Apr 11, 2022

the government and the economy

The Bank of Israel announced today it will be increasing the interest rates slightly. 

MK Moshe Gafni (UTJ) used the announcement to slam the government. Gafni said, "this is not a big surprise. The increase is not significant but it shows the trend. Turbulence is starting and that is not good. When the interest rates go up, other things increase right after. The government does not know how to manage the economy and is causing unprecedented expensiveness".

Well, it is not unprecedented, but it has been a while. I am not sure how much of it is caused by the current government, how much was caused by previous governments, and how much is caused by global trends and causes.

This government has raised taxes on certain items, and that was intentional. Yes, sugary drinks are more expensive as is disposable plates, and that is this government's fault. Some will say that is a good thing and some will say it is a bad thing. That is a fair argument against the government.

A lot of the general increase in prices is the result of the global shipping crisis and is not the fault of  anybody specific in our government. Maybe they can partially fight it in certain ways, such as dismantling the labor unions and breaking up monopolies, but these types of movements dont happen in a day. 

Previous governments brought us to terrible deficits by overspending and handing out money (which might have been necessary at the time), but government loans taken at those times to hand out and spend that money eventually needs to be paid back. Printing and handing out money causes inflation and prices to rise. 

I am not sure his accusation that the government cant manage the economy is accurate considering Moody's just raised Israel's rating, in addition to the announcement of the low deficit. They seem to overall be doing a good, or at least decent, job on the economy but there are trends happening aroudn the world that wont skip over Israel. 



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