The REAL cause of the current economic crisis

AS AT December 2022 we are faced with a multitude of strikes and with untold misery whilst much of the population cannot afford the inflated cost of living.

The Government would have us believe that the inflation that has recently occurred is all down to the Russian invasion of Ukraine. However, the cost of getting oil out of the ground is unchanged. There is plenty of fuel in the world without any from Russia or Ukraine.

There are two things that have caused the inflation of all costs. The currency was inflated by creating billions to combat the Covid epidemic (un-necessary if they had taken better advice – see my essay on Covid). Then the price of gas and petroleum was deliberately raised immediately following COP26 in Glasgow. This was clearly a deliberate act to raise the price of fossil fuels and cause renewable energy to become competitive. This decision and act was effected without any vote, without any consideration of whether it would have any benefit in terms of reducing greenhouse gases, and without consideration as to the effect this would have upon each and every item and service that is required for daily living.

In short, this action was inappropriate since it has caused chaos and misery, but has not significantly reduced greenhouse gas emissions. If change is needed, instead, there should have been a tax on aircraft fuel, a ban on logging any natural timber, a move to rapidly cease burning coal worldwide, a ban on all flaring of gas, a significant tax on red meat, a ban on all single use plastic and all disposable packaging, (everything needs to become re-useable) and the long-term reduction of human damage to the planet as explained in my separate essay on global warming.

Regarding inflation, this will be short-lived if no more foolish and ill-considered actions are taken. It is un-necessary to raise interest rates. This action will also increase inflation. Economic activity will now be reduced for several years, so that there will be deflation to follow, instead of further inflation. It can be argued that modest inflation is good for the economy as it promotes investment in capital projects and building works, and allows payment of interest on savings. When there is inflation though, it is essential that wages are kept in line, and equivalent pay rises should be automatic. Widespread strikes will only lead to severe damage to the economy. Pay rises are needed to counter extraordinary inflation that will only last a year or so. If there are no more unnecessary (deliberate) hikes in fuel costs, then there will not be a recurrence of the same inflation. Instead, governments must look for ways to reduce greenhouse gases without putting peoples lives at risk.