Inflation: pandemic consequence, government negligence or globalist obedience?
Inflation is roaring and it has only just got started.
Inflation is roaring and it has only just got started. This article will examine what foreseeable actions the government could and arguably should have taken to mitigate the stimuli, extent and duration of surging inflation, and will explore related issues to the rising costs of living.
Background
When the Office of Budget Responsibility (“OBR”) (which is almost as badly misnomered as the Conservative & Unionist Party) is forecasting average inflation will not fall below 4% before the end of 2023, this virtually guarantees that:
OBR forecast of Consumer Price Index inflation (“CPI”) peaking in Q4 of 2022/23 fiscal year at 8.7% and will remain above 4% in 2023/24 fiscal year will undershoot reality;
As economic growth is now forecast at 3.8% for 2022/23 (down from 6% in October 2021) and below 2% in 2023/24, we are set for two years of stagflation (where inflation outpaces economic growth);
“Real life inflation” (which will be the subject of a separate research piece) is at least double the current level of CPI. Current level is 6.2% so “real life inflation” is at least 12.4%. That is before domestic energy bill increases averaging 54%.
With average wage growth at 3.8%, taxes rising year on year throughout the remainder of this parliamentary term (to the highest level since 1945) and living standards falling at the fastest rate since records began, the UK is set for significant economic pain, not least for millions who will be dragged into fuel poverty.
Given the forecast fourfold increase in National Debt servicing costs from £21billion in 2021/22 fiscal year to £83billion in 2022/23, the economic horizon is increasingly gloomy.
Around 20% of the National Debt (£500Bn) has debt servicing costs pegged to the Retail Price Index (“RPI”), which is currently at 8.2% and set to rise, so debt servicing of this amount will increase commensurately.
On 28th March 2022 in the House of Commons, Siobhan McDonagh (Labour MP for Mitcham & Morden) said:
“We have a tax burden rising to the highest level since the 1940s, the worst fall in living standards since the 1950s, public sector net debt reaching the highest level since the 1960s and real earnings growth facing the largest one-year drop since the 1970s”.
This is not what the electorate voted for in December 2019.
Covid-19
The government will argue that the pandemic derailed economic normality and shattered inflation stability. Even the most churlish analyst would argue they are right (to some extent), but largely for the wrong reasons.
The government, with the unbridled support of the toothless opposition, locked down the country on three separate occasions despite inter alia: a “successful” vaccine rollout programme, closing schools despite de minimis risk to children without co-morbidities (leading to reduced parental economic output), storing up a national mental health time bomb and many more people dying with COVID-19 than from COVID-19.
No doubt there will be a public inquiry at some stage which will examine the efficacy of the government’s COVID-19 strategy from the perspective of health and social care outcomes, but it is telling that the average age of someone who has died with COVID-19 on their death certificate to date is a year higher than average UK life expectancy.
Returning to the economic damage wrought by COVID-19, the government’s response to the pandemic was to splurge money relatively indiscriminately and whilst, inevitably, not everyone benefitted either directly (furlough) or indirectly (government guaranteeing hundreds of billions of pounds of corporate loans), most did.
This largesse, unprecedented in peacetime, helped to deliver a much lower rise in unemployment to the extent that in February 2022 it is lower than in February 2020, just before the pandemic took hold and lockdowns began. Though this was acheived at an eye watering cost, that will take several generations over a hundered years to repay.
Pandemic spending, (including additional government borrowing as a consequence) is over £500Bn. As three in eight bounce back loans to industry (£50,000 per loan with modest eligibility criteria and 100% government guarantees) have defaulted, it is reasonable to assume that a proportion of larger corporate loans (with 80% government guarantees) will also default.
The total cost of COVID-19, including additional spending on clearing the NHS backlog of operations and assuming modest business defaults, is likely to exceed £600Bn. As economic conditions worsen when debt servicing costs increase, that figure could conceivably reach £1trillion. It will definitely increase appreciably.
Bank of England Monetary Policy Committe (“MPC”)
Twenty-five years ago this May, Tony Blair took office. Blair and Gordon Brown, in an effort to convince those sceptical of New Labour’s economic competence, decided to devolve control of inflation (and with it the money supply) along with the setting of interest rates to the Bank of England.
The Labour Party had been out of power for eighteen years and its last period in office included: 27% inflation, 17% interest rates, a bailout from the International Monetary Fund and a 98% marginal rate of taxation on “the rich” leading to many millionaires living offshore.
Within a year of getting back into office, the Bank of England Act 1998 was passed and the “independent” Monetary Policy Committee (“MPC”) was formed.
For the first five years of its existence the MPC had to maintain inflation below 2.5%, with inflation measured by the RPI.
In 2003, Gordon Brown, changed the target to maintaining inflation below 2%, pegged now instead to the CPI. Put simply, the CPI has more carve outs (as reflected in its current rate of 6.2% compared to 8.2% RPI). This impugned the independence of the MPC.
My belief at the time is unchanged today. Delegating monetary policy, inflation control and interest rate setting responsibilities away from the Chancellor of the Exchequer was a cynical dereliction of governance in exchange for short-term political expediency.
In the first eight months of the pandemic, the Bank of England embarked on £250billion of Quantitative Easing (“QE”) to provide additional liquidity (making it easier for financial markets to run). This is commonly known as (digitally) printing money.
QE, used appropriately, lowers the cost of borrowing throughout the economy, including for the government. QE works by lowering the bond yield or “interest rate” on debt throughout the economy, including UK government debt (also known as bonds). It adds liquidity to support economic growth but if overused will, over time, stimulate inflation.
Having studied the virtual parallel actions of other Central Banks, including notably the US Federal Reserve and European Central Bank, a sceptic might conclude there is a “globalist” blueprint that one might even term a Ponzi scheme conspiracy that led to much too loose monetary policy, which in the case of the UK and US is particularly so through excessive QE, and QE continuing to be exercised to mitigate a financial storm that had already passed. Excessive delay by the central banks in iteratively increasing interest rates has occurred too, with them refusing to balance the risk of consumer debt defaults (including mortgage repossessions) with the inevitable risk of inflation as the threat of COVID-19 receded, economic conditions improved and pent up demand for goods and services was unleashed.
The World Economic Forum
The World Economic Forum (“WEF”) is a malevolent, metastasising force with tentacles, holding principles covering support for: digital currency, social credit (including control of individuals’ purchases) and both “Build Back Better” and net zero zealotry. They have no electoral mandate whatsoever and receive the financial and physical support of notable billionaires, including George Soros, Mark Zuckerberg and Bill Gates.
The WEF is controlling the globalist agenda, at a time when it has never been clearer that globalisation has failed and must be consigned to the dustbin of history.
The United Kingdom electorate did not knowingly vote to leave one globalist cabal of unelected bureaucrats intent on overriding democracy and turning their part of the planet into a border-free zone, to join another one by stealth, with no debate or democratic mandate.
If you are not aware of the World Economic Forum, start doing some homework. It is in plain sight on their web site. The next two men in the line of succession to the throne of HM The Queen are immersed, as is our Prime Minister and senior members of the government. It is time to wake up, stand up and push back, before our civil liberties are further eroded.
Many commentators far more eminent than me believe the WEF is a malign force that has infiltrated governments, Big Tech and Big Pharma, and is responsible for repeatedly increasing population suppression and censorship.
The truckers’ protest in Canada that led to the suspension of bank accounts, the cancellation of credit cards, the sequestrations of trucks and the imprisonment of protesters exercising free speech in a Western Liberal Democracy should make everyone stop and think about the direction the world is heading in. If it can happen there, it can happen here.
Though some may feel that the two years of the Coronavirus Act, replete with emergency powers never before seen in peacetime or wartime, given the gross intrusion and restriction of our civil liberties, 30,000 mandatory sackings in the care sector due to vaccine hesitancy and countless other pernicious and iniquitous acts, it has already happened here.
Once you have read the WEF agenda, you may feel it appropriate to question more deeply why so many of the world’s population, through our Central Banks’ mirrored (failed but in lockstep) monetary strategies, are staring at long-term economic decline and ongoing changes to demography that are increasingly bleaching away traditional British conservative values.
The Russian invasion of Ukraine
A truce in Ukraine as soon as possible would of course be beneficial from a humanitarian, geopolitical and economic perspective for the people of Ukraine and the wider global population, but to mask rising inflation with Slavic war is contemptible and disingenuous.
Whilst undoubtedly inflation will be further impacted by a prolonged Russian invasion of Ukraine, it would be mendacious to pretend that inflation was not already “baked in” before 24th February 2022.
This article was written by Chris Davies and was originally published on his blog, Just Chris Davies, which you may access here.
