Dear Mervyn – the real letter

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If the Bank of England fails to keep to within 1% of the Government’s 2% inflation target, the Governor is forced to write a letter to the Chancellor every three months with an explanation. Since 2007 there have been 14 of these supposed apologies, the last nine in consecutive quarters. The Governor has been writing them so long, his notepaper has changed along the way, as has the Chancellors.

In response Messrs. Brown (felt pen!), Darling and Osborne have usually said something like: “I’m sure you’ve done your best, my dear chap, and I’m reassured by your promise that inflation is just about to fall. Keep up the good work.” The latest exchange has just been published. But we’ve come across another letter from the Chancellor to Mervyn King that doesn’t appear to be on the Treasury or Bank of England website. (Click to enlarge it)

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8 Comments

1. John H

   February 16, 2012 at 10:43 pm

   Quantitative Easing conjures up an entirely different image for me. The old sailing ships such as HMS Victory used to have an arrangement called the Seat of Ease, sometimes placed near the bowsprit over the water – you can probably guess its purpose.

   Linking one to the other leads to the conclusion that certain people are talking out of their backsides.

   Not too crude I hope.

   Recommend (4)
2. frances

   February 17, 2012 at 3:36 am

   Its a pre requisite of every MP Civil servant and self serving banker or CEO or overpaid overstuffed official to talk out of their backsides
   They would not know or speak or recognise the truth if it hit them and knocked them flat on the floor

   Recommend (5)
3. Nick

   February 19, 2012 at 9:13 am

   Since this is going on since 3 years now, the blame has to go to Osborne now for letting this parody continue..

   Perhaps this way, we can see more of a gov reaction.

   Recommend (6)
4. frances

   February 20, 2012 at 7:19 am

   All the indications now are that 0.5% interest rate will continue well into 2014
   that will make 5 years of utter misery and penury for lord knows how many pensioners who are utterly dependant on interest from savings

   Add on CPI on what is miserly state pensions and theres going to be an entire generation of pensioners who are going to be in dire straits and all this from David Cameron and Nick Clegg who both PROMISED to help savers

   Instead the only people they are helping are all those who took out mortgages and loans they could not afford

   Well i am sick asnd tired of being taxed to the hilt to support all the illegals , the feckless and the downright theiving scroungers of every ilk while the likes of MK and his bunch get Quarter of a Million and more

   All of this can fair and square be blamed on Gordon Brown because he was the one who sold off the countrys Gold Reserves and started a spending spree that acheived nothing but BUST BUST BUST

   Time he was made to pay up for it

   Recommend (4)
5. John.

   February 20, 2012 at 12:18 pm

   Frances I empathise completely and have no affection for GB whatsoever, or anyone else starring in the eternal quinquennial Punch and Judy show euphemistically called a parliamentary democracy.

   However this mess started in earnest over 30 years ago, long before GB. The much vaunted and equally maligned Mrs T introduced her utterly ruthless free market doctrine, which basically involved selling off everything to private profiteers for next to nothing. During her time we saw the destruction of local council house building programs and the wholesale privatisation of existing affordable housing stock. That resulted in a single generation of council tenants who benefited massively simply for being in the right place at the right time, at the expense of all the generations to follow… and also kick started a new build housing stagnation and unsustainable, destructive housing price boom. Little more than a profit taking bonanza and fertile ground for the law of unintended consequences.

   Fast forward 30 years and we now see massive demand for affordable rented housing, increasingly unaffordable first time buyer housing stock and vast tranches of deteriorating, poor quality, private housing feeding an army of rapacious landlord robber barons. Much of what the government and their stooges in the MPC / BoE are doing now is about preserving the unsustainable housing boom and deflating the inevitable bust with stolen savers wealth.

   They’re basically engaged in a wealth redistribution program to allow all the greedy bankers who created Thatchers robber barons and housing boom the time and money they need to try and unravel the mess they alone have created. In a just world they’d all go bust together and those who behaved responsibly would pick up the pieces but that’s not how establishment power and privilege works, thanks to fiat currency and political corruption the banks have the western world right where they want them, in massive debt.

   So instead of seeing a natural correction we see a bizarre scenario where those who are busy being financially responsibility and off doing other things are locked into a government backed insurance policy that protects those elite chosen few sat at the top table and the private enterprise and greed they seek to exploit for profit, from all going bust together by giving them as soft a landing as possible… all at our expense of course. That goes without saying.

   It’s the price to be paid for electing corrupt governments.

   Recommend (8)
6. Howard

   February 22, 2012 at 9:51 am

   I see in the paper today Charlie Bean says that “Those people [savers] should accept the pain as the price of restoring the wider economy to health”. However, he omitted to add that neither he nor King seem to be sharing in any pain. We learn that despite the BOE recommending that pension scheme benefits be linked to CPI they left the BOE pension scheme linked to RPI. A case of “I’m alright Jack” it seems to me.

   We must also not forget that King presided over the low interest regime that was one of the route causes of the debt crisis in the first place.

   Finally I wish that the BOE would get rid of this awful untruth on its website “The Bank sets interest rates to keep inflation low to preserve the value of your money” I suppose it doesn’t matter as nobody believes them anymore.

   Recommend (19)
7. frances

   February 23, 2012 at 7:34 am

   Charlie Bean is full of C**p
   just like the rest of the MPC and the entire lot at the treasury HMRC and the entire bunch of politicians

   All them have ” I AM ALLRIGHT JACK ” mentality

   Gordon Brown screwed Pension Funds, wrecked Final salary pensions ,not content with that he sold off the countrys gold reserves CHEAP and then squandered everything else on a huge bunch of illegals , layabouts and freeloaders and now expects all those who went without , were prudent and frugal and tried to care for themselves to pay over and over again for all those who just sit around with their hands out and have never paid a penny into the system in their lives

   Justice , Fairness , and even handed treatment for all …….what a joke

   Recommend (15)
8. John.

   February 23, 2012 at 11:26 am

   Governments aren’t about serving the ordinary, everyday people of this country. Sure, they’ll all pay lip service to it and use that illusion to play endless, laughable party politics and morality games in the media, but politicians are actually just regularly recycled shop window dummies.

   The faceless establishment and institutions of the state, the civil service suits and their murky connections with private profiteers allowing them access to the public purse. That’s where the real power lies and they will always do whatever it takes to preserve that power, along with all the privileges that accompany it. Their interests and motivations are not in directly serving the ordinary people of this country but in empowering and enriching themselves and their wealthy chums at our expense. Their objectives may well cross paths with public interest from time to time, but ensuring the wealth and privilege the establishment crust enjoy is preserved at all costs is what they’re really about.

   Recommend (7)