Nigel Farage is still a coward

I cannot help but be amused by the recent comments by the ex-UKIP MEP Godfrey Bloom.

First of all, I repeat that Nigel Farage is a coward.  He got angry with Godfrey Bloom not because Bloom did anything particularly bad, but rather because the national press got all uptight about him, and Farage does not have the brass neck to stand up to the press - or at least not on this occasion.

Bloom jokingly referred to women at a meeting as sluts.  He is perhaps one of the few people left in this country who actually know the correct meaning of that word.  It was ill-advised, but no big deal.  He was wrong to swat Michael Crick with a brochure, but Crick was behaving provocatively.  In the circumstances, Farage should have stood by his fellow MEP.

So far as I am aware, the conference brochure was not designed by Bloom, and I wonder how Farage would have reacted to Crick's question.

Bloom remarks that No sane individual from a successful professional background would now go into [politics]. The vilification and lies overwhelm anyone with conviction.

I am a bit puzzled here.  If the problems are mendacity and vilification, then surely no sane individual would want to enter politics.  I fail to see how the professional background has anything to do with it.  He continues:

I am paid as a Westminster MP, which is equivalent to the salary of a bright young lawyer in Leeds or Hull and about what I was earning in 1989.

We now seem to be getting to the nub of the matter.  The salary of an MEP is I believe £66,396, and I will take Bloom's word for it that lawyers tend to earn more.  Nevertheless  £66,396 is more than the salary of a university professor, and also more than the typical earnings of road maintenance workers - but of course they do an important job and do it well.

MEPs can top up their salaries with allowances, and one former UKIP MEP once boasted that he could make shedloads of money.  Also, would Godfrey Bloom like to discuss the voting records of UKIP MEPs?  Would Nigel Farage like to tell us what percentage of votes he has taken part in during the time he has been an MEP?

In other news, Prime Minister David Cameron has ruled out the possibility of the Conservative Party forming a pact with UKIP.  He has even called upon UKIP voters to back his party instead.  Just how stupid does he think UKIP voters are?

My previous comments on UKIP include:

The UKIP hamster

Another storm in the UKIP tea cup

UKIP councillor throws in the towel

A challenge to the coward Farage

Another attempt to smear UKIP

UKIP have no need to fear Sked

Controlling inflation

I really must return to the subject of interest rates.  Interest rates are commonly regarded as the government’s primary tool – or perhaps only tool – in tackling inflation.

Let us consider what happened in the late 1980s when Nigel Lawson was Chancellor of the Exchequer.  He cut income tax, with the result that many people were destined to be better off.  Inflation rose, and he increased interest rates.  As a result, many people lost their homes to mortgage arrears.

Let us consider what happened from the point of view of a typical working person at the time.  Income tax has been reduced, and you can look forward to having more money.  You will not have that money immediately however.  Every month you will be paid your salary, and you will be paying less tax than before, and so each monthly payment will be slightly more than you are used to.

You have the option of saving this money, but I am going to assume that you choose to spend it.  If you spend this extra money as you earn it, and if everyone else does likewise, then maybe no harm will be done.

The problem arose that many people did not want to wait until they had earned their extra money before spending it.  They decided to spend their extra money in advance of receiving it, and so either take out personal loans at the bank or else reach for their credit cards.

The impact of large numbers of people spending more money than usual in the shops tended to push up inflation.  Remember that economics is all about supply and demand.  People spending more money created more demand for certain goods, and so the prices tended to rise.  At times of low demand, shops will often cut prices or maybe use gimmicks like two-for-one offers (not much different from a price cut) in order to attract customers, but at times of high demand there is little incentive to keep prices low.

With inflation rising, the government raised interest rates.  This made borrowing money more expensive, and so people had an obvious incentive to put away their credit cards.  However this appears not to have happened at once, and inflation remained high, and so the government kept on raising interest rates.

There were two main effects of higher interest rates.  One was that people were less likely to borrow money, which in turn dampened down spending in the shops.  The other was that people with mortgages were paying far more in repayments, and so had less money to spend on other things.  Again, this resulted in less spending in the shops.  With fewer people spending money, the shops had to start cutting prices to attract customers, and so inflation began to fall.

I feel obliged to repeat that the money that homeowners were paying in increased mortgage interest payments did not evaporate.  Some of it presumably went to savers in higher interest rates, but the savers did not necessarily go out and spend their extra money.  A lot of them probably carried on saving.  Some of the money was profit for the bank, and some of it would have found its way into the coffers of the Bank of England.  Although this money was then available to create new loans, the higher than normal interest rates discouraged people from borrowing.

Economics is a complex subject, and it is hard to explain it without resorting to simplification.   It is not inevitable that tax cuts will prompt a spending spree, or that inflation will follow.  It appears to be true that raising interest rates tends to result in lower inflation, however the parrot cry that interest rate rises somehow damage the economy has little or no basis in reality.

Previous posts on the economy include:

Understanding interest rates

Does money evaporate?

The end of bronze

Coinage and inflation

Interest rates, inflation, and jobs

HS2 fat cats

I have already made clear my views on both HS2 and fat cats:

A woman scorned

The banksters are not Jonathan and Charlotte

A small victory in Barnet

It is now reported that HS2 is squarely in the hands of fat cats.  Its chief executive Alison Munro is earning ten thousand pounds per month of your money, while its newly appointed chairman is going to be paid nearly SIX HUNDRED THOUSAND POUNDS each year - and once again it's your money (or at least it was).

Alison Munro has claimed that HS2 does not need a blank cheque, but I for one do not believe her.  Are we to assume that the overpaid Munro and the obscenely overpaid Higgins will inevitably work together to ensure that HS2 does not exceed its budget?

If you believe that, as the Duke of Wellington once said, you'll believe anything.

Higgins has urged cross-party support for HS2, but any political party with any sense will pledge to scrap it.

Twelve year ban for Stephen Lee / UKIP protest votes

Snooker player Stephen Lee has been banned from playing competitive snooker for twelve years as a punishment for match-fixing.

This compares with the squalid world of professional football.  Vinnie Jones was given a suspended ban in 1992 for bringing that game into disrepute, followed by an indefinite ban which was later converted to a four-match ban.  He then went on to enjoy a successful career as an actor, cashing in on his violent persona.

Next time someone punches you in the face, reflect that there might be far less violence on the streets of Britain if aggressive football players were punished with anything like the severity accorded to Stephen Lee - and I'm not even sure if he has any history of violence.


In other news, at least one pompous newspaper columnist is arguing that Labour could win the next general election as a result - in part at least - of disgruntled Tories voting UKIP.

The truth is however that millions of people in this country have had enough of the Tory/LibDem coalition government, and want a change.  Neither the Labour Party nor UKIP are to blame for that.  David Cameron has from the outset acted like a Prime Minister wanting to lose power, and his wish may well come true in 2015.

Peace for more than just one day

A news event you might have missed at the weekend was the Peace One Day concert in Holland.  Apparently this is a self-congratulatory event for people who pretend to be pacifists - which to be fair one or two of them might actually be.

If you are a pacifist, then demonstrate your pacifism not by going to concerts, but rather by NEVER casting your vote in any election for any political party which supports British involvement in foreign wars.

I have previously written about pacifism:

Syria does not want to be bombed

George and Baldrick

The Red Shield versus Syria

The Bomber Command thug

Ed's apprenticeships

Labour’s new policy on immigration has come unstuck almost at once.

Ed the Clown has recently argued that a Labour government led by his oafish self would force British employers to recruit and train a British apprentice for every worker hired from outside the EU.  It is now reported that this would be illegal under EU law.  Any apprenticeship would have to be available to nationals of any EU country.

Even if this barrier could be overcome, other problems are that the policy has met with a hostile reception in the business community, which is not surprising given that many employers in this country are pretty well devoid of any sense of decency.  Some readers might think that there are some situations in which an employer might reasonably want to recruit a foreigner, but surely those cases – if genuine – are rare.

Another problem with Ed’s policy is that training an apprentice is not the same as giving anyone a job.  If an employer who recruits a worker from outside the EU were to train a British apprentice, then would Ed the Clown then require the said employer to give the fully trained British apprentice a job once the apprenticeship had been completed?

Yet another problem is that Ed’s policy does not discourage companies from recruiting foreigners from other EU countries.

In other words, Ed Miliband is a clown.  If you vote Labour, then you are voting for failure.  Having said that though, neither the Conservative Party nor the LibDems have better policies.  This country will not have sensible laws until we leave the European Union and the Council of Europe.

Are you a member of a political party which supports leaving the EU and the Council of Europe?  It would be easier for politicians to ignore the parrot cries of nasty employers if they know that they have the support of the public.

School uniforms: think before complaining

In the past few weeks there have been a number of reports in the press of pupils being sent home from school or otherwise punished for minor infringements of their school's strict uniform policy.  These include:

• A girl whose trousers were deemed to be too tight.
• A girl whose skirt was made of stretchy fabric.
• A girl who had dyed her hair bright red.

I accept that it can sometimes be difficult for parents to find clothes which exactly match the school uniform policy, and that it can be especially hard in some cases, such as where a child is an unusual height for his or her age.  It is therefore easy to conclude that in some cases the rules are too strict.

Nevertheless I would urge you to consider that for many years now there has been a huge problem of violence in schools.  This has included knives being brought to school, and a woman teacher miscarrying after being assaulted by a pupil.  A report in 2009 for example found that forty percent of Welsh teachers had been assaulted.

The solution to violent classrooms is discipline, and a rigid school uniform policy is part and parcel of the more disciplined approach.  It is an example of zero tolerance.

While you might think that your local school is too strict about enforcing uniform rules, reflect that having your child sent home from school on one occasion for a minor infringement of a uniform code is preferable to your child being kicked and punched on a daily basis.

Your Muslim faith - really?

A Muslim man has said that his Muslim faith has helped him cope with the loss of his wife and three children in a suspected act of murder by arson.

Islam is founded upon a book called The Koran.  This book dictates that Muslims should fight non-Muslims (9:29) and that Jews and Christians should be destroyed (9:30).  A similar sentiment is found in 5:51.  The Koran also preaches terror against non-Muslims (8:12), spousal abuse (4:34), spousal rape (2:223), and that slaves may be raped (23:6).

To anyone who accuses me of not understanding The Koran, The Koran says many times that it is either clear or easy to understand.  Therefore the correct interpretation is always the obvious one.

To anyone who accuses me of being inconsiderate to a man who has just lost his family, has Muhammad Taufiq Al Sattar ever expressed support for a political party which has credible policies for tackling crime in this country?  If not, then he is partly to blame for the fact that many parts of Britain are killing zones.

Update: some real Muslims have been at work in Nairobi, killing non-Muslims in compliance with the teachings of The Koran.

Then again, although these Muslims are still in error.  It is reported that they believe that the mother of the prophet Muhammad was called Aminah.  This is not recorded in The Koran, however, and the other sources for Islam are fictitious.

Christians could do more

I have previously noted the failure of Roman Catholics to stand by one of their own.  Now I must question the failure of Christians to stand by the Cornish couple who were persecuted for standing by their principles.

The Bible is pretty clear on homosexuality, and you certainly don't need a degree in theology to be able to find the relevant passages.  Romans 1 is a good starting point, and Revelation 21 is also informative.

The Daily Mail reports that:

The couple claim they have received death threats, vandalism and had their website corrupted with pornography.

Have the people who sent the death threats or committed the acts of vandalism been prosecuted?

Christians could help the Bulls by staying in their hotel, or by sending them money to help them survive.  They could also help by joining a political party which does not hate christianity.  That excludes the Labour Party, the Conservative Party, and the Liberal Democrats.

They could also help - assuming they go to one of the mainstream churches - by refusing to put money in the collection plate until the leaders of their particular church do a better job of speaking out on behalf of persecuted Christians.

The betrayal of a working mother

A young mother called Chelsea Press has been told that she would be better off if she quit her job - and this is not the only example of working people being let down by the ConDem government.

I believe that the following figures are roughly correct for a single person without children working thirty-five hours per week for the minimum wage:

Tax year 2010-2011: nearly forty pounds each week in tax credits.

Tax year 2013-2014: about ten pounds each week in tax credits.

Furthermore, this betrayal is the work of a government which is making it very hard for unemployed people to find jobs, as I have noted before:

The Work Programme

IDS

Hundred applications

If you vote either Conservative or LibDem, then you are voting to make life hard not only for the unemployed, but also for many working people as well.

Interest rates, inflation, and jobs

Inflation is a trend rise in prices over a period of time, and also the decline in the value of money over the same period of time.  This link explains more.  It is impossible to calculate the rate of inflation exactly, as we have to make assumptions which are not necessarily correct.

Suppose for example that your weekly shop includes a Mr Kipling battenberg cake.  When the price of a Mr Kipling battenberg cake rises, then so too does the cost of your weekly shop - or not.  For one thing, the increased price of the Mr Kipling battenberg cake might be offset by a fall in the price of other goods that you buy.  Even if other prices do not fall, then the overall cost of your weekly shop will increase only if you continue to buy the Mr Kipling battenberg cake.  However you might react to the price rise by buying the store-brand battenberg cake instead - in which case the overall cost of your weekly shop might fall.

The BBC is reporting today that inflation has exceeded the target of two percent. It states that:

The Bank targets CPI inflation of 2%, but is currently holding off raising interest rates to control inflation because the unemployment rate is too high.

It is generally held that raising the Bank of England's base lending rate tends to put downward pressure on inflation.  I won't argue with that right now.  What I am wondering is whether or not the Bank is right to assume - as it appears to do - that an increase in interest rates would either cause unemployment to rise or at least not to fall very much.

My first comment is that unemployment is barely falling at all at the moment - just 24,000 in the last quarter.  My second comment is that there is - so far as I am aware - absolutely no evidence that interest rate adjustments necessarily impact upon the level of unemployment.  I have looked for such evidence, but cannot find it.

If anyone can supply such evidence I would be grateful.  I would be interested in statistical evidence of a correlation in a particular country over a significant period of time - not just one year.  I would also be interested in robust economic reasoning.  I have heard enough platitudes from bad economists, and do not wish to hear any more.

Gamblers take a risk

A man from Bristol is upset that the gambling firm Coral has not paid him the promised amount of money on a winning bet on the grounds that they gave him the wrong odds.  Apparently he can make a complaint to the Independent Betting Adjudication Service, who will then be able to require the full payment.

I have heard other cases of where betting shops or casinos have refused to pay out winnings to their customers. A favourite ploy of casinos is to allege cheating, while at least one betting shop refused to pay out on a winning bet on the grounds that they did not take bets on that particular sporting event - even though they just had.

Nevertheless, my sympathy is limited.  Gamblers know that they take a risk, and also that the odds are always stacked in favour of them losing.  Now that you know that bookmakers and casinos sometimes refuse to pay out even when clients win, are you going to set foot in either a betting shop or a casino?  Ever?

I have never heard of any instance of either the national lottery or a bingo hall refusing to pay out a prize to a customer for a dubious reason.  If you cannot resist the temptation to gamble, then do yourself a favour by staying away from betting shops and casinos.  It would be a great day for Britain if every single betting shop and casino closed down from lack of patronage.

Coinage and inflation

When researching my recent post about the probable demise of bronze (copper-plated steel) coins, I came across a curious fact.

The halfpenny coin was abolished in 1984, and there had apparently been a debate for some time about whether or not to let it go.  What surprised me was that one of the arguments against its abolition was that it would cause inflation.  Anyone who argued that must have known virtually nothing about economics.

Inflation is a trend rise in prices over a period of time, and equally the decline in the value of money over the same period of time. It has everything to do with supply and demand, and nothing to do with coinage.

Suppose we remove bronze from circulation.  Clearly everything has to be priced in multiples of five pence.  The pint of milk which today costs 49p would need to cost either 45p or 50p; the bar of chocolate which today sells for 59p would need to cost either 55p or 60p; and the loaf of bread which today costs 89p would need to cost either 85p or 90p.

Let us suppose that in every case the price is rounded up - which is unlikely.  The result would have no impact whatever upon inflation.  People would respond to the increase in price either by buying less milk, fewer bars of chocolate, and fewer loaves of bread; or by buying them in the same quantities as before but paying slightly more.  Let's face it, a penny extra on the price of a few items is not going to break the bank.

If people buy less of the given items, then the retailers might want to cut the price to stimulate demand.  By contrast, if people buy the same amount of the given items but pay the same, then they may choose to spend less on other items, and so on.  There is no reason to think that inflation would be affected.

Whether or not bronze coins are abolished should be decided on the basis of whether or not those coins are still useful, and not on irrational comments about inflation made by people who do not understand economics.

As I said in my previous post, the fate of coinage is determined by inflation, not vice versa.

The end of bronze

When was the last time you bought anything for a penny?  It is possible that your local newsagent still sells some kinds of sweets loose for a penny each.  Do you ever buy anything for two pence?

It seems that bronze coins exist merely for the purpose of children buying loose sweets, and there really is a case to be made for getting rid of them.  Of course you cannot realistically get rid of the penny unless you also get rid of the two pence coin as well, leaving shopkeepers to price everything in multiples of five pence.

Then again, I suppose that you could get rid of the penny and the five pence coin as well, and then price everything in multiples of two pence, but it would make more sense to scrap both remaining bronze coins.

Of course some of us might want to keep bronze coins for sentimental reasons, but consider the evidence:

The farthing was legal tender in this country until 1960.

The sixpence was legal tender in this country until 1980.

The halfpenny was legal tender in this country until 1984.

The engine of change in our currency is inflation.   Back in 1983 there were probably a lot of things you could buy for less than five pence, but now there is almost nothing.  Inflation is a trend rise in prices, and likewise the fall in the value of money over time.  I will go into this in more depth in a future post, but for the time being I will note that the British government currently sees an inflation rate of two percent per year as being reasonable.

This may seem only a small increase, but look at the long term view.  If prices rise every year at two percent, then the loaf of bread you buy today for 80p will cost 98p in ten years time, £1.19 in twenty years time, and £2.15 in fifty years from now.  Likewise, the bag of chips which today costs £1.30 will cost £1.58 in ten years time, £1.93 in twenty years time, and £3.50 in fifty years from now.

By contrast, if we allow inflation at just three percent every year, then a loaf of bread will cost £3.51 in fifty years from now, and a bag of chips will cost £5.70.

But wait - the loaf of bread will not cost £3.51, because in fifty years from now the penny and the two pence coin will almost certainly be history, and the five pence coin might have gone as well.  Presumably therefore the loaf of bread will cost either £3.50 or £3.60.

Of course we could elect a government committed to zero inflation, but when will that happen?

Footnote: regarding the title of this post, I am aware that the so-called bronze coins are no longer minted in bronze.  Since 1992 they have been minted in copper-plated steel.

Does money evaporate?

I have already written an introduction to the subject of interest rates, and now I would like to put some flesh on the bones.

Why is it that so many people – including many who ought to know better – would have us believe that interest rate rises harm the economy?

Why is it that so many people would have us believe that interest rate cuts are good for the economy?  If this were true, then surely any sensible government would cut interest rates to zero and leave them there. 

The reason why this does not happen is that low interest rates are not always the right thing for the economy.

When interest rates increase, people with mortgages pay more in interest on their mortgages, and therefore have less money to spend on other goods.  Nevertheless this money that they are paying in interest on their mortgages does not evaporate.

Some of that money is paid out to savers in higher interest payments, and some of it is paid out to shareholders in dividends, and some of it is doubtless paid out to directors in bonuses.  Some of the money might even find its way into the coffers of the Treasury in the form of taxation.

Any of the various recipients of this money can choose to either spend it or save it.

In the same way, when interest rates are reduced, people with mortgages pay less in interest, but savers earn less, and so on.  The people with mortgages who are better off can choose to spend their extra money or save it.

When money is spent, it can boost the economy.  That is obvious.  When the money is saved, it provides money for the banks to lend out to people and businesses, and that too can help the economy.  That is not so obvious, but you might nevertheless expect politicians and economists to grasp that fact.