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Thursday 11 December 2008

how to stop the run on sterling - reject "hair of the dog" economic policy

In view of the run on sterling and Germany's criticisms of UK and US "hair of the dog" economic policy, I have this morning sent some well-meant advice to the Chancellor's advisers at HM Treasury.

The recipients are:

Catherine Macleod (Special Adviser)
Sam White (Special Adviser)
Andrew Maugham (Council of Economic Advisers)
David Pinto-Duschinsky (Council of Economic Advisers)
Geoffrey Spence (Council of Economic Advisers)

Subject: "hair of the dog" economic policies cannot reverse run on sterling

... but sensible economic policies will!

A sensible economic policy would consist of

(1) cutting taxes AND

(2) cutting spending

For all the usual reasons, the government will NOT be exercising Option 2. The Tories hardly dare say it themselves. Cut public spending? Why, that is like proposing that we all start eating babies!

However, were you to exercise Option 2, the run on sterling would stop and might even reverse, without any adjustment to interest rates.

Try it and see!


But Brown, Darlng and Mandelson will not dare, for they worship at the shrine of the Welfare State and I am asking them to slay their sacred cow.

Perhaps their advisers are braver than they are.

2 comments:

rgundapa said...

Well meant advice!!? I am glad they wont give a shit to your advice!! Please disclose what you studied in economics and what you achieved there, you arsehole english nationalist!!

Claire Khaw said...

A interesting accusation which I will add to my already extensive collection.

I do have an A level in Economics.

What qualifications does "rgundapa" have other than one in invective? I fear he cannot be either a wise or nice person. And even if he worked in the Fed or the Treasury, there is still no guarantee that his knowledge is necessarily of the "non-arsehole" kind.

The secret is simply in keeping to the boring old rule of keeping a balanced budget and not borrowing and lending irresponsibly, not following some black box theory that is sold to you by some charlatan casino bank who gets paid to implement quantitative easing.

I have no fear of anyone accepting my advice. If it is cheap, sensible and effective, it is guaranteed not to be. It has to be expensive, insane and ineffectual to attract government approval.

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