I am making this link as a result of the recent focus on the economic situation, rise of the price of fuel and food to further underscore how quickly this nation and the rich countries whip themselves up into a panic mode. It may be that we have become so wrapped up in ourselves that this is the best we can do.
Why is it that when the Governor of the Bank of England utters his words that what we end up with is a divine economic revelation on inflation: it will continue to rise increasing the risk of ‘stagflation’ in British economy. Fall in house prices (long overdue given the ridiculous value for a roof), rise in food and energy prices – all of this would push consumer inflation above 4%. What are these folks concerned about: their profit margins or their balance sheets?
One cannot help but feel that our economic ‘reasonings’ are skewed: what are these people talking about with their 4%, 3.3%, 4.3%, and 3.1% increases, instead of a 2% target for inflation? What should countries like, Guyana, Jamaica, Haiti and numerous African countries with their 165%, 215% and 300% inflation think about this present conversation? In these countries one needs a truck or bullock-cart to transport the local currency to do Saturday ‘minimalist’ market shopping: that is if you can find the money in the first place. They do not panic: they do magic with their little economic means and turn overnight into economic migrants! That, I concede, may be something new for the English!
The talk of and panic around the 4% inflation is morally disgusting and scandalous when placed in a global context. Of course, a reality is the fact that those who will suffer most in the UK are not those whom the economic policy makers and pundits have in their view. Do you think they are considering the folks who share in £1.4 trillion of personal debt in the UK? In fact, the theory is that we need to spend more, borrow and get into debt in order to feed the economic engine. Who do you think are the ones to save? Perhaps, all the CEO’s and Corpocrats can begin by taking a 100% reduction on their yearly income or if this will cause them to suffer from extreme deprivation they can at least do all the shopping, borrowing, and saving to keep the economy from overheating.
Amateur as I am in economics, I am certainly aware of what a small percentage increase of inflation will mean in terms of the loss of revenues (over £9bn to be added to the shortfall already in place). But at what point are we going to talk about changing life-styles, spending less on rubbish commodities and unnecessary things, doing economics differently, making sacrifices, raising taxes and seeing how the revenues are translated in real services?
The more we continue to want to live in and blow our economic bubbles – the more insecure and unpredictable our economic life will be and panic will more than often be our lot.
© copyright Jagessar July 1, 2008
