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Why we can’t just print more money: the book “Storm over the Bank of England”.

The learning curve is steep. Only now, after more than a decade of maintaining the Bank of England’s printing presses, is a new generation beginning to realize that the magic money tree does not exist.

All economic action has consequences, and the return of double-digit inflation, which evokes memories of the 1970s, is rapidly changing the political narrative.

When Rupal Patel and Jack Meining, two Bank of England economists, came up with writing an explanation of economics for sixth graders and other concerned non-professionals, they could never have imagined that the Bank would find itself at the center of a political crossfire. .

Rupal Patel

Guide: Bank of England economist Rupel Patel and Jack Maing’s book – aimed at sixth and interested non-professionals – causes political scandal

After all, for most of the period since the Bank of England gained independence from the government in 1997, the old lady from Threadneedle Street has managed to stay in touch with the 2 per cent consumer price target set by the government.

Only after the double crises of Covid-19 and Russia’s war with Ukraine did prices jump.

Bank Governor Andrew Bailey was slow, and confidence in the institution was severely tested.

The answer to the Bank’s book of economists in paperback “Can’t we just print more money?” The economy in ten simple questions now looks obvious.

When I recently met with enthusiastic authors at the Bank, they recognized that there is no greater need for a better understanding of economics than there is now.

“I think it’s really for everyone,” Patel said. “For those who are now wondering why energy prices are rising.”

Above our conversation hangs a very big question: why did the Bank not see the onset of the inflation problem?

Mayning, a former economist who worked at the Independent Analytical Center of the National Institute for Economic and Social Research (NIESR), explains that his previous job was the private secretary to former Bank of England chief economist Andy Holden, and his boss did kill the alarm.

In the spring of 2021, Haldane, now executive director of the Royal Society of the Arts (RSA), warned that “inflation gin has come out of the bottle”.

“The financial crises and these major events are hard to spot, just as a forecaster can’t tell you exactly at 2pm that it’s going to rain,” Meining says.

By writing the book, the authors seek to inspire a new generation of economists

By writing the book, the authors seek to inspire a new generation of economists

Inflation is more complex than most of us think, and they can study it all their lives and still be wrong, he argues. What he thinks makes it even more important is that people who haven’t thought about it in five minutes need some grounding.

“The bank has introduced quantitative easing [money printing] if it was necessary to stimulate the economy, – Patel intervenes.

“In the book, we look at why we can’t just print money and how it can lead to inflation.

“The current level of inflation is caused by many factors that do not fall under the control of the Bank of England.

“We can have little effect on energy supplies from Russia. We hope that if people start to understand a little more about what is happening in the economy now, they will be able to understand where everything can be controlled and where it cannot. ”

The Bank’s entire approach to inflation and interest rates has made it look untouchable. For the first time describing price increases after Covid’s restrictions began to be lifted in 2021 as “transitional,” only at the end of the year did the company not embark on a path to slow prices.

Since then, the Monetary Policy Committee on setting interest rates has voted to raise rates, raising them from a very low level of 0.1 percent to 1.25 percent.

But while the Bank lingered, its U.S. counterpart, the Federal Reserve, was more aggressive, raising rates by 0.75 percentage points at one time this month.

The Bank’s snail-like response has provoked unreasonable criticism from former Governor Lord King, Chancellor Rishi Sunak’s warning not to allow inflation, and a call by former Permanent Finance Minister Sir Nicholas McPherson to accept “real money”.

What Patel and Meaning are trying to do is not so much to explain where inflation comes from as its impact on ordinary citizens.

“High inflation is now essentially undermining money’s ability to buy things,” Meining says. “The pound in your pocket buys you less in stores – it’s all know and feel when you go to the supermarket.”

Record: For most of the period since independence in 1997, the Bank of England has managed to stay in touch with the government-set 2 per cent consumer price plan.

Record: For most of the period since independence in 1997, the Bank of England has managed to stay in touch with the government-set 2 per cent consumer price plan.

The former employer Meaning NIESR recently found itself in the headlines when it claimed that the inability of the authorities to regulate inflation could lead to the fact that 2 million Britons would find themselves in “poverty”.

According to Meaning, this is even more reason to read their book because it “shows the power of economic forces” and “a real impact on people’s quality of life”.

According to him, major events, such as rising cost of living or decline, affect people in a variety of ways – on their health, well-being and, importantly, on their earnings throughout life, not just when they are. to survive.

Because of the time we are going through, our conversation is dominated by inflation. In the book, the authors also try to explain how – despite all the negativity now – economic forces in the form of inventions and technologies have raised living standards in all areas.

Nowadays, people tend to talk about the internet and computers. But Patel notes that “a modest washing machine has actually helped many people, especially women, have better opportunities.”

The work at the Bank now needs to be tough with critics who pounce on blatant failure with all the forecasting skills to detect an inflationary threat.

But there is another aspect to all this. There’s nothing like a good crisis (as Patel and Meining say they come every ten years or so) to spark interest in how the economy works.

By writing the book, the authors want to inspire a new generation of economists, both at the school level and among senior students.

When King was governor from 2003 to 2013, one of his long-standing complaints was that the UK was lagging behind in producing home economists with PhDs and they needed to import them from the rest of Europe.

If Patel and Meining could help reverse this situation, they would be doing a great public service.

To help with this, they promised that all proceeds from their book should be used to send copies to every public high school in the country.

That would be a brilliant result and could help improve the image of an institution damaged by the return of 1970s-style price increases.

■ Can’t we just print more money? Economics in Ten Simple Questions by Rupel Patel and Jack Manning, Bank of England. Published by Cornerstone Press £ 14.99

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Why we can’t just print more money: the book “Storm over the Bank of England”.

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