Hey,

News people continue to annoy me with their stupid, narrow take on the world. Every story has to pamper to the ignorance of the majority, because god forbid they should ever enlighten anyone. Take the increase in interest rates announced today. I am aware hardly any of you are economists, but I'm going to blunder on regardless. I will go slow. Two things are happening right now. One, the economy is expanding fairly quickly. Jobs are being created and businesses are producing more. There is a limit to this however, called the number-of-working-people-and-machines. Reaching full capacity is kind of like reaching light speed: it can't really happen. The reason is that prices are analogous to mass in the light speed example. As we get closer and closer to full capacity, prices increases, and not at a steady rate, but at an exponential rate.

With me so far?

OK, now by raising interest rates, the Bank alleviates this pressures slightly. People spend more paying back mortgages and getting loans, so they spend less elsewhere. This slows down the growth of the economy and it's output and, hopefully, means prices don't take off. Because once prices take off, it takes a lot to slow them down. The basic result is that a lot more people are made unemployed than we would like, a level of which could be sustained now by simply acting early.

Add in to this the second thing: their an election coming. Mr Brown will be out with a big bag of cash pretty soon, as Labour try to buy themselves another term in office. You think that might possibly act contrary to that little full capacity problem I mentioned earlier? You know, George, I think it might.

Mix in a few other features like the promised spending programs in education and health and the dangerously unstable housing market, and, well gosh darn it, if raising interest rates might be a sensible suggestion after all. But what about, Steve, 24, a fish trader from Oadby having to pay £15 more a month for the privilege of not living in Argentina? Won't anyone think of the fish traders?

I'm aware no-one cares about this shit.

Speak soon,

Craig