Yesterday the Truss government and Bank of England completed a three-business-day complete somersault in fiscal and monetary policy, creating a new hyperinflationary monster called QE plus interest rate hikes plus tax cuts and massive government borrowing to subsidize energy prices. Challenged by the IMF and various “experts” like Larry Summers and Mohamed El-Erian, the Truss team re-emphasized His Majesty’s government’s resolve to do what it pleases and that it expects to be followed.
Not to insult the German government, today it was monkey see, monkey do. Chancellor Olaf Scholz held a press conference to announce that “prices must come down” and that his government would throw out its debt limit and borrow in order to provide €200 billion in support to households and companies in paying their energy bills, as well as cutting the (natural) gas sales tax and other taxes.
