Recession: the price Britain will pay to control inflation | Analysis: As the Bank of England raises interest rates the message is clear – the 1970s are back

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  3. The inflation-targeting model of neo-classical economics works by actually targeting pay (this is explicit in the model, do an internet search if you don’t know this).

    Its rationale is to reduce investment, thus increasing unemployment to the “equilibrium” level, where increasing competition for jobs makes workers stop demanding above-inflation pay levels, which are presumed to be what is driving inflation higher. So the model is class warfare loaded at the best of times.

    But, in the current situation, inflation is not being driven by workers wage demands, but by supply shortages and soaring energy prices caused by energy cartel price-fixing, plus the war in Ukraine. Raising interest rates to cut investment, thus employment, thus wage demands, is patently obviously not going to stop the ongoing price rises. It is purely designed to make sure that pay demands can’t keep up with those prices. In other words, it’s an opportunistic move to further reduce the wage share of net output (which has been steadily forced down since the 1970s).

  4. Recessions are a natural part of a market economy. This is a fact.

    You’re meant to cut your deficit and invest during the non recessions so you can afford more generous spending during recessions. Spending during recessions is important because it keeps people safe, it shortens recessions and it is more effective than at other times.

    We have done the opposite because Tories are shit and shitheads voted for them. Now here we are.

  8. No, that can’t be right. The papers told me it was Corbyn who was going to take us back to the 70s, not the tories.

    /s because apparently the mods need it spelling out to them these days.

  10. Wait, Brexit isn’t going to make us rich again? Who knew? Perhaps the experts were right after all.

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