In full: Former BoE Governor warns of a "very unpleasant period" ahead
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- Опубликовано: 8 сен 2024
- Former Bank of England Governor Mervyn King blames central banks for fuelling the cost of living crisis by printing too much money during the pandemic.
King headed Britain's central bank from 2003 to 2013, and oversaw the start of its QE programme in March 2009 during the global financial crisis.
But in more recent years he has criticised the scale of central bank asset purchases, which were funded by newly-created money.
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What people like King never admit is that after a period of 10% inflation, even if inflation then falls back to the magic 2%, prices are still 12% minimum higher than they were a 18 months before. Prices will never return to where they were before huge inflation struck, thus the demands for huge wage rises will persist in the medium term.
Spot on.
Once currency exists, inflation exists.
The feedback between inflation and wages, the persistence of inflation in the absence of a strong policy response, and the welfare effects of inflation are all well known and accepted in the economics profession. I think your accusation is very strange.
wrong, materials will end up cheaper than where they were before covid. as has happened many times in the past. oil is cheaper than its been at times in the past. Its still where it was pretty much all through 2011-2014. Get over it! youll all get left behind! AGAIN
These governments and elites have all got together and created this inflation through releasing Covid. They're inflating their national debts away after all the money they're printed the last 2 years and now the war they've started with Puton on purpose. This guy is so full of 💩 Next up is collapse of the economy and next engineered pandemic over the next few years so they can bring in their CBDC's and full government tyranny.
Isn’t it amazing how all these people suddenly develop 20/20 vision after they leave positions of power where they could actually have done something about the problems and causes they see so clearly
But how would they make money if they don't write it down for their new 'best seller' book!
He didn’t decide on lockdown
Yep, they have already collected their billions.
must have watched a diffrent interview to the one i just watched...?
I doubt this guy would have known about a future war in Ukraine and covid lockdowns worldwide.....our economy was on track to recover nicely since 2008 but we didn't account for worldwide crisis
The Central Banks have been printing big time since 2008, which has been devaluing the purchasing power of our currencies
Covid:(
Bitcoin is deflationary, cant be confiscated, has a fixed supply
And therefore, all roads now lead to Bitcoin.
Until Blockchain is centralised and bitcoin is banned, then we will be slaves to imaginary 1s and 0s with no alternative. Gold is money, everything else is currency.
That was when obama took office, and deliberately began our final descent into a 3rd world nation. Like Biden, he did everything he could to sabotage our economy, morality, education quality, and race relations.
Government requires inflation to manage debt, central bank is trying to help create it, not fight it. Inflation is stealth tax.
I’m amazed as to how few people realise this critical truth
I don't understand. The neo-liberal governments wanted near interest rates in order to generate more debt without having to make much interest payments. Increasing inflation will require rates to go up, which will balloon debt service payments.
Inflation is a tool to stop governments going bankrupt.
Inflation is the way governments are going to pay for their ridiculous debts. By screwing the people again
@@belialbradley222 inflation reduces the real value of debt
"inflation stayed 2% since than till now"
Well I calculated my living inflation from 2005 to 2020 and came across to figures from 4-12% a year. Region of the Netherlands. Items included were salami, rice, eggs, swimming ticket, plane ticket, shoes, electronics, kebab, rent. A secnd way to see the official inflations figures are manipulated/not truth was to compare minimum.wage at burger king as opposed to price of a whooper menu. In 2010 i could buy 2 to 2,5 menu's for 1h of work while in 2020 it came to 1,3. That is an inflation of 100% in 10 years. Annual inflation calculate yourself.
With other words we were delibaretely manipulated OR we are dealing with morons with a lot of power and fancy suits.
The moment I realised that i sold my money and as much as possible hedged against inflation.
Everyone who can hold a calculator and do the math and knows what has been going on.
Also the introduction of the Euro was a source of huge inflation. The price of almost everything went up while wages stayed mostly the same at first.
I still sometimes calculate back to the old currency while I get killed over it by people that I should not do that.
Don't forget that over those years, where the price stayed static, the Volume or weight of your grocery products was reduced as a "sly " increase .
@@Niknteen1 Yes for one part that is true but for the most part as i could see it stayed the same. Chocolate went from 100 to 75 grams, meat and bread stayed the same.
@@morskisrle with how things are looking, bread likely to go up. I think wheat is sold like oil in global market so less supply -> more price. Unless politicians would manage some bilateral grain deal with Ukraine, off the market.
I work in customer service for an energy company, seeing peoples bills almost double is just awful 😖
Double ? Mine nearly tripled.
All thanks to one greedy class
Ye, don't forget the masses that are eating from them, we are all in to this.
We are fking ourselves and our neighbors. We need to change as individuals or else we r fked.
Wait til it happens 3 or 4 more times over the next year.
Crisis in the energy sectors as prices collapse, albeit to prior levels, will be the headline grabber when things (hopefully) return to better pricing. But we avoid the impact price comparison and contract price fixing had on delaying the gas price effect till it was unavoidable and prices took a massive hike. Without the free market of contracts and competition the price increases would have been so gradual we probably wouldn’t have seen them, and wage increases would have met those increases as time passed. It’s the system that’s at fault, initially favouring those who played roulette with their fixed contracts, not the gas prices, and certainly not the war in the Ukraine.
The absolute audacity to say inflation has been kept down since the 90s! Even before this crisis, what about the price of homes? Virtually everything has inflated massively when compared directly with wages stagnating.
homes are a separate issue. the prices of homes have gone up because the baby boomers have been using it as an investment vehicle since the 80s. my parents own 4 homes, i know a guy who owns more than 80 condos and rents them out. the only way to stem the cost of homes is either ban people from having more 2 homes OR tax the living hell out of the people who own a lot of homes to the point where it is no longer profitable to buy a place just to rent it out.
@@solomonshvthere are multiple factors as to why the property market has inflated!
@@solomonshv I agree there definitely needs to be a limit on how many homes one can own. Nothing but greed.
Mass immigration fuels house price rises
Wages haven't stagnated for those in the finance industries so he doesn't care.
How can we get to almost 20 mins in this interview and not talk about the inflated stock market, the inflated housing market, the number of zero contract jobs....the role of crypto currencies, the roll-out of CBDC.......incredible.
or how over 60% of Americans have zero savings and live pay to pay. same with Canada and uk is the same im sure.
Excellent. Inflation is in capital markets and in cartelized suppliers. The rest is more or less small talk.
@@bobray7790 Agree, the level of inequality is an absolutely huge issue in most modern economies.
Absolutely! No mention of the steady destruction of tax revenue generating jobs, the failure to provide proper public services, (44% down to 36% of GDP) in the UK since 1975. One of the lowest in the developed World, while the very wealthy have raced ahead, fleeing tax as they go.
Because he's part of the problem - as is the lapdog who is interviewing him.
I was waiting for Mervyn King to speak on this subject to see whether his opinion confirmed my own suspicions. I have always though King was a man of great integrity and pragmatism, he did not disappoint. We hear much about the cause of inflation from our clueless politicians and economists, the pandemic, Ukraine, supply chain, energy costs and the rests. These elements are contributory of course but do not run to the true cause. The true cause is the continuous dilution of our currency through endless quantitative easing. We are living beyond our means and have been doing so for many years and I fear a rude awakening beckons.
We are also now feeling the full impact of COVID shutting down industries and without doubt the generous furlong payments. This is just catch 🆙 why are we so surprised 😮 with this being the end result after COVID? Very good interview imo.
well spotted and well said.
@@nikolarosie1594 We are feeling 2008. They printed trillions and bailed out the banks and big businesses that should have been allowed to fail. That is capitalism.
Amen to that
Mr. King probably has the knowhow to steer us out of this dilemma.
People in general are seriously spooked by the increasing energy costs, which along with food costs.
We gone from " full bore, flat out" to "throw the anchor out " and have stopped spending on anything but essentials.
Massive job losses and the mother of all recessions is beyond doubt
Not true pubs and cinemas are packed out were i live as are restaraunts
Prices are going because people have so much money to spend. People didn’t spend much during the pandemic, now the pandemic is easing they are all spending. We also have problems with petrol, food, gas and electricity.
pubs and cinemas are the only thing that can take your mind off 'the bad economy' so people still go to those but out of despair, not out of having too much money... Most people used to eat in cinemas (despite having exhorbitant prices) but not anymore... The waiting lines are gone.
If people were spooked they would vote every single EU "leader" out of office!
@@marclarsson7533 assuming they were smart enough to do so.
He should know what a recession looks like having been in the thick of the last one caused by the banks & investment firms playing roulette with peoples futures and lives.
he did help stoke a UK housing bubble
All the casino banks were levered up 28 upto 50 times their deposits for some banks.
Anyone who has done well out of a system that has left so many not doing well, is not a good person.
@@stevenmoore3480 i did okay out of the system, but I waws young when people like Merv was in office, and worked out what the rules of the game were/are. Now im 39 going on 40, knew they would trash GBP to keep property prices up, now we have inflation and a cost of living crises, all caused by their QE (priting money). Inflarion is expantion of money supply and a symptom of that is price increases. Inflation not increases is prices of goods and services, and this is why Mer failed as he could not and still does not understand the differences OR he coudl care less about GBP, and thats why general public shouldnt either.
The presenter is thinking 'why didn't I get the Jürgen klopp interview'
And what about those on a pension or fixed income? They get crushed as the currency loses value, experienced as rising prices.
The USA baby boom is going to get severely hurt between fixed income pensions that survive but the payment loses buying power and pension funds that outright fail due to underfunded, over risky investments.
Exactly right, Sir. The distribution effects are really important.
Very good interview. Refreshing to finally hear someone with authority pointing out the money printing as the main cause for the inflation
Like nobody saw that one coming. This was planned all along.
But he's dreaming thinking the economy will pick up and we can raise interest rates
@@everready2903 the economy is picking up, not least because of government policy to incentivise work and inequality.
@@dimwit3006 Energy prices is going to affect so much. Disposable income is seriously dropping and will hit the economy accordingly.
Notice how inflation is only sold as a problem when wages inflation in the real economy starts to occur but 30 years of Outrageous asset price inflation is fine.
Well it’s not fine when housing affordability for average citizens has been collapsing over that same 30 years.
I reckon the more inflation in the real economy (as opposed to the investment economy) the better.
An interview where the interviewer allowed the subject to answer fully. Refreshing.
Should make humans realise they have an agenda which sheeple seize to see and acknowledge.
As the wise people warned from the beginning, the over-reaction would be worse than the disease.
Yep more people will die and more people would lose their job long term from the lockdown than from Covid. Said that from the first week of the lock-down.
…part of the problem folks…part, but not all…
Workers haven’t been paid fairly for decades.
Politicians haven’t been responsible to the people for decades…
Politicians are slaves to the military. Thats where all the money is going. 40 billion a month of taxpayer money to ukraine war, 10 billion a year for new weapons for israel, etc.
Hello "worker" Companies are not paid "fairly" by customers so what's your solution ? ask for more money and lose the work to a competitor overseas then ?
@@mrjohncharlesbrown exactly. We can't act unilaterally in the UK and then expect the rest of the globe to disappear. Like it or hate it, the UK is very plugged in to a very globalised economy.
It breaks my heart seeing that just a few can see where the surplus that we humans produce is going...to the pockets of - again - just a few.
😔😔😔
Too real
Welcome to capitalism, get your bread ticket and wait in line!
Generally people turn a blind eye as long as they're getting a fair share of the crumbs. The crumbs are now becoming sparse and Governments are applying ESG policies. Batten down the hatches.
We play for our own slavery and oppression. Then they kill us when we are old and disabled so they don’t have to pay our welfare and pensions. We should get rid of the rich and greedy. Inflation happens when the rich feed themselves and the money doesn’t circulate in the population. Corruption and BS from the rich is the the problem. (Edit to correct typos)
@@AutisticAwakeActivist Well said Maria...well said! 👍🏿🇦🇷✌🏾
Inflation wasn’t showing up because they kept taking out key inflation indicators so it looked like there was no inflation like housing.. but they knew exactly what they were doing and they know what will be coming.. we are talk about the global financial engineers..
If we measured inflation the same way we did before the 90s it would be around 18%.
names?
@@murkatable Civil Servants.
Hi Nebraska, I don't think they do know what's coming at all!!
The big man upstairs has a few bones to pick with dealers of false weights and measures.
Just raise the interest rates to the necessary level, don't prolong the catastrophe. We will have a recessions either way.
Except this time there's way too much debt in the whole system to raise rates to where they should/need to be. Great for Gov's to inflate away their debts but as usual hurts the regular working person
The BoE have failed miserably to control inflation and the value of sterling. Inflation hit 5% after the first chunk of QE in 2009, now 10% after the pandemic QE chunk. Rather than reversing some of the money printing to strengthen the pound, I think the BoE will re-start the printing press again when the recession hits.
Agreed. They've been printing money for decades then are shocked this is where we are.
Sadly printing 💰 is the only idea they seem to have.
QE cannot be the scapegoat here. QE itself is not all too inflationary except through interest channels. QE should definitely not be used synonymously with money printing.
They can't because it will only make inflation worse. They finally hit the wall with printing money and it's going to be unconfortable for most of us as King points out.
@@andrelucassen9229 I totally agree that they shouldn't do anymore QE, in fact they should be reversing some of it, but that doesn't mean that from the comfort of their BoE offices that they won't re-start the programme, after all, they believe that the problem is being caused by global events and nothing to do with their own actions.
@@paulb1034 At this point any additional printing will contribute directly to more inflation. As King notices they will probably try to limit the increase in interest rates, but by now they're just behind the curve. It's not up to the central banks anymore at this point to "dictate" the inflation percentage. The choice now is either shorter more intense economic pain by significantly raising rates now, or prolonged misery as a result not raising quickly and sufficiently.
Central banking appears to be one of those areas where by the experts that's get promoted to the top job are incredibly poor at what they do.
If I were that poor at my job I would be unemployed.
The purpose of a central bank is to loot the wealth from a country. Plenty of books cover it.
Economics trying to keep billions of people happy during international crisis is quite difficult
@@lewis123417 No economists are just snake oil salesmen, even this entrenched in the money grabbing guy has said as much.
Spot on
Its not energy prices. ITS HOUSING!
Single guy employed living in a one bed:
£200 food
£800 rent
£200 housing gas/water/electric/internet/upkeep
£150 housing tax
£25 Mobile phone
£200 vehicle fuel
£200 vehicle tax/insurance/maintenence
£7 netflix
=Lets call that £1800/mth overhead
Gross pay £28k, minus tax, = £1900 take home
£100 a month spare = £3 per day. 4 pints down the local saturday night.
Housing is currently 7x average yearly wage. In the 90's it was 3x. In the 50s it was 1x.
Housing prices have been bidded up by a decade of cheap money - look at the history if interest rates and tell me that 14 years of less than 1% interest is normal...
The inflation has been directly caused the Bank of England for keeping interest rates too low for too long and engaging in in reckless quantatative easing for decades. The BoE has monerised the debt created by The Treasury.Private Banks - Barclays, HSBC, RBS, create 6 - 10 billion each year of electronic money from thin air and use this money to speculate in the money and real estate markets. This drives up the prices of property, energy, food, etc.
Interest rates have been kept low because of the obsession with housing in the economy and savers have been drawn to more risky investments
Yes, and what about those who have borrowed up to their maximum to break into the housing market. Im ild enough to remember the days of negative equity...horrible
Cheap money for years have not helped first time buyer one jot. It fueled house price rises ironically making them less affordable and when they do rise the brown stuff will hit the fan.
Not only private households but businesses are borrowed up to the hilt and would fail in large numbers if interest rates rise substantially. This would potentially put millions out of work over a relatively short timeframe.
It's all a house of cards
Inflation has nothing to with wage negotiation; that's a symptom. Money printing - plain and simple is the only cause. Currency creation causes Inflation.
Yes so simple.
Increase the $ = decrease it’s value
Decrease the $ = increase it’s value.
Simple, my question is why? Why print money when we could cut costs. Congress or whoever has no concern for the American people. It’s only complicated when we want more than we can afford.
The vast majority of the Printing went to the usual Banksters so they could keep liquidity in there interbank lending mechanism and generate returns in their Global Casino which does little to stimulate the real economy and just pushes up asset prices as they look for assets to swap their Free Money for, pushing up prices as all these Printed Billions are chasing the same big ticket luxury assets.
If those Trillions were given to the actual Workers who are the real economy it would stimulate growth, investment and expansion of the real economy instead of the Paper Casino Economy like we have seen since 2008 onwards.
Massive global corps that never make a profit stock prices still going to the Moon even when the entire Global economy shut down for the best part of 2 Years. All perfectly normal, nothing to see here, move along, the economy is great LOL.
Welcome to Clown World folks.
The purpose of a central bank is to loot the wealth from a country. Plenty of books cover it.
Yep.
Inflation is too much money chasing too few goods. Housing, fuel, food, etc.
I'm already living through an unpleasant period.
But what if we collectively decide to stop using their money, why do we put ourselves through non stop debt.
Don't remember this old clown saying that when he was riding shotgun on our way to the 2008 global financial meltdown ? And that other chancer, Mark (quarter point drop every year in office to zero interest rate) - Carney. - It'll work ! it'll work ! - It f**king didn't !
It's already too late to start raising interest rates.
What this country needs is energy security and food security.
But mostly - in order to reach those goals - needs to spit with those who's goal is to destroy it.
that's what EVERY country needs - but UK alone is way way to small to create that for itself. It needs to be part of a bigger bloc with more collective economic and political heft on a global scale.If only there were some such bloc we could be part of ....
@@michaelamazingfba3724 infestation of domestic enemies is the #1 problem of any country today. Without that problem, there are always other countries willing to help in time of crisis, as in WWI & II, before the recent major infestation of marxist leaders took place, who have done more damage in the last 20 years than any outside power has in centuries.
What if the aim of the exercise was to create inflation via QE. With the pandemic as the justification and the reason(s) to erode existing debt accumulated during the years of low rates.
100% this was always the plan. I'm surprised more people haven't realised this
I also think this was the plan. They have models that show a cataclysmic end of the current financial system, so perhaps the only way to not go down that avenue is to inflate the debt away
I’ll get my tin hat
@@Rosseboi Tell me why then we have never seen inflation before. Japan has been doing QE for over 20 years. Next to no inflation there. QE1-Q4 in the States never caused inflation. In fact is caused deflation.
@@GaryABArmstrong Easy. Easy peasy!!! Japan had the largest economic bubble in known history. Or close to.
Land values dropped by 70% by 1991.
FYI the Japanese Imperial palace alone was worth MORE than California's GDP ;)))
When we crashed in 2008 there was no land value drop govs propped it up.
There's your difference ;)
"Complicated models" is a euphemism for deliberate deception.
It can’t be that complicated. Everyone knows printing money devalues the currency. Probably deliberate to get now what we can not afford.
"I didn't see the financial crisis coming..!"
Lol
Inflation is a problem because of the Central Bankers of the West. None of them should have the autonomy to slash interest rates to the level that they have. Money should be a store of value, retain its purchasing power and receive an acceptable rate of return, otherwise, it will eventually become just a worthless piece of paper whilst the price of tangible assets skyrockets.
we have gamblers with direct finance interest in the stock markets running the USA government no one can stop it
Central Bankers of the world, not just the west
For humble folk it's always just a question of what is the level of unpleasantness for us in this corrupted system we can't break, escape or change for the better
The corporate financial economy is fully global - the reach of any central bank is just within its currency’s area. General wealth and ownership have concentrated immensely since 1980 and most nations have sold off (privatised) institutions, assets and outsourced earlier ownerships. In my view, this has left governments and democracies (if applicable) unable (or unwilling) to remedy what unregulated financial growth has created.
Growth can no longer mend the lack of resources on a global scale. Even a green shift will be dictated by the corporate sector, not by governments. Financial (non-producing) growth disenfranchises more people than it enables, as QE benefited finance itself, not the majority of non-owners - meaning wage takers of any kind, even well earning families. From now on, housing, energy and food will be out of reach for normal well educated individuals, and that’s different from 1929, 1989 and 2008. It’s also a condition in every country in the global north, also unlike earlier financial downturns.
I can see this from, yes controversial political topic, public housing. Selling or not getting,investing more by city, means there is no counterbalance to help people when these financial money forces rip apart housing market and take those away from people grasp. London seems bad in this. Then huge number of other examples where privatisation just doesnt work or for the very least counter balance option to free market(uncertainty) needs to be. Im not financial expert but I see concentration of wealth similar risk as communist system power and decision making was too concentrated, making any decision slow and few. Even in job market this can be seen, big corporations hesitate too much hiring and then one swoop fire 1000s of people. Then there is all sorts of inefficiencies from this overfinancialization and centralization, making system vulnerable ie to covid type relatively solvable problem.
exactly! Why isn't everyone else seeing this??
The trouble is he keeps on repeating about Russia's invasion of Ukraine but that's only accelerated what is bound to happen. What really destroyed the economy are government's policies which are anti human. Neil McCoy Ward explains it.
One thing missing is the money printing was to make their buddies richer money printing only enriches the first user of the new money they knew it would cause inflation because inflation is increasing the currency supply
true, but inflation can also be caused by a reduction in the supply of goods, especially goods with inflexible demand (food, energy). And low and behold we have both at once.
@@iainbagnall4825 no that's not right
Scarcity increases prices that's not inflation that's a increase in Value of a product this is used by many manufacturers as a business model .
Increased currency supply reduces the value of the currency therefore each unit buys less that's inflation
When will savers get better interest rates? 🤔 I had a meagre 0.8% but now it's just 0.45%
Nobody cares about savers anymore. Savers have been screwed for about twelve years! It makes my blood boil.
invest in equity not cash. inflation will kill cash
@@jonkayl9416 By the way, It was not my intention to suggest that one shouldn't invest in equity. Of course, one should. But that doesn't mean that interest rates should hover around zero, either. Apart from what it does to savers, it is not good for the long-term health of the economy. In short, it is not sound economic policy.
The people of this world have only one true escape hatch, in the short term it's volatile while it's greatly misunderstood, trusted networks have screwed this world blind, verify your SoV/median of exchange anywhere in the world, Bitcoin is the way 💪
Banks hate savers. Invest your money
This is the man who kept interest rates artificially low until the banking crisis. Well done.
Yeah notice how he excluded himself from the very rich... quite sickening, I don't believe for a moment he gives two figs for people with low to no income and no prospects.
@@stevenmoore3480 it's not necessarily relevant whether he cares. His job was to keep the UK economy as a whole healthy. It's not central bankers' job to look after society, take care of the poor, redistribute income etc etc etc . That's the government's job.
I wonder how many people will watch this then drive right to Starbucks for an expensive coffee
"Q. Does QE cause Inflation?
A. Yes it does..."
-this is a direct quote from the Bank Of Englands website... Central Banks the world over have printed money (QE) and made money too cheap for well over a decade and the reaper has finally arrived...
It's all about Variation, which cannot be "controlled".
The first "mistaken idea" as he calls it was to take the dollar off the gold standard by Nixon in August 1971.
Adrian Orr in NZ explicitly said what they were about to engage upon back in 2020 would have significant negative effects, particularly on property prices and the wealth gap. They all knew what they were doing.
Lol. 2% inflation? When? Real world inflation was never that low in the UK in the last 50 years.
The energy prices are ALL related to 'green energy' and the WEF. Nothing more, nothing less.
Printing money has been on a three-digit increment since 2008, how do one beat that with a miserable 3-5% wage increase now and then?
The whole idea of a Central Bank is THE big problem. A free market would do a much better job of setting interest rates than a small group of people in a board room at Threadneedle Street. Too bad this question was not asked by the Sky News reporter.
The US Fed was formed as a result of instability in the free markets. In the financial crisis of 1907, the stock market dropped 50%, banking liquidity dried up, and many banks started going bust. J. P. Morgan had to intervene along with the heads of other big banks to pledge large sums of their own money to restore confidence and shore up the banking system. This highlighted a weakness in the system that could result in collapses occurring when people in the free market panic sold in large numbers, and indicated the need for some sort of senior authority that could step in to restore confidence in the system when the markets started getting out of control. The Federal Reserve was formed a year later to fulfil that role.
According to these guys, corporate windfall profits and record - breaking board dividends do not create inflationary pressure...
But when minimum wagers strike for an increase of wages so that they meet the cost of living price, inflation must be tamed and austerity must be imposes.
If that is the nature of the US, Canadian and British economies, then something fundamental needs to change in the economies of these countries. It's not working anymore!
A brilliant person. I'm however amazed that both him and the journalist don't emphasize that energy prices are only likely to get higher in the future. They both treat the situation as temporary. I'm not so sure about that. Evreything points to increasing energy costs in the long term.
Also like to bring to your attention, Politicians never ask for a pay rise they give themselves it and never miss one...everyone else has to fight for a rise...
They always seem to exclude the skyrocketing costs of energy, food, and housing especially in calculating inflation. No way were all of those at 2% until very recently. Considering that an average middle or lower class person spends a huge percentage of their income on these items, it's absurd.
those at the bottom will end up suffering the most during this "very unpleasant period" ahead. and the interviewee, a wealthy banker, he won't experience any suffering whatsoever.
Mervyn King is wiser now than he was when he retired.
The young bucks should pay heed to that old courser.
It's easy from the sidelines. Like listening to pundits at half time saying what the team should do to get back into the game.
@@everready2903 exactly, I don’t think people know he did the same thing , only difference is that he had a 5% buffer rather than a 0.25% one.
@@Dedicated_.1 Yep! Admittedly the FED & ECB aren't any different but he ignored one of his primary mandates in keeping inflation around 2%. Instead endless growth was the mantra even if it was via increasing debt and borrowing by making servicing it easier with ever lower rates. The 2020 borrowing of £299BN by the government added to our 100%+ debt to gdp and any rate rises now will squeeze the government's finances even more at a time when so many are looking to the government to help with the cost of living. Severe financial pain is coming and it can't be put off for future years any longer.
Inflation Is a tax by government to pay for their debts
*Our debts
Mervyn King was one of the finest Governors we have ever had at the BofE. Humble, thoughtful and deeply knowledgeable. We were very fortunate to have had had both Mervyn King and Alistair Darling at the helm during the 2008 banking crisis. People have short memories. A very refreshing interview.
The git your interviewing is the reason why we are in this mess!
Mrs Thatcher put up interest rates in the late 1980’s /early 1990’s , from mid single figures which had existed for some time to around 12% , this was considered very harsh at the time but it surely did correct inflation. Also it corrected the ever increasing price in the housing market, which was running away from peoples salaries/wages etc , causing people to lend more and force debt situations . Sound familiar today? We currently have house prices running away from peoples “Safe” lending capacity, and 1st time buyers on not able to get on the housing ladder. The Government stance is to print more money won’t work . They say they are producing “Affordable Housing “ , there is no such thing in this climate, because builders will always sell them for the market price, not make heavy price reductions to help 1st time buyers. As long as interest rates are very low , investors will find other ways to make money , whether it be Commodities, housing, Classic Cars or whatever , therefore bolstering prices in those sectors. The housing market leaped 5 times its starting price in Ted Heaths Government 1970- 1974, due to money /lending being made more widely available . It stabilised during the Labour Government after with lending being limited to 3 to 3 and half times gross incomes , protecting banks and lenders at the time. When Mrs Thatcher lifted that lending Umbrella mid 1980’s the market flew up again. When it was clear both Inflation and House Market prices were running away she raised bank rates to correct this after the Stock Market Crash in October 1987. Prices of property fell and stabilised in the early 1990s before rising at first at a slower steadier rate , no longer the Boom /Bust levels of before.
Those policies also put 3 million people into unemployment and destroyed the manufacturing base in the UK.
He was a well behaved puppet for his masters and made them untold fortunes. He was very well rewarded with his peerage to the house of Lords.
Especially since WW2, western economies work efficiently with inflation between 2.5 to 4 percent, together with increasing asset ( mostly real estate & equities ) and commodity values.
Deflation is a horrid scenario for central banks, manipulated scarcity of goods and commodities overcomes this catastrophe with instant inflation.
There is something beautiful about the way he starts off by allocating blame on the workers. Notice how in the first few minutes are him talking about the labour force. He convientently misses out that we don't have an inflation problem at the moment we have a capitalism problem with companies predominantly the old infrastructure companies that were privatised pushing prices through the roof. Always remember this he would have been given the job as the BoE Governer because he was willing to lie to the public.
It may not present itself as acutely in the UK, but the monetary policy in US may find itself completely driven by the attempt to "manage" the S&P500, and the Nasdaq. But that didn't happen by accident, the view that stocks cannot fall has been entrenched in the mind of all participants for almost a generation, the greed of wanting more, fear of missing out. But the world is a very much more complex place since the 90s, so whether the conventional Keynesian monetary policy will still do the trick ? It just isn't that simple.
If interest rates are not increased proportionally, but income is, inflation is going to be used to pay off debt loans cheaply at the expense of the savers. Making reckless borrowers, clever rich, at the expense of conservative.
In the face of Covid, the central bankers adopted the Politicians' Syllogism:
"We must do something.
This is something.
Therefore, we must do this."
Inflation is close to double digits...what is this men talking about...I was paying 1$ for 1 litre of gasoline in 2020...now I pay 2$ for it...it is 100% price rise...100 looks like a 3 digit number to me
I think old Merv has an IQ of about 80, adjusted for inflation.
Lmaooo
As someone with about £ 23m of assets none of this will affect me much.
Never before in history has there been a rapid expansion of money not accompanied with inflation.
Milton Friedman
Mervyn "Brexit is good" King lecturing on prices? I'm out 🤨
The best way to beat inflation is for people to group together and stop spending for a period of a few months. Cold showers, turn off your gas supply, cut back to an extent where these companies will start to notice. They will act
Just look at the oil and gas companies and their huge profits. Price increases are only going to their pockets!
As a foreigner, I cannot understand why anybody interviews Mervyn King after he promoted no deal Brexit and said that Brexit would not make any dent on the UK's GDP.
Aside of that, one cannot compare COVID to the 'Spanish flu', because the interest rates, investiment in a war-time economy etc. are completely different at the time the decisions were made. That is, Mervyn The Lord King Ridiculous is suggesting that people should have gone bankcrupt so that everything would be better right now.
Furlough was popular at the time because the downsides come later. Now we see higher taxes to pay down the debt levels that resulted. But, it has been made worse by the supply chain shocks, commodity price rises and global instability. Some of this inflation will be combatted by recessionary forces. The other exogenous factors may not be, and the problem then will be wage demands at near full employment currently. The threat then is an inflation spiral as wage rises lead to more inflation ad infinitum. The difficulty I see in the current situation particularly is the debt level both public and private in the context of a stagflation environment. The exact transmission environment is difficult to foresee, but pain is a certainty.
Now, we are to discuss the mandate of the BOE. For years there was recognition that that central bank independence leant credibility to monetary policy, and kept interest rates lower. The Bundesbank model, for example. Now, apparently monetary targeting is to be the answer, and political interference. I can see a grave risk that political meddling is about to make a bad situation, just a lot worse.
We need to end all private central banks. Eliminate all debt based currency and go back to a gold backed money system issued by the government and not a private bank that issues currency at interest. And no digital currency. All cash based.
As Putin did
yes indeed, a very unpleasant period for the working class
I'm not buying the point that we are in aperiod of "bad luck". Not for a single second. Putin, for instance, has been very very clear for years about what Russia's position would be if the Ukraine tried to join NATO. Many scholars on the Russia situation have said that the West pushed Russia into a spot, where war was the only likely outcome. We (The West) could have avoided the additional energy and food crisis associated with Russia and Ukraine, by not staging the 2014 coup and not stifling the Minsk Agreements. Heck, Trump warned the Germans in his UN speech that they were dangerously dependent upon Russia and the Germans laughed at him.
As for Covid, I think a lot of that was also known, but what Govts should never have done, is shut down the whole economy and bring in vax mandates. There were other softer methods that could have been empoyed. And....they did not need to print money like they did.
I believe that this had been orchestrated as a part of The Great Reset. If not, that's an awful lot of very stupid decisions made one after the other.
Brexit! Brexit! Brexit! The elephant in the room! Yet no mention of it?
Britain should leave the eu!
Brexit is a bit of a disaster for UK - We all see that but inflation has been caused by global QE
Wrong! Wrong! Wrong! Look around the world… inflation bad everywhere. Get over Brexit (from some one who voted remain)
Melvyn King absolutely destroyed the economy by not letting Lloyds acquire Northern Rock because of Moral Hazard, then embarked on the greatest episode of Moral Hazard of all time
"what's government's were doing was enough" like wasted 10bn on track and trace
UK inflation is nearer 20 % not 10% .Many food/drink items are 50%. House prices need to collapse 50%
A very informative interview. "Stuff happens" so forecasts are always likely to be wrong and the King Canute theory of money supply were good points. Also, i like that he showed an empathetic understanding for the impacts of people on low incomes and the ripply effects of that through the wider economy.
> he showed an empathetic understanding for the impacts of people on low incomes
Words are cheap.
So it was enough to forbid people from making a living, but what was really too much was then giving them some freshly printed money to quench their anger. Sounds like the problem is wrecking the wealth of the middle class. The former, not the latter.
No one seems to be allowed to mention the devastating effect of Brexit, probably the single most important factor in the expected collapse of GB
How does it explain world wide similar problems other central banks and economies are having ?
FED: US will go into recession
Remainer: Brexit
LOL
The idea we can't do anything about keeping price increases for energy down is just BS. It's a policy decision by governments, France capped theirs at 4%. Meanwhile in the UK enegy companies are making millions for their shareholders and prices to consumers going up 100% plus. Legalised tax evasion with tax havens? Try tackling that. This guy is just promoting the status quo, making the rich richer and the poor poorer.
I remember 19% inflation in the seventies where my bank savings dissolved into nothing.
We were constantly told by the politicians that caused it that it had a good side. Well that was where I learnt to hate with a purity, politicians and smart arse academics
Very disappointing and simplistic analysis of inflationary trends from a pandit of this calibre, blaming only money printing. In 2008's crisis central banks printed enormous amounts of money but inflation didn't skyrocket. So it is not as simple as that. This pandemic-money wasn't handouts it was just enough to keep the economy going, protect most people's jobs and businesses. This money didn't lead to a savings surplus for most people. The fact that people had to stay in their homes and could not spend as much money as before meant that they were forced by the circumstances (everything other than supermarkets being closed) to save money. Therefore with or without the central banks printing money post-pandemic consumption would obviously increase as it did due to accumulated savings. At the same time many employers laid off their employees and then were rushing to hire people back and competing with each other over who will get to hire more people and benefit from this consumption boom; therefore wages in many sectors increased (and so did the spending power of some people). Then we should also consider that the global supply chains collapsed due to the pandemic disruption and haven't fully recovered yet, which is the reason why the prices of most products have increased. On top of that we have the added inflationary pressures on food prices from the war that Russia started in Ukraine and the skyrocketing energy prices due to the sanctions against Russia. The increase in gas and petrol are trickling down to all sorts of products translating into more price increases. Lastly we have industries that may just be exploiting the opportunity to increase their profit margins using the inflationary trends as an excuse. Thus it is not simply "money printing"
The energy prices went up way before Russian invasion of Ukraine, what was the rational for that? Surely that can't be blamed on Russia like most of the current problems that the western world is experiencing
“I don’t give advice to my successors, and I’m not prepared to do that”. What a classy and measured response. A lot of people would relish the opportunity to put their stamp on things and espouse their opinion, not this chap, brilliant.
Only because he doesnt have a clue.
Stock answer maybe words are their jobs after all
Probably had a clause in his former contract of employment, which would cut the index link out his pension. Nice gag!
Gentleman? Or knows the central bankers know exactly what they are doing v and he isnt able to disclose what? Central bankers have a liquidity crises, and this former executive hasnt the heart to touch on the potentially most important piece of information? I dont buy it. He is part of the scheme. He will make money knowing the plan, and will do so because the rest of us wont figure it out, in time
These crooks are not worth praising imo.
2:24. Yes, but the chief reasons were cheaper imports (deflationary) and the impact of IT on the economy. AS for bring inflation back down to 2%, the solution is quite simple. They will continue to fudge the figures and subsidise the economy with debt with one difference, it will be so much easier when everything has been digitalised. It is nothing more than the inevitable dumbing down game.
Great interview. He speaks so much sense and puts perspective on it all.
He is a crook
Mr Smug was in charge of the Bank of England in the run up to the biggest banking crisis in UK History. It''s amazed me ever since that he walked away untainted. Can anyone explain this? It's galling to hear him offering his 'expert' opinion on other crises.
Was really nice to hear from sir Eddie
Use pure class Hearing him speak
Is a reminder of how low we have fallen
In America, the Federal Reserve used to keep 10 per cent of all money created in reserve, however during covid they changed this to zero!
Why do i have this feeling that this so called inflation is only affecting the ill informed, I've been reading up on recession and the market, apparently both bull and bear market condition provides equal avenue to accrue massive gains, and a news article particularly mention a 32 year old that made $180k in 5weeks, how do I learn and apply these strategies, my portfolio has been stagnant for months.
There are a lot of strategies to make tongue-wetting profit especially in this down market, but such sophisticated trades can only be carried out by proper market experts
true, A lot of folks actually downplay the role of a port-folio a.dvisor these days. I remember couple summers back, after a lengthy divorce I needed a good boost to help my business stay afloat. With the aid of an port-folio-coach, i grew my reserve of 300k to almost 850k that same year. Helped me a lot.
I am a simple sole but I think nearly everyone misses a vital point, in the 80’s and 1990’s more and more goods were made in the Far East, a lot of prices dropped noticeably, due to their very low labour costs, or didn’t go up for years. For a period the west didn’t loose jobs and had cheaper and cheaper goods in actual and real terms. We exported our inflation and imported cheap goods, that period is well and truly over.
Everything that has happened in the last 2 years has all been by design,the cargo ship stuck in the canal,Covid,The vaccinations,The war in Ukraine,Monkeypox,rampant inflation,are the central banks really that incompetent?,given the fact valuable lessons could of been learnt from such recent history.
We are being led backwards in time to 1984!
Bollocks and learn to punctuate.
The most logical discussion on the subject heard so far
He has double face.
Never trust a liquid mind like that.
So why not then doesn't he speak about going back to the Gold Standard, and do a live tv audit of all the gold UK has..... ? !