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We should welcome the end of “cheap everything”

Leonardo DiCaprio splashing the cash in The Wolf of Wall Street (2013)

“The era of cheap is over,” says Rana Foroohar in The Washington Post. For a decade and a half of “go-go speculation”, our economy was driven by “cheap everything”: cheap money, cheap energy, cheap labour. Over the past five years, which have featured a pandemic and a European war, that’s all gone “kaput”. And it’s a good thing. The end of cheap money – interest rates are hitting highs not seen for more than a decade – will create an economy that’s “more rational and hardheaded”. Investors won’t just back any old tech company or “meme stock”; they’ll pile into areas like manufacturing, which is set to boom in the US.

It’s a similar story with the end of cheap energy. One outcome of Russia’s invasion of Ukraine is the realisation, especially in Europe, “that getting crucial commodities from autocrats is never a good idea”. America, Europe and China are all speeding up the transition to a green economy by building wind and solar farms, electric cars, and the supply chains needed to sustain them. Finally, there’s the end of cheap labour. After “decades of wage stagnation amid record corporate profits”, salaries are rising and companies are trying to hang on to staff in a tight labour market. Overall, the end of cheap will mean “a more balanced and resilient economy”, and more power for Main Street rather than Wall Street. Because cheap is never really cheap: it just means kicking troubles down the road.

💰😇 The end of cheap money will also have a massive effect on Westminster, says Andrew Neil in the Daily Mail. Politicians from both sides will no longer be able to “promise the moon”, because the bond markets won’t let them. As Liz Truss found, investors can simply refuse to buy government debt, sending the price of borrowing through the roof. You never know, we could be about to enter “a new period of honesty in British politics”.