Great comments today from Stansberry An economist's shocking admission... People and businesses 'need to accept' they're poorer... Stop asking for a raise... Oh, the arrogance... He lives in his parents' house... The latest meme-stock trade...
The Bank of England's chief economist said the quiet part out loud...
Inflation is still growing at 10% annually, by official numbers, in the United Kingdom. Here's what England's central bank really thinks about what the public should do about it. The Guardian recently reported his admission...
British households and businesses "need to accept" they are poorer and stop seeking pay increases and pushing prices higher, the Bank of England's chief economist, Huw Pill, has said.
This is one of the more shocking public admissions I (Corey McLaughlin) have heard in a while... and I read a lot.
And you haven't heard the worst part yet. The economist who made these comments lives in a £1.5 million flat in London owned by his parents.
You can't make this stuff up, because it's the truth...
And it's so telling and revealing of what those behind the scenes at central banks can tell themselves (or at least the public)... and how the world got into this inflation mess in the first place.
It reminds me of some wise words I once heard from the author Maya Angelou... "When someone shows you who they are, believe them the first time."
Conceptual economists living in a land of data and digital money-printers love to engineer real-time experiments on the real-world economy, then take no responsibility when things don't go as they planned.
Consider Huw Pill, whose analysis helps shape the Bank of England's policy decisions. He said on a recent podcast produced by Columbia Law School that a game of "pass the parcel" is taking place in the U.K. economy – as households and companies try to pass on their higher costs.
While he said it's natural for people to seek higher wages in response to higher prices or for restaurants to respond by charging more for their food, Pill said they should stop... for the good of everyone.
As an example, Pill said the U.K. is a big importer of natural gas, and gas prices have gone up beyond the prices of U.K. exports. He blames the people. Pill said in the episode of the podcast, titled "Inflation: Not Dead Yet"...
If the cost of what you're buying has gone up compared to what you're selling, you're going to be worse off. So somehow in the U.K., someone needs to accept that they're worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through on to customers.
And what we're facing now is that reluctance to accept that, yes, we're all worse off, and we all have to take our share. Instead, [people] try and pass that cost on to one of our compatriots saying, "We'll be all right, but they will have to take our share too." That pass-the-parcel game that's going on here... that game is generating inflation, and that part of inflation can persist.
Well, yes. It's true. That part of inflation can persist as everyday people simply want to figure out a way to pay their bills and make payroll so their employees can afford food that's 50% or whatever more than a year ago.
But, um...
What about all the big-government policies that led to these high prices in the first place?
Like many central banks' decisions to throw unprecedented amounts of stimulus into the economy amid the pandemic, for far too long, and see what happens? Or the belief that inflation is "a hump," as European Central Bank President Christine Lagarde said in December 2021... A year and a half later, the U.K.'s hump is still growing.
Or, a little more specific, how about the decisions of European leaders over the years to become heavily dependent on Russian energy sources (I'm looking at you, Germany) rather than developing their own? The ripple effects have made their way around the U.K., driving prices higher as Russia went to war in Ukraine.
But, no, you peasants, have fun staying poor!
Do your part!
Such sage advice from Huw Pill, who makes £190,000 a year at his cushy government job... used to be a Goldman Sachs banker... and yet, at age 55, still appears to live off his parents.
As the Mirror, a U.K. tabloid, reported two days ago...
We can reveal he makes do in his mum and dad's posh apartment in a private lane in Kensington – one of London's most expensive areas.
Mr Pill declined to say if he pays for his home – or if he regretted telling a US podcast that Brits "need to accept they're worse off".
Unite union leader Sharon Graham said: "You couldn't make it up. He jets off to America to explain to a podcast audience that being worse off needs to be accepted – while of course he isn't. It is absolutely jaw-dropping that bankers like Huw Pill should lecture about sacrifice for the common good."
Indeed. It's not even clear if this guy pays his own mortgage. And yet...
'Someone needs to accept that they're worse off,' he said...
What a banker, and what arrogance. How about you, Huw? Move out of your parents' house (what are you, a 55-year-old Millennial?!), take a salary cut, and "be worse off." Then spend less, get a real job, pump your own gas, and see how you like it.
Maybe he is doing these things now, but I doubt it. As an irate reader of the Guardian wrote in a letter in response to the comments...
It's simply not true that "we're all worse off", as Mr Pill claims. Neither the prime minister nor King Charles appear to be in that category. Public sector workers and food bank clients don't need a senior economist to tell them who is worse off and who isn't.
And if you think, "Well, this is England, that's not us"... well, first look at where the Bank of England's chief economist got his last round of training. He got his PhD in economics from Stanford.
This kind of thinking is already apparent in the U.S., too...
As my colleague Dan Ferris pointed out on the Stansberry Investor Hour yesterday, it's like when some U.S. politicians criticize businesses making too much money as the reason for inflation...
Sure, businesses raising prices is part of the deal. But they're also the ones raising wages for workers, mostly on the lower-income end... I don't hear many in D.C. complaining about that... but oh, no, stop making money. What do they want corporations to do? Mimic the U.S. government and run $1.5 trillion annual deficits?
Maybe that's it.
Whatever the intention, don't forget the big lesson here. When someone or something shows you who or what they are, believe them...
For policymakers to ignore the big monetary-policy decisions that mostly got us to 40-year-high inflation is either a surefire sign of a lack of self-awareness or a belief that more government control or influence is the answer. It's a reminder that to navigate a climate like this, it's wise to have a plan to protect and grow your wealth.
And think about how to beat inflation yourself... because nobody else is going to do it for you. You can bet so long as central banks have control over fiat currency, there will be inflation fuel to be dealt with... and no responsibility taken on their part for causing it.