60 Second Economist

Okay it’s not really an “art” more of an “economics”; well of course it would be or else it wouldn’t have made it into this blog.

Let’s think about this for a moment; the best gifts are given to you by your significant other (a boyfriend or a girlfriend)- alot of thought goes into these presents. It’s the gift from grandma that tends to be hopeless – and that’s because grandma doesn’t see you very much.

If you buy a present and the present is unwanted, those are real resources that have been wasted – energy, hard work, time and materials.

That’s why the best present from grandma is cash and we economists believe that the best present anyone should  ever give or recieve should be cash.

Most people tend not to give cash because it signals to the recipient the value we put on our relationship with them & this can be very embarrassing. So if you must give a gift instead of money…

Your gifts should be as inexpensive as possible, because the waste from poorly chosen gifts is far smaller if the gift itself is small.

Have a wonderful Christmas!

The UK’s inflation rate for December has been published. The RPI stands at a staggering 4.8%. The Bank of Enlgand base rate stands at 0.5% for 26 months in a row. Surely if inflation is rising and people are spending too much then the Bank of England should increase the base rate to reduce the incentive of borrowing and hence spending but No.

The Monetary Policy Commitee voted to keep the rate at 0.5%. The last change in the rate was back in March 2009.

There is however specualtion going around in various economcis circles that the hgih inflation may help us pay the debt we owe. The amount we owe just passed the £1 trillion mark. So with a high inflation rate we may be able repay less in real terms.

Clever or what?  Well only time will tell I guess.

What the 60 Second Economist is referring to is your economic Vote.

Believe it or not the economic vote has influence on politics and the economy.

Each £1 (or penny) spent is an economic vote.

Every time you spend some amount of money at your local supermarket you are essentially giving your vote to that company to stay in business over its competitors.

However, many “economic voters” become disenfranchised – resources go to where demand and profit is highest. What we mean here is that the poorest may not have much voting power in this kind of democracy.