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Comment by thoughtstheseus | Hacker News Reader

Government spending without a credible increase in government revenue creates inflation. It’s astounding how many people don’t see this. You can’t print money/credit and expect to maintain purchasing power. The UK needs to supply low cost energy, not print money to buy energy.

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Would be funny if you're an American. The UK has almost half the debt-to-GDP of the US thanks to years of austerity.

> The UK needs to supply low cost energy, not print money to buy energy.

Sure, but you can't do that over night and not temporarily backstopping consumers until that supply comes online risks bankrupting businesses and putting even more strain on the economy. So long as it's temporary it's probably the best thing we can realistically do.

85% vs 125%? What are you on about? That's a long way from half. And the USD is the reserve currency of the world, the moment interest rates started to rise everyone moved into USD.

The US is also energy almost independent. The UK has increasing energy prices, and refuses to do anything about it.

Moreover, low GDP growth and high interest rates will cause the UK to catch right up :)

No country especially the ones with decelerating economies should compare themselves with USA. The rules apply to US differently. I m not going to list them, Brits should realize this is not 1921.

> Brits should realize this is not 1921.

Heh, well stated. The sun set on the British empire a long time ago. Expectations need to be adjusted accordingly.

Yes, but the US has the world's effective (for the moment anyway) reserve currency: the UK's not in that position.

It's not the debt that matters but the change in debt, aka the deficit / surplus. If the debt stays constant, so does the money supply. The absolute level of the debt doesn't matter with regards to inflation, it's the change in the levels of debt that matter.

A larger debt means more interest payments which makes a significant deficit more likely, but it's that deficit, aka change in money supply, that affects inflation not the absolute size of the debt.

You can do one of those overnight, the other not so much.

Also: spending without revenue creates a deficit, not necessarily inflation.

It does tend to create inflationary pressures via an increase in the borrowing cost of government (often expressed as the government bond rate), which in turn makes the entire cost of many other forms of borrowing more expensive, which in turn changes the expectation of what a dollar or Euro or pound is worth today as compared to what it will be worth in a year's time.

He didn't say overnight. Who said that?

And Sunak just cancelled all fracking that Truss wanted to start. So the UK has basically decided to NOT have any form of cheap energy.

You reap what you sow.

Markets price in updated expectations immediately. Maybe they don’t price it right but they do price it.

Sunak is keeping the van on wind power. Every agreed that fracking wouldn’t help with the energy crisis.

Dunno, seems like Japan has been trying that strategy for going on 20 years without any significant changes in inflation. Even though the explicit goal was to increase it.

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