WHAT IS WRONG WITH THE UK ECONOMY - PT 1

What concerns ordinary people, and therefore politicians, about the economy at the moment is inflation and mortgage interest rates. What they want in general is financial stability, economic growth and social peace.

While governments dream up tax and spend programs, central banks are supposed to keep the economy ship-shape as concerns stable prices for consumers, employment and productivity for producers, and currency exchange rate and reserves for traders.

The opposite of financial stability is breakneck change. Decades of excessive govt, commercial and private sector debt, has been achieved by tremebdously cheap money and vast increases in the money supply. These spending sprees have devalued our currency, heated up inflation, central banks have responded by shrinking credit availability and raising rates at speeds never before seen.

We cannot expect economic growth when the factors of production like supply, wages and taxes, go up; while demand falls. Plus poor productivity from underinvestment, high divi payouts with too much defensive industry, and not enough learning  innovation and technology. Plus housing is way too expensive compared to wages so excessive investment in bricks misallocates capital.

And finally, peace on the streets depends on equality, equality in the distribution of assets which seems to be 95-5%; and the shareout of profits between capital and labour.

If those goals can be shared and agreed, if the problems and requirements can be addressed with strategies that are seen to be fair, then we might have a bit less conflict, a bit more pride, frugality and hard work, and then maybe more harmony in our society and less greed and anger.

We need serious programs from serious politicians and competent central banks.