Ask HN: What Is Happening in the UK? • Hacker News Board

Re: Ask HN: What Is Happening in the UK?

#231

Post by tmaly » Sat, Oct 01, 2022, 10:26 PM UTC

hunglee2 wrote: post #24

In simple terms, the Bank of England and UK Gov are pursuing conflicting economic policies, BoE trying to take money out of circulation through hiking up interest rates, whilst UK Gov is putting money into circulation by proposing massive debt funded tax cuts. The obvious incoherency of this then led to the markets losing confidence in the UK economy, crashing the value of the pound, which in turn makes the planned U…

What about the British Pension funds speculating the derivatives?

https://www.cnbc.com/2022/09/30/ron-insana-something-big-cou...

Re: Ask HN: What Is Happening in the UK?

#232

Post by tmaly » Sat, Oct 01, 2022, 10:32 PM UTC

candiodari wrote: post #113

scrlk wrote: post #58

The Bank of England's announcement that they will restart QE (a.k.a. money printer goes brrr) on a "temporary basis" was driven off the back of UK pension funds facing massive margin calls due to the spike in gilt yields. There's a good article in the Financial Times that explains the mechanics behind it ("LDI: the better mousetrap that almost broke the UK"): https://www.ft.com/content/f4a728a5-0179-48bd-b292-f48e30f…

A cynic would say this is by design. The government created those funds to avoid paying pensions, and spend the money themselves (pension funds are designed to let the government spend all the money they collect, increasing government debt. They do not have the choice what to invest in), and this is merely a continuation of that policy. That these funds are going to crash is a certainty, they're designed to delay it…

What is the exact relationship between the amount of money introduced into the economy and the decrease in purchasing power?

I have yet to see an exact model that shows this. Obviously it could not be one to one because of residential/commercial credit based on a fractional reserve system.

Re: Ask HN: What Is Happening in the UK?

#233

Post by mbrodersen » Sun, Oct 02, 2022, 12:20 AM UTC

colinmhayes wrote: post #173

rvieira wrote: post #170

Earlier quoted context omitted.

(Not an economist by any measure) Can you explain "tax cuts which will have a big inflationary impact". The 20% bracket went down to 19%. The 45% bracket disappeared (now included in the 40%) which is only for £150k+ earners, which is a tiny minority in the UK. I don't think the actual numbers move inflation. Isn't it more the conflicting policies (BoE and gov) in theory and the perception of them not being in the sa…

Increasing the money supply causes inflation. Rich people don't just put their money under their mattress. They invest it which means it's being given to other people who use it to buy things.

Or the invested money will simply drive up share prices without giving anybody else money to buy things.

Re: Ask HN: What Is Happening in the UK?

#234

Post by adammarples » Sun, Oct 02, 2022, 7:44 PM UTC

origin_path wrote: post #183

rvieira wrote: post #170

Earlier quoted context omitted.

(Not an economist by any measure) Can you explain "tax cuts which will have a big inflationary impact". The 20% bracket went down to 19%. The 45% bracket disappeared (now included in the 40%) which is only for £150k+ earners, which is a tiny minority in the UK. I don't think the actual numbers move inflation. Isn't it more the conflicting policies (BoE and gov) in theory and the perception of them not being in the sa…

Yeah, the idea it's the tax cut isn't correct. That's not even a big tax cut. It's the energy price cap that utterly dominates. The left will insist otherwise because they hate tax cuts and love price controls, but that doesn't make it accurate.

The carnage happened at 9.30 am on Friday directly after the budget announcement, caused by the budget announcement. Energy subsidy was proposed earlier in the week. The market suddenly realised that kwasi and liz are irresponsible idealists and acted accordingly.