Quixotic Enquiries | Tilting at the Economic Windmill

Time 2020-09-25 14:05:39

Web Name: Quixotic Enquiries | Tilting at the Economic Windmill

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by jonquixote | Feb 25, 2015 | Article, FeaturedIntro I can still dimly remember Black Wednesday when the UK crashed out of the pre-Euro Exchange Rate Mechanism. George Soros gleefully telling reporters he had made more than a billion GBP on that single day. Norman Lamont meanwhile was a good deal less happy as he announced the suspension of the pound after losing several billion pounds of taxpayers money trying to prop up its value. Few people realised back then that the speculators had helped the UK sidestep what is now might be considered the biggest mistake of post war European politics the creation of the Euro. Of course there were those who warned that the Euro would amplify the differences in productivity between the different regions of Europe enlarging rather than ameliorating the differences between nations but they were seemed in number next to the happy clappy big government brigade. Following the financial crisis this problem has been thrown sharply into focus with speculation that Southern European states may be ejected from the currency union. In this article I will look at the growing divergence in the Eurozones economies since the crisis. The Data Naturally, the EU produces a plethora of data items for our perusal. All the data in this article were obtained from eurostat Incomes Net National Income is somewhat more representative of what is happening to actual incomes than GDP since it excludes capital spending and also money that disappears abroad just as soon as it touches the ground (hello Irish economy). The north-south divide is immediately clear with incomes stagnating across the south while they continue to grow in the north... by jonquixote | Feb 8, 2015 | UncategorizedJust a quick chart for now. In red is the year-on-year excess increase in the money supply less the gross domestic product. Green and blue show the year-on-year excess increase in the incomes of the highest earners over the average. Unlike when viewing the here a clear difference does exist between the Thatcer/Major governments, where the excess increase in the money supply is correlated with an increase in the incomes of the wealthiest, and the Blair/Brown era where the incomes of the rich largely increased along with those of everyone else. Despite this, there is something of a consensus that the rich have been getting richer. Just not by increasing their... by jonquixote | Feb 6, 2015 | ArticleIntro Growing up, I often found myself parked before the morning news blaring away on the television. I don t know if my mother hoped that I would absorb something useful from this or just hoped it would shut me up What I did learn was that the price of oil was about $20 per barrel. Every day. Or so it seemed. Of course it is a bit more expensive these days. It wasn t until I became a motorist some years later that I thought to invert this relationship and consider what a dollar is worth in oil instead. This approach surely makes more sense, after all the oil is something real and useful, limited in supply. Whereas a dollar or pound or euro is just a piece of paper that may or may not be worth anything and of which bankers can create as much as they like. Today a dollar is worth about 4 UK pints of oil. In the previous article we saw how the total quantity of Pounds had increased over the last 40 or so years and speculated that this would be reflected in the prices of assets and commodities this will be shown to be the case below. Assets prices which are likely to show a good correlation with the quantity of money are those whose quantity is relatively fixed As Mark Twain once quipped buy Land, they re not making it anymore . In the UK building of new property is heavily regulated meaning that its quantity is relatively fixed also making houses a good asset. Until relatively recently gold was very widely used... by jonquixote | Feb 6, 2015 | ArticleIntro Financial Crises and will it won t it double dips have receded into the second fastest growth in the OECD. Now, the once architect of the Omnishambles, the chancellor, seems to bask in the reflected glory of this unlikely economic resurgence. This article is the first of a series looking at some of the wads of economic data fabricated by the Bank of England and the Office for National Statistics which will attempt to discern how the recovery shapes up in a historical context. About inflation In particular I will look at the relationship between the growth in the money supply, GDP and household incomes over the last 25 30 years. For people unfamiliar with economics the term money supply which never features in the news despite its obvious importance. If you search the web you will find a variety of articles full of different opinions on this subject. Very simplistically the money supply simply reflects the total amount of pounds in the economy. Over time this quantity has grown enormously. I am going to take it as read that the reader can see that this growth is associated with inflation. A great deal of information about this is available around the web. Inflation has a particularly insidious nature devaluing all the gains of the past that the present might seem affordable. Some people might find this acceptable, after all the poorest have very little savings anyway. In practice though no one with any sense stores large amounts of wealth as cash for long periods. Poorer generally less educated people however store most of their... by jonquixote | Feb 6, 2015 | Featured, NewsWelcome to Quixotic Enquiries. This is my first foray into blogging to apologies in advance for any technical hitches! Quixotic Enquiries will comprise my reflections on the state of the UK economy. I am a physicist by training however the fallout from the financial crisis as well as the increasing financial inequality in the UK have persuaded me like Isaac Newton before (I wish ) to investigate the dismal science of economics. Since I have no professional training whatsoever I cannot guarantee that I won t just be tilting at windmills in the manner of Cervantes great hero. Nevertheless the performance of actual economists often appears itself to be so dismal as to imply that such training has little value. To begin with I will be investigating inflation, growth, asset prices and the link between these and income and wealth inequality. Sit tight and enjoy the...

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