers such as the former Conservative leader - who became the shortest-serving prime minister in history when she resigned last year - had a "basic misunderstanding of what drives economies".

Speaking at the Global Progress Action Summit in Montreal, the former Bank boss hit out at the "misguided view" that cutting taxes and government spending leads to economic growth - and accused Brexiteers of wanting to "tear down the future".

Mr Carney said populists, including Brexiteers, treated spending and tax cuts as a "Pavlovian reaction to every problem" which was "grounded in a basic misunderstanding of what drives economies."

"Those with little experience in the private sector - lifelong politicians masquerading as free marketeers - grossly under-value the importance of mission, of institutions, and of discipline to a strong economy."

Read more from Sky News:Met Police responds to Russell Brand claimsAirport closed by flooding amid weather warningsSir Keir Starmer fails to rule out tax burden rise under Labour

Mr Carney, whose current roles include being the vice chair of Brookfield Asset Management, was replaced by Andrew Bailey as governor of the Bank in 2020 after he stayed on longer than expected due to concerns over potential Brexit disruption to the economy.

The original article contains 524 words, the summary contains 205 words. Saved 61%. I'm a bot and I'm open source!

[+] [email protected] -8 points 1 year ago* (last edited 1 year ago) (2 children)

TLDR - Carney chucking out chaff to deflect from his money printing that's helped cause worst inflation in 50 years

Truss didn't help, but Carney is a bullshit artist who quotes dodgy statistics to cover his arse

As refuted by JD Portes

https://www.newstatesman.com/comment/2022/11/brexit-damage-uk-economy-mark-carney

And UK inflation peaked at about 10%. Argentina's was 108% last time I checked. More bs by Carney

[–] [email protected] 9 points 1 year ago (2 children)

Pssst, when you have increasing prices and record profits, that's not inflation, it's price gouging.

If this was a true inflationary cycle, the profits would have been eroded too.

[–] [email protected] 2 points 1 year ago (1 children)

It is inflation. Inflation is literally too much money chasing too few goods - if there's sufficient supply of goods (or insufficient supply of money) price gouging literally cannot happen. Outside of illegal acts such as collusion, price gouging is a symptom of too much money chasing too few goods.

[–] [email protected] 1 points 1 year ago

I agree inflation is caused by changes in the money supply.

QE is one way of doing that, but also is shifting the use of existing money, eg if you buy less derivatives, and more commodities.

To clarify, this is because purchasing derivatives has the effect of temporarily removing money from the money supply because the units are created, and destroyed, when purchased and sold. Derivatives are effectively infinite, as opposed to commodities which are finite.

As such you can cause inflation through changes in demand and/or supply of certain critical commodities which have onward effects. This is one of the factors we are seeing with the supply of gas, causing higher energy costs, causing higher manufacturing costs, higher transport costs, etc.

However, if you look at companies like ISPs, phone networks, etc, you see they have contractual terms which state RPI+x%. If we are generous and say that their costs do increase in like with others, aka inflation, then the x% extra is still pure profit. I would class this as price gouging, especially when so many companies in the same space have the same clauses, it's almost tacit collusion.

I'm not saying that this is the only factor, but companies who are posting record profits are, by definition, increasing revenue faster than costs, meaning that inflation it is not just inflation. If it was, their costs would raise at the same rate and profit (as a %) would be flat.

[+] [email protected] -6 points 1 year ago* (last edited 1 year ago) (1 children)

Why? Retailers work on gross margin. Not seen anything outside the energy industry that looks like gouging

Greedflation has been debunked

Inflation is the result of economic policy mistakes and war, not corporate avarice

...

Ms Lagarde has said that it would be desirable for profit margins in the euro zone to fall. She is right; such a decline would be disinflationary and would restore workers’ share of the economic pie. But that does not mean that a crackdown on corporate greed is needed. Instead, monetary and fiscal policymakers need to continue to correct the error of excessive stimulus by raising interest rates and tightening fiscal policy.

The right lesson to draw from the past two years is not that companies have got greedier, but that workers suffer when policymakers let inflation run out of control. All the more reason, in short, to care about price stability in the first place. ■

https://www.economist.com/leaders/2023/07/06/greedflation-is-a-nonsense-idea

[–] [email protected] 7 points 1 year ago (2 children)

Ah, I didn't realise it was you, I've learnt my lesson not to bother arguing basic economics with you.

Btw, that economist article contradicts your first comment. But you do you hun.

[–] buzziebee 5 points 1 year ago (1 children)

Yeah just ignore them. Playing chess with a seagull and all that.

[–] [email protected] -5 points 1 year ago

You can fuck off as well

[–] [email protected] -4 points 1 year ago* (last edited 1 year ago) (1 children)

Lol, superiorly incorrect. Nice mix, and with an ad hominum straight off the bat. Bravo!

You said:

Pssst, when you have increasing prices and record profits, that's not inflation, it's price gouging.

That's literally what inflation is, unless you prefer the monetary theorists version, like I do, to say that increasing M2 money supply is actually inflation.

How does it contradict my first comment? Or do you not understand gross margin?

Edit. I guess not.

[–] [email protected] 0 points 1 year ago (1 children)

It's not an ad hominem to say "given my experience last time I tried to discuss economics with you, I'm choosing to not do it again".

[–] [email protected] -1 points 1 year ago* (last edited 1 year ago)

And yet you can't answer my questions... I think it might be you that doesn't understand basic economics

I don't recall our previous conversation either

[–] [email protected] 6 points 1 year ago (1 children)

TLDR - Carney chucking out chaff to deflect from his money printing that’s helped cause worst inflation in 50 years

Can you back this claim up?

Carney gave warnings regarding Brexit and was proved correct. Inflation halved under Carney until 2016. His response to quell the market's reaction actually saved the UK from plummeting. Carney was responsible for making banks accountable for their own misdemeanours, instead of expecting the tax payer to bail them out. If Carney wants to stand up and state Brexit was stupid, then I am with him.

https://www.reuters.com/article/us-britain-boe-carney-factbox-idUSKBN2080VQ

[+] [email protected] -6 points 1 year ago* (last edited 1 year ago) (1 children)

[removed by mod]

[–] [email protected] 6 points 1 year ago (1 children)

So Carney is responsible for something that happened 3 years after he left office? A problem which was really the fault of Truss? If the BOE (under Andrew Bailey) did not use quantitative easing at that point all pensions funds in the UK would have collapsed.

You may want to learn about economics and the role of the BOE. You clearly are listening only to a government's media script, a government that has only one policy and that is to blame everyone else. There is a ton of stuff this government could do to lower inflation; it has done nothing except talk. There not been one single policy that has helped reduce inflation. Inflation is only lowering now because it is peaking out. The IMF stated last year that UK inflation would drop to 5% if policies at that time were left unchanged. We are above that 5% because you cannot predict things precisely.

[–] [email protected] -3 points 1 year ago* (last edited 1 year ago) (2 children)

As Haldane said, they printed too much for too long and kept rates too low.

As did the Fed and ECB..

Thanks for the condescending tone, I'm not listening to any government script. I listen to fund and asset managers, the bearish ones have been saying this for years.

The govt didn't have to let the energy shock into the economy, France and others didn't, so that is on them as they didn't use policy to address it sufficiently.

Truss and Kwasi announcing unfunded tax cuts to bond whales sealed their fate.

Perhaps a chart of M2 explains it better. Carney left less headroom pre COVID.

[–] [email protected] 4 points 1 year ago

The spike in 2016 was in response to Brexit. How is Brexit the fault of the BOE. Truss and Kwazi were after Carney left as was the energy crisis. You have conspiracy theoritus and absolutely no clue what you are talking about. You are latching onto threads with no substance.

[–] [email protected] 3 points 1 year ago (1 children)

The govt didn't have to let the energy shock into the economy, France and others didn't, so that is on them as they didn't use policy to address it sufficiently.

France's energy mix contains significantly less gas, when compared to the UK. They barely use any for electricity generation, see below, compared to the UK where gas is ~40% of our annual mix.

http://gridwatch.templar.co.uk/france/ https://www.mygridgb.co.uk/historicaldata/

That is why France was better insulated from a supply side gas shock.

[–] [email protected] -3 points 1 year ago (1 children)

It does help if you know what you are talking about.

As I said, the UK, along with the Netherlands and Belgium chose to let the energy shock into the economy and ameliorate with policy.

Other countries chose price caps to keep the energy shock out of the economy

https://www.bbc.co.uk/news/61522123

[–] [email protected] 1 points 1 year ago* (last edited 1 year ago) (1 children)

And EDF were able to cap prices at 4% because of their nuclear infrastructure which meant the cost of subsidising that 4% cap was considerably less than the equivalent would have been in the UK.

As always, context is important.

[–] [email protected] -1 points 1 year ago* (last edited 1 year ago) (1 children)

And Spain? And all the other price caps?

It's almost like you're not comprehending what I'm saying

[–] [email protected] 2 points 1 year ago* (last edited 1 year ago) (1 children)

https://app.electricitymaps.com/zone/ES

Spain uses a lot of gas, and prices have increased substantially. Between 2017 and 2019 the price per MWh hovered around €50, in 2020 it fell to €34. In 2021 it jumped to €112, and 2022 to €167.

The government started removing excess profits in 2021 - see here - and more recently are also subsidising the cost to generators where needed, see here. This was at the peak of Spain's inflation, which reached 10% and then fell back to a more typical level, see here.

They have not been able to isolate themselves the same way France have, and are in a situation much closer to the UK with regards to reliance on gas, but through better economic management within Spain and across the eurozone now have lower inflation.

Edit: speeeeling.

[–] [email protected] -1 points 1 year ago (1 children)

Thanks for the random facts, what's your point?

[–] [email protected] 2 points 1 year ago (1 children)

That context is important and ignoring it means you keep making easily falsifiable claims, like saying the energy crisis didn't impact other countries. I have now both shown, and explained to, you why that is wrong, and so my work here is done.

[–] [email protected] -1 points 1 year ago

Lol, I didn't say that though.

I said the UK, Netherlands and Belgium let the energy shock into the economy whilst other countries used price caps to keep it out.

I then provided a source that detailed the approach on a country by country basis

You then started quoting random stuff about Spain and France