I find myself starting to pen a rant.

A rant brought on by the wall to wall stupidity and fountain of platitudinous story telling that spills from our TV and radio sets as politicians and commentators of all colours and stripes try to justify their actions and explain away the situation that they have created by their own choices & actions and as importantly that we, the willing fools of the electorate, gave them the powers to create.

Namely: the storm of fiscal and social calamities that are currently building. It seems our political class and leaders all point to inflation and drivers out side their control as the causation: so what is inflation, how is it driven and how far out of their control is it?

Inflation simply put is the result of too much money chasing too few goods. How you end up with too much money usually is a consequence of executive choice and manipulation.

Looking back in time;

Originaly money was basically a collective name for physical commodities used for barter- I will swap these six chickens for your pig… this is Commodity Money.

Chickens and Pigs were difficult to carry so as countries formed and structures grew societies invented a more portable type of money, this is known as Fiat Money. This money ceased to have a value as a physical commodity - its value was what ever the issuing King, Queen or Government said it was. This worked fine as long as power was absolute and the value honest but it was clearly open to abuse. Consider, whilst this type of money or if you like currency, started as a marker of commodities that had a value all accepted – a Kings store of gold or silver coin was worth its weight in gold or silver but this one to one equity could be abused; by example when Henry VIII ran out of money he hit on the wheeze of breaking this relationship by diluting the value of the precious metal contained in his coinage – it looked the same and the coin value did not change because the King’s word was absolute and he decreed it was of the same value. Instantly he could mint more coins and have more money whilst holding no more gold or silver – equally instantly each new coin was materially worth less. But that fact took time to feed through as most of the population were outside the magic circle of the educated. Merchants and Money lenders however understood and the cost of borrowing increased or “inflated” to recognise that the coin used to repay them had fallen in value.

In this we have a perfect early example of monetary inflation. More money in circulation for no matched increase in value

Moving on, as economic activities grew and expanded and the need to trade using money more complex, the idea of what money could be developed into Fiduciary Money. This made it possible to to sell by giving a standardised, easily acceptable, promise of transfer of value to somebody else using tokens which could be cheaply produced and easy carried. Paper instruments of value - cheques and banknotes, are kinds of tokens which are used as money and carry value as Fiat (real state issued) Money.

This further developed into Commercial Bank Money – this is money that is further stretched away from the original idea – people deposit their “real money” with the institution (Bank) who in return promise to give it back on demand often with interest. The bank then uses this to under pin and expand its own activities feeling safe in the knowledge that not every one will ask for their money back at the same time and they can use the aggregated value of the deposits to make more money for themselves by lending it at (greater) interest or speculating on the values of other commodities.

From here the floor falls away and we get to the idea that “money makes money” which is where our current problems have their roots as the value of money now basically rests on human confidence and that is something that ebbs and flows, often at speed as circumstances change.

Think Weimar Republic or America in 1929,

So coming forward to inflation today – where did today's inflation start? I suggest way back in 1971 with the “Barber Boom” ‘dash for growth’ aimed to deliver 10% growth over two years by taking the breaks off investment by rapid growth in the money supply and the adoption of aggressive economic policies – this did succeed to begin with the extra money was used not least to buy physical asserts – note the tripling the value of the main asset held by the general population (their homes) in less than 3 years which made everyone feel “richer” - but in turn the huge growth in money supply (not money value) was destabilising and the whole train set fell off the rails when OPEC hiked oil prices in response to a war in the middle east an action which killed economic growth (real money creation) with the result that confidence evaporated.

No confidence with too much money in supply that was not tied to real money asset support gave instant problems and a rapid economic decline and inflation growth to 25% that it took the Thatcher government and its will to face difficult truths to haul back.

But a brick was in the wall - house price inflation remained baked in…

Next we go through the Thatcher/Lawson boom of the 1980’s a boom again in asset growth that further distorted the value of money – it being now valued by the private individual against both the increasing competition for , and so cost of, the finite stock of domestic property they wished to purchase and the spiralling value of international corporations and stock markets which in turn delivered the likes of Enron and the scandal of the 2008 banking crisis.

Again the wheels came off once confidence evaporated and again governments acted – this time Gordon Brown was in the chair and dumped huge sums of money on the problem, created and printed by the Government against its ability to borrow and deploy sleight of hand in treasury instruments – not physical stored wealth, into the system to save the banks and so the whole international game of Jenga from collapse. This action did not cause instant problems of consumer inflation as this money never reached the general population (who suffered the usual consequences of a loss of fiscal belief - loss of buying power and so of houses, jobs, etc), Brown's created money stayed with the banks who used it to recover their balance sheets and indulge in re-establishing their own business models i.e. commercial lending which gave a huge boom in stock assert values (once again the formula repeats; too much money chasing too few asserts = prices rather than values rise).

Brown and his international counterparties did little to actually punish those who caused the problems or make deep structural reforms to the failed systems. To example; they left the Credit Reference Agencies who arguably over valued the failed institutions so allowing them to gain the leverage on their balance sheet values whilst also giving a stamp of approval and security to the failed financial instruments such as Mortgage Credit Default Swaps that based in the huge supply of money via cheap corporate and retail credit and lax fiscal management caused the crash.

Next we have the COVID pandemic which again stalled economic life – again the money press was deployed and funded by treasury slight and exceptionally low sovereign debt interest rates but this time government used its intervention in the money supply to support not banks and supply side production but the general public by using furlough to support incomes whist production basically ceased for two years.

Impact? Supply and business activity stalled whilst demand remained strong – i.e too much money in supply (not value) chasing too few goods (again). Result? The same - Inflation.

Finally we have a major war in Ukraine that is further crippling production. This time of basic food stuffs on a world scale and delivering an other energy shock on the scale of the 1970s to both producers and consumers in western Europe as Russia turned off the gas taps to the countries of western Europe in retaliation for their support of Ukraine, the very same countries who like the U.K. by choice have spent much of the last decade closing their indigenous energy creation to chase a political goal of “Net Zero” climate control whilst basing their economic and domestic power security on the forever availability of cheap imported gas from Russia and other unpredictable sources that were clearly beyond their control or influence. Result? Even fewer goods chased yet again by too much money in supply (again not in value) resulting in more and continuing depressed economic outputs and yet more inflationary pressure.

It has to be faced; inflation is a recurring outcome of wilful political actions and choices.

• The choice to inflate the money supply.

• The choice to feed that increase into asset values whilst depressing incomes.

• The choice to respond to the COVID pandemic by again inflating the money supply – this time by holding up personal incomes to maintain demand (buying power) whilst effectively turning off production (supply).

• The choice to abandon internal production of power by the abandonment of fossil fuel sources, under investment in nuclear and over promotion of wind to chase a vision or maybe a dream of “net zero” .

• The choice to rely for critical and base load energy on imports from unstable and potentially hostile states.

• The choice to base retail price of electricity on a failed formula compounded by unsustainable green taxations. On this last point – the cost of electricity – laying aside the failures to invest and develop internal resources just look at the way the price is calculated;

So given the proofs of history along road that has led to where we and our economy now stand answer me this:

• Why do we listen to these people?

• Why do we accept what they tell us?

• Why does the largely silent majority allow the direction of travel and agenda to be set by the bliz of 280 character drivel that spills from Twitter and its fellow social media platforms - amplified by vacuous 24 hour news reporting?

• Why do we live in such an attention-deficit world?

• Why can’t those who seek to lead us away from this mess simply come clean and lay out an honest “mea culpa” for mistakes clearly made? For most I suggest simply because it would be the end of their world vision and their careers’

The issues and problems we face are ones we can solve if we have the will to own the problems, move away from government handouts of quick fix magic money creation and act to reset the agenda and break the repeating cycle I have layed out above.

The big question is does that collective will exist?