Why the lib-dems are shit

[i_got_poison]

The BOE do expect the £200 billion they've sold not to be disappeared from circulation. The whole point is that it circulates. Contra your weird claim that they expect it to be taken out. You're a bit out of your depth here. And we're only paddling.

when the BoE uses QE, the funds created aren't sold through the money markets they're used to buy financial assets (such as treasuries, securities etc) from banks,
in the process giving them excess reserves. if this money found it's way into system it would eventually cause hyperinflation. the money is there to clear toxic
assets (sub prime, deriatives etc) from the bank's balance sheets.

you've misunderstood what i meant. the £200bn isn't taken out of the economy, public sector jobs and services are. meaning we as a nation consume less
which fulfills the demand for commodities elsewhere in the world.

if i'm paddling, you're aquaphobic

 

[butchersapron]

No, you misunderstand your own argument, it appears. £200 bn is not taken out of 'the economy' at all.

 

[butchersapron]

when the BoE uses QE, the funds created aren't sold through the money markets they're used to buy financial assets (such as treasuries, securities etc) from banks,
in the process giving them excess reserves. if this money found it's way into system it would eventually cause hyperinflation. the money is there to clear toxic
assets (sub prime, deriatives etc) from the bank's balance sheets.

Show me it being used in this manner.

 

[i_got_poison]

How many claims have you this arse over tit now? Winter-heating allowance ring-fenced = wrong, BOE wants to operate a tight monetarist policy by printing money = wrong, others?

the winter heating fuel allowance was said to be ring fenced by the prime minister at PMQ's (there or at a public conference). you've got
to take his word for it til the spending review is published.

i never insinuated the BoE was operating a tight monetary policy. how could i do that when interest rates are at 0.5%.

you need to spend more time reading my post instead of reacting to them.

 

[butchersapron]

Did he? Show me?

That's the point, jumbo.

 

[Edie]

one thing to remember is that britain is a safe debt. We pay back- christ we only finished paying off the yanks for a massive post war debt a few years ago. But they got every penny. We may not be an economic powerhouse anymore but the country is capable of borrowing in large amounts because it is known that the wealth is here and debts will be paid. We could borrow heavily and invest in our economy, a tactic proven to get things back on an even keel. But the ideology of tory governance is set on slash and burn- squeeze blood from a stone. Big state is anathema to the political class in charge. More and more new quango quashers are finding there isn't actually any savings to be made as we are operating on a shoestring anyway.

I think I just don't understand why we are in debt at all. We're a rich nation, why do we owe money at all?

 

[FreddyB]

when the BoE uses QE, the funds created aren't sold through the money markets they're used to buy financial assets (such as treasuries, securities etc) from banks,
in the process giving them excess reserves. if this money found it's way into system it would eventually cause hyperinflation. the money is there to clear toxic
assets (sub prime, deriatives etc) from the bank's balance sheets.

you've misunderstood what i meant. the £200bn isn't taken out of the economy, public sector jobs and services are. meaning we as a nation consume less
which fulfills the demand for commodities elsewhere in the world.

if i'm paddling, you're aquaphobic

The BoE QE cash was explicitly meant to find it's way into the wider economy. Here's a handy pdf from the BoE explaining it for you Quantitative easing explained. Putting more money into our economy to boost spending

 

[Proper Tidy]

I think I just don't understand why we are in debt at all. We're a rich nation, why do we owe money at all?

We got rid of industry and based our capitalist economy around finance capital, is the short answer. Debt is a product, to be bought and sold.

 

[i_got_poison]

Show me it being used in this manner.

google "quantative easing". wiki page has a good explanation.

you could also google "shadow banking system". alot of pages will return results for america, but there are a few international ones in there too.

 

[butchersapron]

There's no bullshitter like an economics bullshitter.

 

[kyser_soze]

I think I just don't understand why we are in debt at all. We're a rich nation, why do we owe money at all?

Look at it this way:

You raise £100 p.a. in taxation. You spend £110 of that. In five years, you owe 50% more than your annual income (we're ignoring inflation in this example).

What you're left with is having to cut your normal spending back by £10 every year, but also to pay back the £50 you've accumulated in debt. You can do this by either raising taxes to bring in £110 per year, diverting the extra £10 into paying down the debt OR you can choose to cut spending by £10 per year, meaning that of the £100 you get in tax take, you only spend £90 on services and divert £10 to paying the debt down. The Condemd have opted to pay the £50 back by raising the tax take to £105, while at the same time, decreasing spend to £75.

Why do we owe the money? Depends on where you stand on the political spectrum. What's for certain is that GB over-estimated the tax take consistently, allowed tax avoidance on a scale that would make a tory blush (via non-doms, allowing a giveaway merchant to run HMRC, cutting HMRC's budget so they can't employ people to chase down avoiders/evaders/late payers) and while this would have been difficult but not impossible to sort out, the laxly regulated City had a few issues and, rather than let the global financial system tank, GB chose to spend money he really didn't have on the Wreck, RBS and QE.

 

[Citizen66]

I think I just don't understand why we are in debt at all. We're a rich nation, why do we owe money at all?

Because banks started collapsing and they used public money to buy some of them to keep them afloat. And that has created a debt that they want us to pay for again. With our fucking jobs and social conditions. While the bankers keep awarding themselves film-star bonuses. In brief.

Hey ho.

 

[butchersapron]

Look at it this way:

You raise £100 p.a. in taxation. You spend £110 of that. In five years, you owe 50% more than your annual income (we're ignoring inflation in this example).

What you're left with is having to cut your normal spending back by £10 every year, but also to pay back the £50 you've accumulated in debt. You can do this by either raising taxes to bring in £110 per year, diverting the extra £10 into paying down the debt OR you can choose to cut spending by £10 per year, meaning that of the £100 you get in tax take, you only spend £90 on services and divert £10 to paying the debt down. The Condemd have opted to pay the £50 back by raising the tax take to £105, while at the same time, decreasing spend to £75.

Why do we owe the money? Depends on where you stand on the political spectrum. What's for certain is that GB over-estimated the tax take consistently, allowed tax avoidance on a scale that would make a tory blush (via non-doms, allowing a giveaway merchant to run HMRC, cutting HMRC's budget so they can't employ people to chase down avoiders/evaders/late payers) and while this would have been difficult but not impossible to sort out, the laxly regulated City had a few issues and, rather than let the global financial system tank, GB chose to spend money he really didn't have on the Wreck, RBS and QE.

No, none of this rubbish that puts a national economy on a footing with a personal economy. There is no valid comparison whatsoever. None.

 

[Doctor Carrot]

Is anyone else listening to Clegg's speech? It's possibly the worst political speech i've ever heard.

 

[kyser_soze]

Because banks started collapsing and they used public money to buy some of them to keep them afloat. And that has created a debt that they want us to pay for again. With our fucking jobs and social conditions. While the bankers keep awarding themselves film-star bonuses. In brief.

Hey ho.

The debt was already there - the banking crisis magnified an already-existing problem of overspending because Senor Darling had no more ££s to spend on propping up the banks. The banking debt is an issue, but the deficit was already there for the world to see prior to the banking mess.

 

[Citizen66]

All this it costs x amount to do this and y amount to do that household econimics stuff over-looks one crucial factor: labour.

It might be cheaper to have someone on the dole than working as a social worker but one is idle while the other is productive and their absense will have a knock-on effect to other elements of society. Watch acquisition crime sky rocket for starters.

 

[kyser_soze]

No, none of this rubbish that puts a national economy on a footing with a personal economy. There is no valid comparison whatsoever. None.

There is a valid comparison when you're using it for illustrative purposes. Simply - the govt spend more money than it was raising in taxes, did this over several years, and was left with a reasonably large chunk of debt when the banking crisis hit. On it's own the debt wouldn't have been that bad.

Altho I await with baited breath your own E-Z reader on how the national debt works.

 

[Citizen66]

The debt was already there - the banking crisis magnified an already-existing problem of overspending because Senor Darling had no more ££s to spend on propping up the banks. The banking debt is an issue, but the deficit was already there for the world to see prior to the banking mess.

Yeah, that's why I said "in brief" at the end.

It still doesn't alter the fact that the capitalist class are now socialising losses from the private sector while keeping profits private. They want their wealth protecting and any risk under-written by the working class.

 

[kyser_soze]

Well yeah, but that's what capitalists do.

 

[ymu]

I think I just don't understand why we are in debt at all. We're a rich nation, why do we owe money at all?

Although it is nowhere near the same as household budgeting, government debt makes sense for exactly the same reasons a mortgage does. It allows capital spending when the lump sum is not immediately available. Most of this debt is held by the BOE, so we effectively owe it to ourselves, and pay ourselves interest. This is one of the huge con jobs on this deficit scare-mongering. We're not in the same situation as Greece, or even the US. Most of our debt is still held domestically, whereas they are owned by interests elsewhere.

The debt is suddenly a bigger perceived problem than it might be in a normal recession because it was triggered by a worldwide financial crisis. The bankers were earning bonuses on fake money - when the various bubbles burst the credit boom came to an end and we had to spend billions on boosting the economy to stop it dying altogether. Companies going under and people losing jobs means less tax paid in and more costly benefits paid out.

However, the debt is nowhere near as big a problem as ideologically-motivated types like to claim. They want to reduce the size of the state and this is their opportunity to do it with a bit of propaganda flannel. It has fuck all to do with economic recovery and everything to do with making us into a country with low wages, low welfare and a handful of billionaires living it up on the back of our labour.

 

[i_got_poison]

The BoE QE cash was explicitly meant to find it's way into the wider economy. Here's a handy pdf from the BoE explaining it for you Quantitative easing explained. Putting more money into our economy to boost spending

2 questions. have you seen any of this £200bn (either in government spending or lax regulatory lending)?
is the government cutting public spending across the board?

if the answer is no and yes respectively, you may want to add a pinch of salt while reading that pdf.

 

[kyser_soze]

The QE cash was supposed to go into freeing up the credit market, whereas it's mainly stayed with the banks to allow them an easy way to build up their capital bases.

 

[butchersapron]

business insider strikes again!

 

[yield]

I think I just don't understand why we are in debt at all. We're a rich nation, why do we owe money at all?

Blagsta linked to a great youtube animation in the Explain the world's debt situation thread from last week.

 

[ViolentPanda]

No offence ymu, but economics is blatantly a load of shit.

Just about everyone except economists will agree with you on that.

They are completely unable to predict anything. They agree on nothing. You can support any argument you like with any number of economists. They don't know what they're fuckin on about.

Not quite true. Many of them know what they're talking about, especially when they're applying historical analysis rather than mathematical models. The problem lies in the fact that most modern economists accept Friedmanism as holy writ.

If as a country we owe money, we need to repay it. And if we're spending more than we're making, then we need to spend less. It's not fuckin rocket science. These bastards are full of smoke and mirrors.

The argument(s) derive from how we repay, at what rate and for what reason(s), and as for spending less, as the old adage goes, sometimes you have to "speculate to accumulate", and that's what Keynesian economic stimulus is about.

 

[ViolentPanda]

i agree stimulus was needed but in america, financial institutions aren't the only beneficiaries. the whole economy is being propped up.
for america to do this, it creates treasury bonds and gets friendly nations to buy them. when china sold £34.bn worth of US bonds earlier this year
japan intervened and started buying up the bonds. it's now the largest foreign holder of US treasuries. economically it makes no sense for japan to
do this, so we must assume they've been coerced. taiwan and south korea are also notably foreign t-bill holders.

what this all means is the uk isn't america. it can't run deficits of this magnitude in pertuity.

No-one is expecting the UK to. As you say, we're not the USA.
That doesn't, however, mean that we need to enact a policy of economic slash-and-burn off the back of a simplistic representation of "deficit=bad, deficit reduction=good", because there's a damn sight more "good" and "bad" in how the deficit is managed/reduced, than in it's reduction (or not) per se. Even a person as ignorant as an economist should be able to see that fairly clearly.

i've already mentioned this in another thread, though due to it's relevance i'll do so again, here. when the BoE dumps £200bn into the economy
it does so with the provision the money will be taken out of the real economy (i.e. private and public sector).

How so? When the BoE enacts quantitative easing it "creates" that money (with all the attendant economic pressures). It doesn't rob Peter to pay Paul.

you can't say "go" quantative easing and in the same breath say "no" to public sector cuts.

You can. You merely require the wit to balance the needs of society and capital.

things don't work like that.

Only if you hold a viewpoint based on market orthodoxies that are founded in an economic outlook (Friedmanism and it's Chicago School cheerleaders) that has never survived any kind of real-world "market testing".

 

[ViolentPanda]

There's no bullshitter like an economics bullshitter.

To be fair, bullshitting is pretty much a necessity (alongside kowtowing to market orthodoxies) for many economics grads.

 

[i_got_poison]

VP - "How so? When the BoE enacts quantitative easing it "creates" that money (with all the attendant economic pressures). It doesn't rob Peter to pay Paul"

money has a relative value to a commodity. the commodity is the thing we work for, purchase and consume.
money is only the means by which we obtain the commodity.
with this in mind, if money is created outside of the existing system with no tangible asset backing it, it's deemed to have no value.
money can't create more of the goods and services it purchases, it can only alter the purchasing price.

a creditor nation doesn't want the money we create, it wants the commodities our money buys. the only achievable way of doing this
is making commodities in the domestic market available. cuts in public expenditure will ensure those goods aren't consumed as people lose their
jobs and with them their purchasing power.

 

[ymu]

VP - "How so? When the BoE enacts quantitative easing it "creates" that money (with all the attendant economic pressures). It doesn't rob Peter to pay Paul"

money has a relative value to a commodity. the commodity is the thing we work for, purchase and consume.
money is only the means by which we obtain the commodity.
with this in mind, if money is created outside of the existing system with no tangible asset backing it, it's deemed to have no value.
money can't create more of the goods and services it purchases, it can only alter the purchasing price.

a creditor nation doesn't want the money we create, it wants the commodities our money buys. the only achievable way of doing this
is making commodities in the domestic market available. cuts in public expenditure will ensure those goods aren't consumed as people lose their
jobs and with them their purchasing power.

The really weird thing is, in your last paragraph, you almost appear to get it. It's like you're regurgitating half understood snippets without ever having thought about their meaning.

QE on a Zimbabwean scale does not work. QE to keep the economy producing and consuming during a recession does.

 

[i_got_poison]

The really weird thing is, in your last paragraph, you almost appear to get it. It's like you're regurgitating half understood snippets without ever having thought about their meaning.

QE on a Zimbabwean scale does not work. QE to keep the economy producing and consuming during a recession does.

if i'm wrong, quote the piece that's wrong and tell me why it is.

don't insult the post and offer absolutely nothing in exchange.

i just explained butchers posting philosophy. do you two know each other?