Current Affairs The Labour Party

[Hickson9]

Of course not, we can just print some, but my point is that it is only the private sector that generates money and the money they can generate is finite......

The vast majority of money isnt printed. It is created by banks out of thin air when they make loans.

 

[Hickson9]

Tell that to Greece, or Spain or Ireland when they were in trouble. Printing money can help but there is still a reaction from that in terms of inflation.

See my answer above.

Most people dont understand the basics around how money works.

Only 3% of money is printed.

 

[abelard]

Tell that to Greece, or Spain or Ireland when they were in trouble. Printing money can help but there is still a reaction from that in terms of inflation.

Public debt only becomes unmanageable when a country does not control the currency in which the debt is owed.

This is why for many countries the Eurozone has been such a disaster, and why, thankfully, none of the examples you cite are relevant to the case of Great Britain.

Go look at Japan, if you want to see just how much debt a country can comfortably manage.

Actually, the debt level in Japan since the crash in nearly every instance increased whenever the government experimented with austerity, because austerity contracted growth even faster than the deficit could be reduced - which is exactly what happened to Britain under Osbourne, as 99% of macroeconomists warned.

You should listen to this: https://www.bloomberg.com/news/arti...ts-still-haven-t-learned-the-lessons-of-japan

@Bruce Wayne too.

As least if the Tories win we might under Javid finally have a finance minister who understands macroeconomics, though credit for this is of course belongs entirely the strength of Labour under Corbyn in 2017.

 

[orly]

Public debt only becomes unmanageable when a country does not control the currency in which the debt is owed.

This is why for many countries the Eurozone has been such a disaster, and why, thankfully, none of the examples you cite are relevant to the case of Great Britain.

Go look at Japan, if you want to see just how much debt a country can comfortably manage.

Actually, the debt level in Japan since the crash in nearly every instance increased whenever the government experimented with austerity, because austerity contracted growth even faster than the deficit could be reduced - which is exactly what happened to Britain under Osbourne, as 99% of macroeconomists warned.

You should listen to this: https://www.bloomberg.com/news/arti...ts-still-haven-t-learned-the-lessons-of-japan

@Bruce Wayne too.

As least if the Tories win we might under Javid finally have a finance minister who understands macroeconomics, though credit for this is of course belongs entirely the strength of Labour under Corbyn in 2017.

Not even sure the main man @tsubaki would make this leap

 

[The binman chronicles]

Public debt only becomes unmanageable when a country does not control the currency in which the debt is owed.

This is why for many countries the Eurozone has been such a disaster, and why, thankfully, none of the examples you cite are relevant to the case of Great Britain.

Go look at Japan, if you want to see just how much debt a country can comfortably manage.

Actually, the debt level in Japan since the crash in nearly every instance increased whenever the government experimented with austerity, because austerity contracted growth even faster than the deficit could be reduced - which is exactly what happened to Britain under Osbourne, as 99% of macroeconomists warned.

You should listen to this: https://www.bloomberg.com/news/arti...ts-still-haven-t-learned-the-lessons-of-japan

@Bruce Wayne too.

As least if the Tories win we might under Javid finally have a finance minister who understands macroeconomics, though credit for this is of course belongs entirely the strength of Labour under Corbyn in 2017.

I've listened to the first 15 minutes of that and what he says I'll agree with but while I'm no expert I would say there is margins that you keep within. I didn't believe the Tory austerity way was much cop and thought Brown's idea was a much better way of dealing with it. However you can't just forget you have a massive deficit and keep spending regardless without any due care for budgets.

The way to combat the sudden slow down of economies is to gradually reduce the spending to match, by suddenly pulling the rug I agree with him you just speed up and deepen the depth of the crisis. You want business to still be loaned money but you can't say to hell with it all we'll keep spending as sooner or later it can and will bite. You cannot assume that we are the masters of our own destiny as you don't know what is around the corner. As Macmillan's famously alleged quote "Events, dear boy, events".

 

[dead_soft]

keep up.....

I’m literally asking for you to provide information you haven’t before. I genuinely want to know the answer as I’m a bit confused by exactly what you mean and would like to understand

 

[abelard]

I've listened to the first 15 minutes of that and what he says I'll agree with but while I'm no expert I would say there is margins that you keep within. I didn't believe the Tory austerity way was much cop and thought Brown's idea was a much better way of dealing with it. However you can't just forget you have a massive deficit and keep spending regardless without any due care for budgets.

The way to combat the sudden slow down of economies is to gradually reduce the spending to match, by suddenly pulling the rug I agree with him you just speed up and deepen the depth of the crisis. You want business to still be loaned money but you can't say to hell with it all we'll keep spending as sooner or later it can and will bite. You cannot assume that we are the masters of our own destiny as you don't know what is around the corner. As Macmillan's famously alleged quote "Events, dear boy, events".

Thank you for giving it a shot. You should try to stick with it.. it gets more interesting as it becomes less abstract.

I am not saying that Britain should run its debt/gdp level as high as Japan, but lamenting that the conversation about public debt in the UK is so illiterate. The sooner we stop running around like the sky is falling every time the Tory press spews nonsense about Labour spending, the better we will all be. There is currently enormous leeway for government investment - it has never been cheaper to borrow - and beyond the question of fiscal capacity, it is also the economically and morally appropriate response to the conditions Britain faces. Again, the IMF, the pension market, the bond market are all begging!!! governments to spend, because the entire global financial system is put at risk by the quantitative easing/asset bubbles necessitated/generated by mindless UK/Eurozone austerity.

The risks are not doing so are terrifying. When a government reduces its deficits, by definition private sector debts swell. This takes the form of corporate debt (a far, far bigger problem today than public debt because firms are borrowing to fund equity buybacks (ie: stock market bubbles) and anticompetitive mergers rather than productive growth), bloated mortgages and household non-mortgage debt, usually at usurious credit card rates. This is not a case of indiscipline and lax morality, but a mathematical relationship between the public and private/household sectors. When the economy next melts down, it will almost certainly be caused by a combination of the first two factors, and seriously exacerbated by the third. The political consequences for liberal democracy could well be fatal. And this will take place precisely because in Britain and the Eurozone, and to a much lesser extent the United States, governments opted for austerity when stimulus was the only viable response.

Government debt is the entire basis of the financial sector. You cannot have pensions without it. You cannot have a finance industry without it. Cutting spending and contracting the economy at the height of the crash is just about the dumbest thing that any British government since Richard III has ever done. It is beyond madness, and probably a thousand times less economically sound than Brexit (not least because it is increasingly clear that it also caused Brexit).

Huge state investment in infrastructure, transit, hospitals, schools, recovering assets like housing or utilities, the green new deal... anything, really, is not only the appropriate political response to the sense of betrayal people rightly feel at the hands of the ideologues and con men running the Tory/Liberal coalition, but also the only sensible economic means of productively soaking up the trillions of QE Pounds that the BoE has had to invent because the government was too busy experimenting with Victorian Social Darwinism on people they regard as a subspecies to manage the economy properly. The sooner we are led by people who approach economics as a technical discipline rather than a medieval morality lesson, the better off we'll all be.

The way to combat the sudden slow down of economies is to gradually reduce the spending to match

This is wrong. When government contracts spending during an economic slowdown, the only effect will be to further accelerate the slowdown (again, assuming that the debt is owed in the government's own currency). This is not a question of opinion, but of mathematics.

Government should only attempt to reduce the deficit when the private economy starts growing too quickly.

 

[The binman chronicles]

Thank you for giving it a shot. You should try to stick with it.. it gets more interesting as it becomes less abstract.

I am not saying that Britain should run its debt/gdp level as high as Japan, but lamenting that the conversation about public debt in the UK is so illiterate. The sooner we stop running around like the sky is falling every time the Tory press spews nonsense about Labour spending, the better we will all be. There is currently enormous leeway for government investment - it has never been cheaper to borrow - and beyond the question of fiscal capacity, it is also the economically and morally appropriate response to the conditions Britain faces. Again, the IMF, the pension market, the bond market are all begging!!! governments to spend, because the entire global financial system is put at risk by the quantitative easing and asset bubbles necessitated/generated by mindless UK/Eurozone austerity.

The risks are not doing so are terrifying. When a government reduces its deficits, by definition private sector debts swell. This takes the form of corporate debt (a far, far bigger problem today than public debt because firms are borrowing to fund stocks buybacks and mergers rather than productive growth), bloated mortgages and household non-mortgage debt, usually at usurious credit card rates. This is not a case of indiscipline and lax morality, but a mathematical relationship between the public and private/household sectors. When the economy next melts down, it will almost certainly be caused by a combination of the first two factors, and seriously exacerbated by the third. The political consequences for liberal democracy could well be fatal. And this will take place precisely because in Britain and the Eurozone, and to a much lesser extent the United States, governments opted for austerity when stimulus was the only viable response.

Government debt is the entire basis of the financial sector. You cannot have pensions without it. You cannot have a finance industry without it. Cutting spending and contracting the economy at the height of the crash is just about the dumbest thing that any British government since Richard III has ever done. It is beyond madness, and probably a thousand times less economically sound than Brexit (not least because it is increasingly clear that it also caused Brexit).

Huge state investment in infrastructure, transit, hospitals, schools, recovering assets like housing or utilities, the green new deal... anything, really, is not only the appropriate political response to the sense of betrayal people rightly feel at the hands of the ideologues and con men running the Tory/Liberal coalition, but also the only sensible economic means of productively soaking up the trillions of QE Pounds that the BoE has had to invent because the government was too busy experimenting with Victorian Social Darwinism on people they regard as a subspecies to manage the economy properly. The sooner we are led by people who approach economics as a technical discipline rather than a medieval morality lesson, the better off we'll all be.



This is wrong. When government contracts spending during an economic slowdown, the only effect will be to further accelerate the slowdown (again, assuming that the debt is owed in the government's own currency). This is not a question of opinion, but of mathematics.

Government should only attempt to reduce the deficit when the private economy starts growing too quickly.

I had the (dis)pleasure of being before the crash to borrow very large sums of money, after the crash I temporarily (what I thought anyhow) bought a car on my credit card thinking I would get a loan to cover it. Uh-uh, wrong answer and I ended up paying over £500 a month to service something that I should have been paying sub £300 for. Now I was good for the money and the extra I was spending could have been going to other purchases boosting the economy, instead it was going to a financial company who weren't lending to anyone to pay off their balance sheet. So I have first hand experience of what is being talked about.

I think you have misinterpreted (although easy to do with a throw away one sentence) what I'm saying about governments keeping a check on the deficit in times of financial stress. The real issue is when you drastically cut funding (austerity), my view was to slowly reduce year on year. Yes run with a moderate deficit to start with but the government should be looking to balance in a realistic timeframe and that might be rejigging priorities. Spend extra to guarantee loans etc giving confidence in the financial sector but can infrastructure spending that has only local benefits.

Once the economy is on an upward trend then you should be running at a surplus as soon as possible. We are paying £48 billion a year servicing the national debt, now this could remain a small percentage as the UK economy grows but could equally increase. Say Brexit reduces our credit rating, suddenly we pay more interest than we had previously and then with a smaller economy we have to borrow much more under the Japanese model to buy our way out of it. If that doesn't work that debt will be a large percentage of the UK's output after a few years.

We shouldn't be afraid of debt but we shouldn't be throwing caution to the wind either.

 

[Bruce Wayne]

I had the (dis)pleasure of being before the crash to borrow very large sums of money, after the crash I temporarily (what I thought anyhow) bought a car on my credit card thinking I would get a loan to cover it. Uh-uh, wrong answer and I ended up paying over £500 a month to service something that I should have been paying sub £300 for. Now I was good for the money and the extra I was spending could have been going to other purchases boosting the economy, instead it was going to a financial company who weren't lending to anyone to pay off their balance sheet. So I have first hand experience of what is being talked about.

I think you have misinterpreted (although easy to do with a throw away one sentence) what I'm saying about governments keeping a check on the deficit in times of financial stress. The real issue is when you drastically cut funding (austerity), my view was to slowly reduce year on year. Yes run with a moderate deficit to start with but the government should be looking to balance in a realistic timeframe and that might be rejigging priorities. Spend extra to guarantee loans etc giving confidence in the financial sector but can infrastructure spending that has only local benefits.

Once the economy is on an upward trend then you should be running at a surplus as soon as possible. We are paying £48 billion a year servicing the national debt, now this could remain a small percentage as the UK economy grows but could equally increase. Say Brexit reduces our credit rating, suddenly we pay more interest than we had previously and then with a smaller economy we have to borrow much more under the Japanese model to buy our way out of it. If that doesn't work that debt will be a large percentage of the UK's output after a few years.

We shouldn't be afraid of debt but we shouldn't be throwing caution to the wind either.

The elephant in the room of course is that proportion of state expenditure that goes on pensions.

Perish any politician who actually proposes doing something with the retirement age though.

 

[roydo]

The elephant in the room of course is that proportion of state expenditure that goes on pensions.

Perish any politician who actually proposes doing something with the retirement age though.

Its been going up since legislation about 20 years ago came in. That said, you are correct that it costs a bomb, but demographics will sort that out in about 15 to 20 years.

 

[Bruce Wayne]

Its been going up since legislation about 20 years ago came in. That said, you are correct that it costs a bomb, but demographics will sort that out in about 15 to 20 years.

Well yeah, I wasn't advocating shooting all pensioners tomorrow

 

[The binman chronicles]

Well yeah, I wasn't advocating shooting all pensioners tomorrow

You had my vote and now you've just lost it again. Politics is so fickle.

 

[The binman chronicles]

The elephant in the room of course is that proportion of state expenditure that goes on pensions.

Perish any politician who actually proposes doing something with the retirement age though.

We know the workplace pension scheme will eventually mean the end of government pensions or at least a cut price version.

 

[Bruce Wayne]

We know the workplace pension scheme will eventually mean the end of government pensions or at least a cut price version.

And the growing number of independent workers?

 

[Bruce Wayne]

You had my vote and now you've just lost it again. Politics is so fickle.

Well to be fair, there's Tuesday and Wednesday...