Home > Banking & Finance, Business, Changing politics for the better, Equality, Ethics, Poverty, Principles, Restoring Democracy, The Reset > The Cost-of-Living Crisis that our Politicians have caused: How can it be that we have less when we receive and spend exactly the same amount, whilst others seem to have a lot more?

The Cost-of-Living Crisis that our Politicians have caused: How can it be that we have less when we receive and spend exactly the same amount, whilst others seem to have a lot more?

To deal with the Lockdown and the related issues which were unnecessary and of their own making, Chancellor Rishi Sunak and the Johnson Government embarked on a profligate money printing bender.

It has been an obscene public spending spree that has not only led to the explosion of public debt. It has accelerated all of the deep-seated financial and economic problems that the UK already had before the Covid Pandemic arrived.

So, what has this all got to do with me, you might ask?

It’s a good question. Especially if you didn’t get any free Furlough money or didn’t have a grant of some kind that you didn’t really need or weren’t expecting to be fire hosed via the local council into your business.

Money is money and its value stays the same, doesn’t it?

Well, the answer is no. The value of money doesn’t ever stay the same – because money only represents value and is not the value of anything itself.

This is a crude example of what is happening, but it will hopefully illustrate the point:

  1. Let’s say that £1000 is all the money that exists. Alongside, there are £1000 worth of goods, £1000 worth of property and £1000 worth of services that have that have value, but that value can only be exchanged by using the £1000 that exists.
  2. You own £100 of the money that exists and that money is sat in your bank account or in bank notes in your hand.
  3. One day, you go out and buy £20 of property, £20 of goods and £10 of services and still have £50 left in your bank account or in banknotes in your hands, which at any time on that day will buy the same things all over again.
  4. The next day, you wake up to find that the Government has printed another £1000 of money and put it in someone else’s bank account or straight into their hands.
  5. But whilst the government printed twice the money, only the same amount of goods, property and services or ‘output’ exists.
  6. Because the total amount of money has doubled overnight, the value of those goods, services and property that exist have also doubled over night.
  7. Now, when you go out to shop for the £20 of goods, the £20 of property and the £10 of services you find that the prices have doubled, and you can no longer buy or afford the same that you previously had.

So, increasing the amount of money in circulation whilst there is no corresponding rise in production, goods manufactured in sold or service output simply means that there is more money available in proportion to everything that can be sold.

What makes the situation worse, is that most of the money that has been printed by the Government has gone into the hands of people and companies that are already very rich, who see and understand what the government is doing and then push up prices, knowing that the government will turn around and print even more.

Meanwhile, throughout this process, those on the lowest wages have effectively gained nothing. They instead find that the same amount of money they earned as last month, will no longer cover the cost of the same foods, goods and services. Sooner or later, they will have to borrow or go into debt, secure a higher income or apply for benefits. Or if that’s not possible, go with out in one or many different ways instead.

To call money printing to solve problems that could have been avoided and the Politicians themselves created is a travesty borne of ignorance, stupidity and self-interest, is only made worse by the reality that the political classes have colluded with the finance sector to allow banks to do exactly the same things, not just over the past two years, but for decades of real time.

Printing Money doesn’t solve problems – it just creates many more by helping the rich and punishing the poor.

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