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What Mervyn King didn’t say


Mervyn King, Governor of the Bank of England delivered a speech to the Institute of Directors in Liverpool today and it has been published on the BoE Website.

While I do not claim to be a distinguished economist like the Governor, I am not bound by the politics of his office and can add what I see as a few unsaid truths.

Firstly, a significant part of the problem is clearly extreme polarisation of wealth. Basically, the rich have (though spivving and speculating on stock, currency and property markets) acquired disproportionate wealth. While a significant number of people are indebted to them because of loans to pay for overvalued property.

If property is overvalued, then food is undervalued and the unprecedented availability of low cost junk food has contributed to obesity and wider social and mental health problems caused by poor diet.

Unfortunately the natural economic rebalancing of property deflation and food inflation (combined with rising fuel costs) will cause pain and misery to many.

While the spivs and speculators are a primary cause of the problem by syphoning funds from people who are poorer than themselves and taking advantage of globalisation, the trade unions also need to look back at historically high wage demands and failing to provide a global solution to workers rights. This effectively exported Victorian working pay and conditions to the developing world and rendered big chucks of our manufacturing industry inefficient.

If you don’t grow, mine or manufacture then you can’t really create true growth- Just the pretend growth of the last 30 years in the UK. Albeit, the North Sea Oil and Gas Industry was a noticeable exception and efficiencies have been created in through improved infrastructure.

However much of this is just a sideshow and I must get back to the main point at hand. This continuous and unstoppable force which has been siphoning wealth from poor to rich.

Not only is this unjust, but it is the root of economic failure because poor people tend to spend their money (they have to usually) and the rich have so much that they can’t possibly spend it and so without monitory exchange then economies stagnate.

The solution: An unprecedented global agreement for governments to print money rendering the assets of the super-rich spivs less valuable but to apportion this sensibly to small savers and to stimulate growth while protecting the most vulnerable. Basically it would be payback time for the spivs and it would create significant long term inflationary pressures if it was not managed carefully.

Here’s one that you might have seen on youtube.


From → Poverty

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