One of the big questions this year, I think, will be what happens to inflation. I think it might dip in the face of credit destruction by banks, but watching it in the medium term will be fascinating.
Just a quick recap: the rate of inflation was rising, and we were told it was ‘transitory’
and would stop rising soon. Then it kept rising. Then Russia invaded Ukraine,
and, a long time after it started rising, we were told that is started rising because
of the invasion.
Everyone nodded, and now that’s the accepted original cause, even if
the cause of what happened, happened after what happened. It all makes perfect sense. Shhh now, shhh.....there there...
The magnitude of its importance however is reflected in the fact
it was one of the main points covered by Sunak today in his big speech. All in
all, I thought it was quite an interesting speech by Sunak; in case you missed
it – he basically set out the Government’s priorities.
It was quite interesting in the sense that he gave a speech, and
it has been thoughtfully considered, and everyone is discussing the pros and
cons etc, but no one is going “WHAT THE HELL! WHAT IS THIS? THIS IS MAD! WHAT
HAS HAPPENED? ARGH!”.
Why should this have been the normal rational response, in a
normal, rational world? Why is the reaction that has occurred proof that all of
our elite are completely insane?
Well, its quite straightforward. The position of the government now is:
1. The Bank of England is in charge
of controlling inflation, and has an inflation target of 2%.
2. The Government now also has an
inflation target, but this is 5%.
3. Inflation is also, according to
the government (and the Bank of England) largely down to factors out of Bank of
England or Government control.
All makes perfect sense,
doesn’t it? It does if you learn to hide from the cold, harsh wind of reality…
This is like me on New Year’s day, possibly still quite drunk from
the night before, saying:
“Right! I’m too fat. I have a plan. Weight loss is outsourced to a
third party, and it’s their responsibility for making my weight loss plan. So, I
will also set my own, different weight loss plan. Oh, and also, whether I lose
weight doesn’t matter, as whether or not I lose weight is down to factors that
are beyond my control.”
And everyone goes: oohh clever.
I suppose, if you were trying to insert some rationality into
analysis, you could also say that it’s quite interesting that he listed various
priorities - “the People’s Priorities” (or the Priorities of People's Hearts maybe, I wasn't really listening at that point) but mentioned nothing – NOTHING – in his priority list about housing.
From a certain section of the commentarial (any journalist under 40 who can't afford a house, basically), there comes the constant cry: build more houses! But now, interestingly, the average cost of building a new house is slightly above the average cost of a house, nationally, depending on your data source. So it becomes even more paradoxical if you think this is the only answer: the policy would be to set another target the Government won't control, and to ask house building companies to solve the problem by being in charge of building houses, at a loss on each house they build, and also to reduce the price of their monopoly product overall, but with no incentive to. Hence possibly why he ignored the topic completely. He probably thought: "yah know what? There's enough madness already for one day. Just right."
I would write more about the rising cost of construction now, but
I mean, what’s the point? It’s 2023. It’s time to let go. Nothing is real now,
the last glimmers of sanity have been extinguished in the rain of the first
week of January.
I've said it before, and I'll say it again: it's time to sit back, have another biscuit, wave good bye to your loved
ones, and set sail on the sea of madness.
Happy sailing.
