A sideways look at economics
‘How do we know that two and two make four? Or that the force of gravity works? Or that the past is unchangeable? If both the past and the external world exist only in the mind, and if the mind itself is controllable – what then?’ – George Orwell, 1984
How do we know that the mini-budget caused the pound to fall? Or caused gilt yields to rise? How do we know that the pension funds that were forced into emergency sell-offs of 30-year bonds, until the Bank of England intervened on 28 September, wouldn’t have fallen into trouble anyway? Or that the Bank of England itself, by not raising interest rates enough before the budget, wasn’t responsible for interest rates rising after the budget? Or that things wouldn’t have got better if the Bank hadn’t intervened?[1]
Welcome to the new UK.[2] Happy Friday.
[1] https://committees.parliament.uk/publications/30136/documents/174584/default/
[2] Jacob Rees-Mogg is the UK business secretary; on Wednesday he defended the mini-budget, and suggested the BBC broke impartiality rules. https://www.bbc.co.uk/news/business-63230001
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