How to fix inflation

It is fashionable for wannabe Government Ministers and so forth to tell us that they want to bring inflation down, and the only way they can think of bringing it down is increasing the mortgage interest rates — which, as Christopher Robin observed, hasn’t worked yet. For some reason the idea of cutting the prices of food, gas and electricity by fiat doesn’t seem to occur to them. In the long run, and quite possibly in the short run as well, increasing mortgage interest rates will cause thousands of deaths as people starve and freeze to death in unlighted houses, or on the streets. Another way to take money out of the economy, which is the ostensible purpose of raising mortgage interest rates — nothing to do with giving our chums in the banks huge bonuses, honest, Guv’nor — has to be found fast.

Therefore, I am posting an alternative way to take money out of the economy. Bring back the sixpence.

If every household in the UK were to save sixpence a week in a piggy bank, that would take more than £36 Mn out of the economy in every full year. (28.2 Mn households × 52 weeks × 6d = £36.66 Mn.)

On the other hand a 1% rise in interest rates raises only £16.75 Mn. (£1,675.4 Mn total mortgage debt × 1% = £16.754 Mn.)

Of course, the plan will work only if people want it to work. That’s why I’m not calling for compulsory saving. Under compulsory saving, people feel, rightly, that they can’t get hold of their sixpences should they suddenly need them. So the sixpenny coin has to be psycho-numismatically designed so that people will want to keep it and not spend it, as they did with the old sixpences. ‘Save two new pence and three new pence on alternate weeks’ is arithmetically the same, but doesn’t cut it.

Likewise, people have to not want to take money out of their piggy banks. Fortunately this problem too has been solved. The piggy banks are made of pottery and don’t have an opening for taking the sixpences out. You have to drop it or break it, so usually the coins stay in the piggy bank and they aren’t taken out and spent. Those sixpences are just as far out of the economy as the money you hand to the banks instead of spending it on food and clothing.

What of those who are too poor to save 6d per week? They can save 6d per fortnight. However many people can’t pay the full whack, the total saved in piggy banks will be at least £18 Mn, which is still more than is raised by a 1% rise in mortgage interest rates.

So there you are, Mr Hunt. As Mr Punch would have said, that’s the way to do it. My bill is in the post.