tag:blogger.com,1999:blog-8764541874043694159.post906941091639249622..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: UK inflation and the oil priceFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8764541874043694159.post-11599236465012867422017-03-06T10:01:12.881+00:002017-03-06T10:01:12.881+00:00"You have discussed a topic that has interest..."You have discussed a topic that has interested me for years. Despite trying to making sense of it all, I have disappointingly failed. <b>Things just don't seem to work the way they <i>"should".</i></b><br />"<br /><br />Me too. <br /><br />Great definition of the problem! Is should relevant? I have gone or am going through the same thing.<br /><br />Who told you the way things should go? Why? <br /><br />But, what actually happened and happens? <br /><br />History and accounting are better informers than economic theory, economic propaganda, political economics, and economic marketing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-71562205087906103022017-03-06T09:24:33.297+00:002017-03-06T09:24:33.297+00:00Inflation has been so bad over the decades that yo...Inflation has been so bad over the decades that you can't accurately call some one a gold digger. You would be better saying currency digger.<br /><br />The use of that term existed when there was gold money.<br /><br />Gold Diggers of 1933 - "We're in the Money" <br />https://www.youtube.com/watch?v=UJOjTNuuEVw<br /><br />Interesting year of that film.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-31059037936813713992017-03-05T03:42:11.063+00:002017-03-05T03:42:11.063+00:00Everyone keeps forgetting that theres millions of ...Everyone keeps forgetting that theres millions of elderly pretty much wholly dependant on savings income who simply cannot and will not spend ..until the B of E actually faces the huge loss that is creating throughout the economy the country will stagnate the flush of spending by those with cheap mortgages has reached its peak and they are finally realising they cannot repay the debt they have racked up ...wheras the prudent could have spent from a position of strength only fools get into debt or think its a solution and the prime idiots on that score is B of E who have consistantly pushed ever cheaper debt whilst robbing the prudent of spending power They will wake up far far too late of course and the country will be wreckedUnknownhttps://www.blogger.com/profile/17947065961878232928noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-77526080687344825302017-02-24T12:40:11.515+00:002017-02-24T12:40:11.515+00:00'It's the supply side that ultimately driv...'It's the supply side that ultimately drives the economy'. <br /><br />I see it's a v complex question but how did you get to that conclusion so quickly from the first part where you discuss distribution.<br /><br />Surely the argument could read:<br />QE boosts asset prices and depresses fx rate > commodity inflation > cost push inflation in tradable sector (priced in dollars) > distribution away from service sector (priced in sterling) > weak labour market institutions so adjustment forced onto wages > wage growth lags productivity > low investment due to plentiful cheap labour and low confidence > rinse and repeat > hysteresis > missing productivity infrastructures and capacities > fragility in face of supply shocks.<br /><br />It's not simply the oil price or the supply side per se but the distributional impact of weak labour market institutions holding down the wage share in a wage led demand economy that's driving the investment story. Kalecki was right to point out that profits alone don't drive investment.Hugo Evanshttps://www.blogger.com/profile/12705056750207255618noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-65333907244458021722017-02-24T11:55:57.789+00:002017-02-24T11:55:57.789+00:00Francis,
Has Japan as another energy importing na...Francis,<br /><br />Has Japan as another energy importing nation shown the same effects as you suggest for the UK?<br /><br />Sterling devaluation I believe has been exacerbated by the last rate cut by the BoE following the Brexit vote and a mistake leaving it with fewer options in the future. <br />Chrislongshttps://www.blogger.com/profile/08252889875324409569noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-73898129714662908222017-02-24T08:31:58.581+00:002017-02-24T08:31:58.581+00:00Are British producers substantially more oil-depen...Are British producers substantially more oil-dependent than those in other countries, and if so, then why?George Cartyhttps://www.blogger.com/profile/12170378024031141482noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-74902289991253164642017-02-22T08:48:40.962+00:002017-02-22T08:48:40.962+00:00Hi Richard,
Traditionally, the biggest input cost...Hi Richard,<br /><br />Traditionally, the biggest input cost by far is labour. When labour costs rise relative to prices (or prices fall relative to nominal wages, as in a recession), companies tend to put workers on short hours to keep the costs down. Inventory, too, is a cost, so if production outstrips sales, companies may slow down production by - for example - running machines at half capacity, or laying off workers. In these days of high energy prices, however, energy has become a much more significant business cost. So companies respond to high energy prices the way they do to high labour costs: if they are confident about sales and have inventory capacity they try to increase productivity, but if they are not confident about sales, they try to reduce costs by under-using both machines and workers. Hence high energy prices can feed into both poor output and low wages by reducing, not increasing productivity. Underlying this is lack of confidence about the economy - so we also see hoarding behaviour by companies (excessive saving).Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-48387042330255063142017-02-22T04:07:34.908+00:002017-02-22T04:07:34.908+00:00Hi Francis,
You have discussed a topic that has i...Hi Francis,<br /><br />You have discussed a topic that has interested me for years. Despite trying to making sense of it all, I have disappointingly failed. Things just don't seem to work the way they "should".<br /><br />Take currencies.<br /><br />The GBP took a huge lurch down of 25% against the EUR and the USD around 2008, somehow this never really came through as a lurch in the CPI number. I wonder if the economists at ONS have some massage technique to remove any perceived short term price fluctuations? This would make some sense, as there are several important prices tied to it, for example wages and pensions. Also the "real GDP" is reported net of the inflation deflator.<br /><br />A wildly swinging inflation number is going to make things difficult, as pensions, for example would ratchet up an extra notch in a short term high inflation environment, but would then not come down afterwards. And the real GDP would go up and down sending the UK into paper recessions and booms.<br /><br />Production versus productivity.<br /><br />"since rising productivity by definition increases energy usage."<br /><br />Surely productivity is the efficiency of production? Something the Brits have been falling down at. I understand rising productivity as more output per unit of input, so there is not necessarily an increase in energy use per unit of production, it could, and indeed has often, fallen.<br /><br />I am not sure about the conclusion, "After all, it is the supply side that ultimately drives economic growth and prosperity", the world has a huge production capacity, but if the workers do not have cash in their pockets it will all sit idle. For growth and prosperity surely<br /><br />1. The workers need to be more productive<br /><br />2. They have to be proportionately remunerated so they can actually buy the stuff.<br /><br />We are globally good at #1, but notoriously bad at #2.<br /><br />The banks have certainly not cut back on consumer finance.<br /><br />"Average debt - excluding mortgages and student loans has now surpassed its previous record of £14,950 to reach £17,630 in winter 2016/17: an increase of 18 per cent."<br /><br />The BoE is backed firmly into a corner. With all that increased relatively low interest debt around, even if inflation starts up, any increase in interest rates will be somewhat hard for the consumers to bear.<br /><br />The paddles have long been lost overboard on the way up this creek....... I believe that the bailers are also gone and the canoe is decidely leaky.....<br /><br />Regards,<br /><br />Richard.Anonymousnoreply@blogger.com