A global recession is on the horizon - please read OP for mod warning

what I am saying is you have to raise rates or you end up in a way worse position than we are currently in. And when I say way worse I mean crippling inflation followed by the mother of all recessions if you don’t raise rates.

what you are suggesting by not raising rates to fight inflation is the equivalent of giving a unlimited credit card to a shopaholic.

Who is borrowing to deal with the increased cost of finance? That doesn't make any sense

A serious issue for the west make no mistake about it.

It's the Chinese doing what they always do, thinking 25-50 years down the road. Meanwhile look at the current crop of idiots the west has leading us and the supposedly greatest nation on earth has Joe Biden or Donald Trump to look forward to leading them for a few years. If that's the best the west can do it's no wonder the outlook is grim.

The household energy subsidy is us borrowing from ourselves.

Nothing a few boomerangs won't solve. Stopping exports of Adidas trainers, mars bars, parmesan cheese, Mercedes and champagne will soon sort them out. They will have the white flags out in a fortnight you watch.

It is tax diverted in response to rate rises if you want to be pedantic.

It's still taking borrowing if it's supposed to an a temporary measure and not cyclical funding.

"One in three private renters have been forced to borrow money to pay their rent in the space of a month, shocking new figures show.

Over two million people have turned to credit cards, overdrafts, family members or even payday loans to meet landlords’ demands."

Shocking, to be honest.

You'd wonder what the situation is like here.

More to the point, you'd wonder how long this fiasco can last before a complete upending.

Inflation wont be 5% for 5 years if anything even near to that happened the country is goosed.

Isn't it amazing how we should defer to financial sales people yet at the same time be considered competent enough to take on a multi decade financial debt product?

Project forward, we get an induced recession, yet inflation remains elevated because other rising trade blocs are driving energy demand regardless of what we do.

Do we make domestic energy supports permanent?

Honestly not sure what you mean, I only really grasped the last line and not saying this being a smart arse. On them being permanent, I don't think they are and i'd imagine the eventual decline of energy costs for households will see the reliance of supports reduced to the usual social welfare schemes as before. The planned additional support of €200 on top of the €600 already paid looks to be coming from windfall taxes on the energy company profits. Not that they won't factor that in when the gouge further.

The interconnector with France is due in the coming years so some nuclear will help. France had one of the lower inflation rates because of that.

Fair point on the energy side of things but is this inflation all energy driven? I studied economics years ago and no doubt the very limited amont I know is long dated but surely the monetary policy that saw huge amounts of money introduced during covid had something to do with this. I recently looked at data that said otherwise but I just couldn't understand why that would be the case.

Thank god for that because i'd run this country into the ground with the little I know.

It isn't borrowing that's driving the current inflation. The interest rates are being applied as if it is.

Our current inflation is imported energy costs feeding down through every aspect of the economy.

The scenario you described about a car is from 20 years ago. In reality interest rates should have being rising after 2002 because of inflation being driven by mortgage backed debt. Signals obviously weren't caught as China entering the WTO reduced the costs for consumers and businesses in western economies, but no one was watching mortgages.

The Economist made it a front cover headline in 2002.

So we've already had a precedent where interest rates should have been applied to stop a mortgage debt bubble but were not, and now we have interest rate rises trying to fight imported energy inflation.

It's like policy makers are applying domestic lessons from the boomer expansion inflation of the 70/80s to a completely different scenario where the inputs are beyond our control.