‘Wages and remuneration’ are not what’s keeping inflation high, says Bank of England at interest hike press conference – it’s how much you’re being forced to pay for food and clothes. But while companies gouge record profits, the Establishment is making you poorer
In an astonishing – or perhaps not, given the arrogance of the Establishment – Bank of England governor Andrew Bailey just admitted, at its press conference to announce yet another interest rate hike that will impoverish huge numbers of people even further during a ‘cost of living emergency, that your wages are not causing inflation.
Instead, companies making huge profits in the food and clothing sector are pushing up prices and driving the headline rate of inflation. In other words, what is causing inflation is them making you poorer.
But the bank is putting up rates anyway, pushing ordinary people who are already drowning even further underwater in the name of a crisis they didn’t cause – and are not fuelling now:
Bailey is paid around £500,000 a year – ‘around’, because when asked about his salary last year, he said:
I can’t tell you exactly what it is, I don’t carry that around in my head.
The rich are laughing at us all while fattening their offshore bank accounts and those in power know they’ll have cushy, highly-paid directorships to go to when they’ve had enough of being the hatchet-men and -women for the so-called ‘elites’.
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Interest rates have now been raised to 4.5% thus bringing them into line with Liz Kendall’s share of the vote in the 2015 Labour leadership election!
Spain has the lowest inflation rate in the Eurozone 3.1%. This year Spain has increased the minimum salary and minimum State Pension by 4%. Thus, 0.9% above inflation. In the last 4 years the Spanish government has raised the minimum wage by around 40%
What is the secret that allows Spain to keep low inflation?
-Private sector landlord this year are only allow to increase the rent to tenants by 2% and in the next two years (up to 2026) by 3% per year maximum. Tenants have the right to tenure of a property for a minimum of 5 years rather than 6 months.
-Last month the Spanish government passed legislation forcing the companies supplying gas and electricity to cut their prices by 30%
-The cost of public transport has been kept below inflation.
-The government has also close loopholes that favoured tax avoidance.
The Bank of England is right, it isn’t wages that drive inflation up but the greed of the capitalist class. Unfortunately, the Tories will no take the necessary steps and neither will Starmer’s Labour.
Another problem, food prices aren’t going to go down any time soon. The south of Europe is suffering from drought that has compromised the harvest of olives, seeds, nuts, wheat, fruits etc. Hence, expect higher prices for sunflower oil, olive oil, bread, pasta, oranges etc.
The Spanish and Portuguese governments, will be prepared to regulate the price of essential foods, so that even the poorest would be able to afford 3 meals per day. The British government? Somehow, I seriously doubt it, no matter who governs Labour or Tory still the same.
But not to worry our MPs will be putting in for a above average pay rise
Jeff no only their salaries, but expect to increase their expenses too.
Does any one know, than when MPs lose their seats they get a one year salary severance? This is apparently regardless of whatever they get a job before the next week.
Then their is their Pensions, better than any pension scheme going around.
But not to worry our MPs will be putting in for a above average pay rise 7
Raising and lowering of interest rates by governments or ‘independent’ central banks like the Bank of England has always been an important way for them to rig the class struggle between labour and capital in their countries.
Raising interest rates in a country reduces borrowing by its businesses for investment (to maintain, expand, or develop their businesses) and by its consumers (overwhelmingly workers) for consumption below what it would otherwise be.
This reduces demand and sales for investment and consumer goods in that country, and, this eventually causes workers in these industries to be laid off, and/or, extra workers not recruited.
In short, raising interest rates increases unemployment and under–employment beyond what they otherwise would be.
This alters the balance of class bargaining power between capital and labour to the benefit of capital.
From this perspective, while the current inflation is undoubtedly the result of profiteering rather than wage increases, this doesn’t mean that the Bank of England is being irrationally delusional in raising interest rates. Raising interest rates will still alter the balance of power between capital and labour in favour of the former.
In doing so, it will help capital resist the pressure from workers to win wage increases in line with, or greater than inflation.
And, in doing that it will help the class of capitalists to keep hold of the extra profits that they’ve grabbed through the profiteering that has caused the inflation.
In other words, the Bank of England is acting pre–emptively to help protect profits, profiteering, and capital’s share of the total social income – a share which is disproportionate, beyond social control, and increasing.
We can add an international perspective to this: in our neoliberal world, it’s the central banks of the most powerful capitalist countries that set the pace for interest rates in all capitalist countries. Above all and overwhelmingly, this means the central bank of the USA – the Federal Reserve: the ‘Fed’. In this way, the US capitalist class and its governing elite seek to manage the class struggle between capital and labour across the whole capitalist world.
Interest rate rises don’t work unless they are higher than inflation
Yes it is argued that they want to create more unemployment to drive wages down, as big business is sat on £950b it won’t invest (New Left Review).
Perhaps as Right Wing Labour has no real policies, the Tories really have only two:
1.Cheap Labour.
2.Stuff the mouths of the rich with gold.