America, Japan, UK and Europe all badly want inflation and central bank interest rates to rise — Oh, so badly! — instead of remaining at the present absurd levels of 0% or 0.5% p.a.. The Institute of Directors want to see them rise also.
Central banks (in other words, governments, despite their supposed independence) want them to increase because they want to resume playing the game of reducing national debts by means of the margin between hoped-for inflation — and thus consequential taxation — and interest rates, enabling them to start paying off national debts, which they’re not able to do at present.
The Institute of Directors want perceptible inflation and interest rates to help them to move prices upwards unobstrusively, but also to bankrupt millions of small businesses and incorporate them as franchises.
But interest rates are not moving! Nor are they ever likely to move while the consumers in the advanced world remain largely a replacement market only for the time being — there not yet being any uniquely new consumer products that could be clamoured for, nor better quality educational and medical services that they can afford.
This morning, Ambrose Evans-Pritchard, like many others in the West, is once again disparaging China’s clunky ways of doing things with regard to its financial sector. Three days ago, when the Shanghai and Shenzhen stock exchanges dropped precipitously, the Chinese government almost immediately made many share-selling operations illegal — on pain of a year or two prison — quite unlike our own “dear free market” (as Queen Victoria would have called it). But it did the trick. If the panic had gone on for a few days longer then China might have experienced the Wall Street Crash of 1929 all over again and, by now. all of us heading into another Great Depression.
The world economy is in a very delicate state at present, but it will have to remain so for a long time to come while we gradually ease ourselves away from the growth in consumer goods of the last 250 years and towards a much more sophistcated world of advanced services. Only those countries which can more nearly maximise the genetic potentialities of all its children, including those of the poor, will be those which keep their heads above water during these coming decades, At present, when politicians and central bank governors are still trying to imagine that the heady days of 2% to 4% annual economic growth can return, the waste of our intellectual resources must be colossal