Société Générale's Albert Edwards On British Austerity And Much Much More

 From The New Statesman, December 3:

“What Rishi Sunak is doing is lunacy”: the City’s favourite strategist on the economy’s hidden dangers
Albert Edwards warns that the government’s austerity has set the economy on a path to collapse.....

[jumping into the middle of the article]

....Edwards calls this combination of loose monetary and tight fiscal policy the “Davos Consensus”. It’s the successor, he says, to the Washington Consensus, the agreement among free-market neoliberals that trade liberalisation, deregulation, lower headline tax rates and privatisation were the route to widespread economic growth. After the 1997 Asian currency crisis the Washington Consensus “was told to get stuffed”, he says. In the ruins of the 2008 crash a new agreement was struck: a commitment to next-to-nothing interest rates, quantitative easing (QE) and low government spending that produced 14 years in which asset prices and inequality boomed, while real wages did nothing.

“Hosing QE into the economy wasn’t in my view particularly effective,” Edwards says, except at inflating the prices of houses and financial assets, some of which it was hoped would spill over into the real economy. It’s for this reason that, while he was by no means a supporter of Truss, Edwards was sympathetic to the central thrust of the short-lived prime minister’s economic position, which was that the post-2008 consensus between central bankers and governments hadn’t worked. “This has caused a lot of problems,” he says. “It’s caused inequality… it has caused intergenerational strife, especially in terms of house prices.” 

It was, he says, “negligent” of central bankers to continue pumping new money into the financial system via QE when it was clear the policy was creating inequality, which fuelled populism, and a teetering edifice of illusory growth. “If free money was the route to economic prosperity, Argentina would be the richest country in the world by now,” he observes. “And, it’s not.”....

....MUCH MORE  

HT: @izakaminska whose The Blind Spot has been on something of a roll recently.

As for Albert, young man, it wasn't “negligent”, it was deliberate.

Rest is fine.