It’s time to dig up some gems from the Fortune & Freedom reader mailbag – thanks for your messages. The first two are all about the monetary bonfire which central bankers have ignited and unleashed on the world.
Nigel as usual makes some very good points. The problem is that the BoE [Bank of England] has had interest rates nailed below 1% since 2008. Since it was founded in 1694 it has never had rates this low for this long. They can’t raise rates above the CPI rate of inflation because they would decimate the banks, who would never be able to fund their highly leveraged balance sheets at over 6%.
In addition, the stock market would implode, the housing market would go into meltdown, as people wouldn’t be able to buy houses and pay mortgages at the much higher rates.
So the central banks, the Fed, BoE, ECB [European Central Bank], are going to let inflation run, continue to jawbone as to what they might do while all the time doing next to nothing. Raising rates by a 0.25% or 0.5%, is like your house going up in flames and when the fire engine arrives they have a bucket of water on the back to throw on the fire, when they should be connecting a hose up to a water mains.
We are approaching the end of the current fiat money system. A system based on debt, and a debt that can never be repaid, as paying debts in debased currency is just another way of defaulting on the debt.
The powers that be are desperate to prolong this madness, by colluding together to keep this dying patient alive…..they will fail, and when they do, it will be a religious experience to people all over the western world.
People will finally learn that what they go to work for is not money, that it’s credit, that their houses are measured against a depreciating asset, and that they are nowhere near as wealthy as they thought.
The world will have to return to a hard money system, currencies will be backed by gold, people will be more free than they are now, and will learn to live within their means.
Reader D points out that raising interest rates is not very likely to provide more gas, new cars or wheat, and will therefore not help with inflation:
Interest rate rises will add to the damage and not solve inflation, they were never going to and never have. Inflation is an excess of demand over supply. Cutting demand is a poor answer, increasing supply is a better one.
We need to be adding the nuclear reactors from the 27 submarines in storage in Devonport to the grid as a short term measure and start building now without inquiries or even planning permission as well as immediately reopening fracking and offshore oil and gas so stupidly closed down.
Indeed we should also reopen coal mines […]
All of this needs money, investment, lots of it. Increasing interest rates makes this harder to afford, restricts the much needed investment so is exactly the wrong thing to be doing.
IF you think that reducing demand in the short term is desirable:
a) Make home office compulsory, which will reduce fuel for vehicles, congestion and make the existing lorries more efficient (they won’t sit in jams as long).
b) Bring in rationing, for food, fuel and electricity immediately.
c) Build up our armed forces as a matter of urgency, this will reduce unemployment and the costs associated with it. Build planes, ships, tanks, guns, ammo in the UK do not import it. Get those Hawk jets back in the air, this time with missiles!
d) Use taxes to cut demand and raise revenue for this, do not use interest rates. Interest rates stop companies investing and only hurt the percentage (usually the middle class) with debt while leaving the rich and poorest untouched… I know the rich don’t like their wealth being taken and want to continue a champagne lifestyle but the reality is we are at war, this is World War 3, it is going to involve a lot of destruction and we had better be getting ready for it.
D may be right about the specifics, but don’t forget the aggregate nature of the inflation statistics. Hiking interest rates will solve the problem of inflation by causing the economy to crash. This won’t solve the issues underlying inflation, such as shortages and supply chain problems, but it will pull the rug out from other prices in our economy sufficiently to offset the higher ones elsewhere.
Cutting off your head to spite your inflation mandate, in other words.
At least Putin has solved our energy problems… by making us ramp up renewable energy.
This reader is particularly impressed:
Please can you forward this information to Nigel with regard to solar panels on the roof.
I fitted mine in 2007 with a 50% government grant. I was of the opinion that I was doing my bit to save the planet, having been largely successfully courted by the climate scare mongers. It was only at a UKIP conference in 2015 that I came across Philip Foster and discovered what was really happening. I have kept in touch with Philip ever since. Given I was saving the world, an ROI of over 20 years was not too much of a worry.
Since then, several things happened. The old ROC credits were replaced with the Feed in Tariff and at the same time, the amount paid for generated power was slashed. The bottom line was that income pretty much halved. Of course, income was wholly reliant on the weather and the sun shining.
I have a 3.8 KW installation that would, at midday on midsummer’s day, produce around 3.6 KW, which is pretty good. Or put another way, the 18 panel array could boil the kettle with a bit of change. At the same time on midwinter’s day, the thing could just about power a light bulb. But it gets worse.
The inverter, which changes Direct Current (DC) from the panels to Alternating Current (AC) for the grid, is made by a company called Fronius of Austria. After 13 years, it packed up. The local Fronius dealer was most impressed that it had lasted that long. The life expectancy is around 8 years. Replacement costs £2,500. As a result, the whole system is now switched off. To get a decent inverter with a 10 year warranty, extendable to 25 years for a fee, would cost £5,000. I would be about 135 before I saw a return.
To put this in context, my washing machine is 25 years old, my old Land Rover 30 years old and my hi fi speakers 50 years old. OK, the poor old Disco is very rusty now, but mechanically, she is perfect. Therefore, 8 years for something that is largely solid state tells you all you need to know about the solar racket.
I would council against going down this route because it is simply not worth it, added to which you have to take a day off every 2 years so someone can come and have a look at it.
The Daily Mail recently reported that “London’s congestion charge has led to HIGHER pollution.”
Is there anything the government can do successfully?
Editor, Fortune & Freedom