You have less money to spend because of inflation and interest rate rises. Why are markets shocked?
The Bank of England: why is it raising interest rates to fight inflation that won’t exist by the time the changes begin to take effect?
Interesting thread from Richard Murphy, explaining why you have less disposable cash – and questioning why the markets are so shocked about it:
Amazon forecast yesterday that it will make sales up to $15 billion dollars less than previously anticipated in the last quarter of this year. That is a due turn of maybe 10% on expectation. Markets were shocked. They shouldn’t be. Central bankers planned this. A thread….
— Richard Murphy (@RichardJMurphy) October 28, 2022
Coordinated interest rate rises of the type we are now seeing central bankers deliver have only one goal. That is to drive down consumer spending whilst supposedly increasing the return to financial capital in the world.
— Richard Murphy (@RichardJMurphy) October 28, 2022
That’s because right now we are still measuring prices after Putin’s war began within prices before Putin’s war started. That change is big. But next year we will compare prices after that war began with prices also after that war began. That change is going to be much smaller.
— Richard Murphy (@RichardJMurphy) October 28, 2022
In that case the only consequence of interest rate increases (which take up to two years to reduce prices, so poor a tool are they) will be to crush the economy long after inflation will have already gone. But the central bankers are still imposing the rate rises, anyway.
— Richard Murphy (@RichardJMurphy) October 28, 2022
Somehow this inevitable and planned outcome has caught the markets by surprise. Apparently they didn’t think such a policy would hit Amazon. Now it has and they’ve marked its share price down dramatically. At one point they were 20% down.
— Richard Murphy (@RichardJMurphy) October 28, 2022
One day someone will look back on the last year and the interest rate rises being pursued in the US, UK and beyond and wonder how an economic policy of such crass stupidity was ever allowed to happen. I have three explanations.
— Richard Murphy (@RichardJMurphy) October 28, 2022
And third, we told them they are wholly responsible for just one aspect of economic policy that is utterly unrelated to any other necessary policy to ensure we have a functioning state, economy and society. Having done so, their own disconnect from responsibility became complete.
— Richard Murphy (@RichardJMurphy) October 28, 2022
Central bank independence is a neoliberal idea that was always intended to undermine the state, as the whole of that philosophy is. Unless it is ended now it is not just undermining the state, it is seeking to destroy economies and the well-being of nations and the people in them
— Richard Murphy (@RichardJMurphy) October 28, 2022
For how long do we have to tolerate the total madness of interest rate rises that cannot address inflation (which is being caused by a reason way beyond its ability to address) and which are causing untold harm? I don’t know, is the answer.
— Richard Murphy (@RichardJMurphy) October 28, 2022
The fall in Amazon’s share price has got headlines. What should get attention is the nightmare happening in tens of millions of households worldwide. That’s where the real pain is, all of it caused by the maliciousness of central bankers.
— Richard Murphy (@RichardJMurphy) October 28, 2022
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Just repeating an apposite comment in the thread from @Gracia1730:
‘Could I make a plea for you not to refer to it as “Putin’s War”. It is the “US provoked war using NATO as proxy” engineered in part by the same bankers on behalf of the military industrial complex.’
(and it started in 2014; NB this should not be seen as indicating support for Putin, rather as a matter of clarification. However, Zelenskyy and his shadowy puppet-masters both in Ukraine and in ‘The West’ – not to mention the Azov mob and the glorification of undoubted Nazi Stepan Andriyovych Bandera – generate decidedly NEGATIVE feelings when it comes to support! As usual, it’s the lot of suffering ordinary people, in this case both ethnic Ukrainian in the west AND ethnic Russian in the east, that claims my sympathy)
If you’re referring to the politicians who call it Putin’s war, there’s nothing I can do about it.