This is an old-style financial crisis but not all the old answers will work. Freezing the pay of doctors and judges may have worked for the Wilson and Heath governments but it has little impact when inflation is negligible or negative.
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Have the laws of supply and demand been repealed? Interest rates have come down, yet borrowing has fallen.
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Capitalists might not like to hear this. But it looks like the biggest ever experiment in Keynesian economics might just have worked.
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Hurry hurry while stocks last? Companies that want to issue bonds because they cannot borrow may find the government has got there first.
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Deflation is not a good thing, but while Britain has it, business should exploit it. And it’s going to go lower.
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Instead of using the latest cuts in interest rate to reduce mortgage-borrowers’ monthly costs, why not use the saving to reduce their loans? It wouldn’t directly stimulate the economy but it would boost the banks and make people richer.
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We shouldn’t worry that the Bank of England risks losing its independence: governments are paid to govern, not to outsource their dirty work to unelected central bankers.
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All those years battling against high inflation and now the worry is that prices will rise too little – or not at all. No wonder the government is worried: it will be the biggest loser.
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As if we didn’t have enough of a financial collapse, the UK is also facing that regular curse of the past – a sterling crisis.
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The government handed interest rate decisions to the Bank of England in 1997. Unfortunately the Bank handed rate decisions to the market many years before.
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