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Thursday, April 25, 2024
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HomeNewsWhat’s the cause of inflation? It’s the government, stupid!

What’s the cause of inflation? It’s the government, stupid!

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SO MANY articles written recently about inflation are very wide of the mark, then along comes Sir Jim Ratcliffe of Ineos fame and tells it the way it is. 

He is heavily criticised for his comments because he chooses to be domiciled in Monaco. Fancy anyone of his billionaire status having the temerity to criticise the previous Chancellor and current Prime Minister for allowing the national debt to spiral by an additional £1trillion over the last three years.

All those loans, grants, furlough payments, Test and Trace and the vaccines themselves have set us back decades, but so far very few have had the insight, let alone economic common sense, to spell out why we are in the present state of flux.

With every Budget comes the bit about what the Chancellor intends to borrow in the coming fiscal year. Each month the Treasury announces what it borrowed the previous month, and commentators give their opinions on whether the amounts were either over or under the projected targets.

But, and it’s a very big but, we never hear that the Treasury didn’t need to borrow in any month as the Chancellor had finally learned to live within the country’s income.

It appears that not even Andrew Bailey, the governor of the Bank of England, realises what inflation is either, judging by his recent mutterings.

Now I must declare my interests in this inflation saga for I can remember Enoch Powell’s views on the subject from nearly 60 years ago when I attended a speech he gave at Bromley Town Hall in Kent.

He spoke of the Illegal Acts of Government and defined what inflation is and what the causes are. Only governments can create inflation by continually borrowing money and failing to live within their means. The consequences are many and lead to requests for wage increases, the costs of everyday products and services increasing and even the government having to spend more if only to pay the debt interest.

Now, many say that to ask for a pay rise is inflationary but as Powell explained, a wage increase is not inflationary BUT it is a consequence of inflation.

Many seem to think that the BoE being slow to increase interest rates is the problem but it is the government’s incompetence that is the problem.

Successive governments don’t do what is required and get carried away campaigning for the next election. They spend our money trying to entice us to vote for them. Many items of expenditure are based purely on a whim and if a reasonable parliamentary majority exists, that madness continues unabated.

The BoE claims to be independent of government so why doesn’t the Governor tell the government to stop borrowing, stop quantitative easing and engage in some sound economics for a change?

Too much emphasis is placed on quangos such as the Office for Budgetary Responsibility instead of Parliament being the arbiter and brakeman for excessive expenditure. Have you noticed how government ministers like to use the word ‘investment’ when what they are doing is expending, often vast sums, on something quite unnecessary?

Local government, supposedly a branch of central government, has fixed limits on what it can spend, but even recently we have learned that the London Borough of Croydon went bust with huge debts and yet no one was apparently to blame! With public servants like that no wonder the country is in a mess and with each passing year the hole just keeps getting bigger.

If interest rates didn’t rise in tandem with international rates, our government wouldn’t be able to borrow and pay wages and pensions and we would all end up in the mire simply because they failed to live within their means.

Attempt to live like that as an individual and it won’t be long before the moneylenders come calling.

If Jeremy Corbyn had a money tree, then Rishi Sunak must have a forest, but for how much longer?

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Geoffrey Bastin
Geoffrey Bastin
Geoffrey Bastin lives in retirement in East Sussex with his long-suffering wife, having been unable to change the world although still hoping to influence it in some small way before it's too late.

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