This morning I had a conversation with a colleague who is an analyst in the City of London.
He gave me a list of of commodities that had risen 71% to 82% year on year. These commodities unpin all western economies. His argument was that this would render the standard of living in the West unsustainable.
He also confirm the opinion that the current Governor of the Bank of England was a complete fool. Andrew Bailey believes that a shortage of labour was the root cause of the runaway inflation the U.K. is suffering. Mervyn King, a previous Governor. begs to differ.
‘He said that the Bank printed more money, so-called quantitative easing, at the same time as manufacturers, restaurants and other service companies closed.
This meant that there was more money in the economy, but less stuff to spend it on, which pushed up prices.
His criticism was not limited to Mr Bailey and his team.’
When market sentiment is indicating an impending recession, having somebody like Bailey as Governor is a worry, especially when he seems more concerned with avoiding criticism of the Bank of England than understanding the fundamentals.
The hike in energy prices is just the start.
It is now almost certain Labour will form the next Government. If they are, they will administer the coup de grace to the economy. However, the voters need somebody to protect them from the cold hard reality of the drift into state socialism of the last thirty years, with a centralised command economy in the hands of buggins-turn technocrats like Bailey.
In free markets, all government is required to do is to maintain a stable economy - nothing more than not debauch the currency. If the situation collapses, there will be a repetition of the National Government that dominated the interwar years. Your vote will be rendered useless.
After the collapse there may be an opportunity to prove that socialism does work, but there will be a lot of pain before that point.
Andrew Withers FRSA