If the past two years have taught us anything, it’s how lockdowns, shutting down businesses and printing money can have a major negative impact on the state of our economy. We are currently facing the worst recession we’ve ever seen with a 10% inflation rate. The Government claim they are going to do their best to combat the cost of living crisis, acting as if they didn’t create it through the mishandling of the pandemic and money printing, but what is their response you may ask? Well, naturally it’s to print more money.
The concept of money printing is quite simply defined as “money creation to increase the money supply”. Though the adverse effects of this are understood by nearly everyone with a basic understanding of how the economy works, it is too great to exceed any benefits we may receive. You see, money printing doesn’t increase economic output at all, it just increases the amount of circulating cash. But what does this mean? Let me give you an example: say you give the entire population of the UK a million pounds, though that may feel great, everyone else has also received a million pounds making you less appreciative of the money and also overall dropping the value of that cash. Printing money also leads to an artificial over-abundance of demand, stemming from an increased cash flow, however, the supply of goods would not be able to meet the new demand as it would not increase at the same rate. The overall result from this is inflation, an issue we are already facing.
So far the government’s response to this cost of living crisis has fundamentally remained the same – either with the UBI or this new Energy Bill Support Scheme. According to new plans unveiled as a part of this scheme, “households will see a discount of £66 applied to their energy bills in October and November and £67 a month from December to March 2023.” According to the BBC article, “All customers with a domestic electricity meter who pay by direct debit, either monthly, quarterly or by card, will see an automatic deduction off their bills.” Firstly, I definitely believe this £66 will help with the next 54% increase we’re about to see in October. Secondly, it looks like the Government will be paying these deductions to the energy companies. Those with “smart” meters will receive an “automatic monthly top-up”.