Krugman comments on the UK pound

[BootinUp]

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Nobody expects the Spanish Inquisition — or the zombie economic apocalypse. The Truss government believes in the miraculous power of tax cuts? Really? At this late date?


What's really amazing is that surging interest rates have been accompanied by a *plunge* in the pound. This is not supposed to happen in advanced countries: we expect deficit spending to drive up interest rates and make the currency *rise*, which is what happened under Reagan

But Britain is now trading like a developing country, where perceived fiscal irresponsibility is undermining confidence in the value of its currency. It's actually kind of awesome

https://threadreaderapp.com/thread/1573283558680301569.html

[muriel_volestrangler]

1. Pound may tumble below $1 on 'naive' UK policies, warns former US Treasury secretary

Former Treasury Secretary Lawrence Summers has blasted the economic policies being adopted by Liz Truss, and warned that the pound could tumble below parity against the US dollar.

“It makes me very sorry to say, but I think the UK is behaving a bit like an emerging market turning itself into a submerging market.

“Between Brexit, how far the Bank of England got behind the curve and now these fiscal policies, I think Britain will be remembered for having pursuing the worst macroeconomic policies of any major country in a long time.”
...
“This is simply not a moment for the kind of naïve, wishful thinking, supply-side economics that is being pursued in Britain.”

https://www.theguardian.com/politics/live/2022/sep/23/mini-budget-2022-chancellor-kwasi-kwarteng-tax-cuts-live?page=with:block-632dc4788f0894f47d8a41b8#block-632dc4788f0894f47d8a41b8

[moondust]

2. Trickle-down

CNBC: Britain pursues ‘trickle-down economics’ despite scorn from Biden. And the stakes are sky-high

Liz & Co. sound brainwashed by Raygun and Thatcher. Apparently they haven't learned from the past 40 years that tax cuts for the rich do not trickle down. Instead the extra money they no longer have to pay in taxes is used to buy stocks and whatever else will make them even richer. That's what they do. Meanwhile I think the NHS needs money and others need raises to help offset inflation. But the government will have less tax revenue to fund the stuff that is actually needed.