Only ‘idiots’ think tanking pound is a crisis says Cardiff Uni Prof who is Liz Truss’ go-to economist
A Cardiff University Professor who is Liz Truss’ go-to economic guru has said that the fall in the value of the pund is not a crisis and those who think it is are “idiots”.
Patrick Minford who is a Professor of Applied Economics at Cardiff Business School said that Chancellor Kwasi Kwarteng should ignore the “mob of critics” who have criticised his mini-budget delivered last Friday.
Fears over the Government’s economic policies has sent the pound tumbling and sparked a sell-off in the gilts market, with the Bank of England forced to launch an emergency UK government bond-buying programme to prevent borrowing costs from spiralling out of control.
But writing in the Telegraph, Patrick Minford said that “we should let markets work and pay no attention to idiots who cry ‘crisis'”.
He added that it was important to leave the pound free to find the level that will allow the UK Government’s “pro-growth policies” to work.
Liz Truss named Patrick Minford as the inspiration behind her pledge to cut taxes as a means of boosting the economy during the leadership race in August.
Patrick Minford has said that he remains convinced that low taxes, free trade and deregulation are what is needed to revitalise the economy, despite this thinking being less fashionable after the 2008 financial crash.
“It makes perfect sense for sterling to fall further over the long term to stimulate exports as imports rise in response to higher growth,” he wrote in the Telegraph. “We should let the market do its work on this front.
“Nor is it any sort of disaster for sterling to fall and boost our industrial competitiveness – far more worrying if it was being artificially held up by some misconceived ‘strong pound’ policy.
“We now have rightly a set of policies on tax and regulation to stimulate growth. It is important to leave sterling free to find the level that will allow these policies to work by pushing up the trade balance and direct investment inflows in the balance of payments.”
‘Restore order’
The Bank of England’s extraordinary intervention today, responding directly to the UK Government’s tax-cutting strategy, will however pile further pressure on Liz Truss and Kwasi Kwarteng to defend a vision for the economy that has spooked markets and shocked most mainstream economists.
The Bank’s chief economist, Welshman Huw Pill, said on Tuesday a “significant monetary response” may be required, but signalled this would not come until policymakers are due to meet as scheduled in November.
In the meantime, the Bank said it would buy bonds “on whatever scale is necessary” in order to steady gilts after Chancellor Mr Kwarteng’s mini-budget last Friday spooked the markets with his package of tax cuts and increased borrowing.
It said the bond-buying programme would be temporary, starting from today until October 14.
“The purpose of these purchases will be to restore orderly market conditions,” the Bank said.
It also postponed next week’s planned kick-off of its £80 billion sale of gilts under the so-called quantitative tightening programme until October 31.
Support our Nation today
For the price of a cup of coffee a month you can help us create an independent, not-for-profit, national news service for the people of Wales, by the people of Wales.
He’s an ideologue not an economist.
And deluded as well.
If I was a student at Cardiff Uni, I would want a refund.
If he had his way students would be paying three times as much as they are now. Free market utopia!
George, you’ll have to be quick!
Man is an economic theorist existing in some abstract world. By now he should have realised that all this nonsense has a nasty negative effect on most working people as consumers. There again he probably inhabits the same bubble as many of those selfish creeps who are still rejoicing and celebrating Liz’s gifts from last week.
Ideal for Liz Truss who is a born again Tory theorist
I hesitate to question a fellow economist; the reality is that economics is not an exist science. Having said that, Professor Minford’s economics is dangerously coloured with ideology. His views reflect ancient ideas and even more ancient theory, his so-called “classical” approach is seriously discredited by the economics profession. The really worrying aspect of letting him loose with the new UK government is the lesson of history. The Thatcher government was advised by classical economists who knew nothing of the real world and persuaded an economically illiterate government to apply such outdated and discredited ideas. What do they say about… Read more »
The classical approach. Quote a dead language (Latin), and ask the masses if they’d prefer crucifixion or being fed to lions.
Thank you for that excellent insight. It explains why Thatcher was despised by so many but sadly the history you mention is about to be repeated as millions will carry forward the narrative for the next 40 years that Elizabeth Margaret Thatcher Truss was wonderful and ‘pulled this country up by its’ bootstraps’ and all that trash.
Oh yes, the economic market is so great right now for the average person, modern economics has really proven itself.
“Modern economics” as you call it could be a reasonable description of the Keynesian approach adopted after WW!! which led to unprecedented economic and indeed social growth.
Sadly the ideological approach of the “classical” school of economics has become popular again, with the accompanying danger to real economic well-being.
Seems ire like a nutty right wing think tank type, rather than someone in education. Of course a brexit type and thatcher supporter, so money is king for the few. So really lacks human value that government should have. After all everyone deserves help, not just dodgy tory donors
So in a post Brexit world the pound was over valued and now it’s finding it’s post Brexit worth?
The sad thing is all this behaviour was predicted pre 2016. This is what the Brexiteers always wanted to do. Any excuses about covid, Ukraine etc etc are exactly that, excuses
Minford is an idiot. I think that’s one thing that most economists agree upon.
Perhaps ‘Idiot’ is a little hard. What seems to have happened is that his conceptual model of the economy does not seem to match what actually happens in real life. As an academic he should really be checking the data against the theory to see how well they match. This he seems not to have done for some years.
What would Mr Drakeford call him ?
Looks like the way Pres Biden is tanking the US. Funny, though, that the markets are deserting Sterling for the Dollar. If M.Bin Salmen goes for the Yuan or Rouble, what will be the result? I hope the Welsh Gov. put their skates on and finally prepare for depression.
Even if this doesn’t take place, they will have gained experience and may be able to tackle a recession?
This wouldn’t be the same Prof Minford, who was the “economists for brexit” group leader, the same prof minford, that has been ridiculed by most other economists in the UK.
And he holds a position in a place of learning, how embarrassing for Cardiff Uni. The only idiots are people who listen to this clown.
Apparently he is popular in China and attracts a lot of students and money from that country…
You have to be an idiot to think his way, grasping only half the picture. Low value currency is only a benefit to economies that are producers of raw materials. Britain generally does not fall into that category. We import simple goods and turn them into complex products. That really covers everything from lamb, through bread to aircraft electronics. Low value sterling certainly makes our goods more attractive to the rest of the world but the corollary is that imports may become prohibitively expensive. If that means vets can’t buy medicines, factories can’t buy components and bakers can’t buy flour… Read more »
The entire problem personified.
it would be a good idea to have a parliament and government to oversee all this, but no, that’s not a priority in this sclerotic system.
The problem with Minford’s opinion is that the ones he calls “idiots” are running the BoE, the IMF and my bloody pension fund.