Unemployment down, inflation down. Was Gordon right?
Discussion
Apparently GDP = private consumption + gross investment + government spending + (exports - imports).
So a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
So a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
turbobloke said:
Apparently GDP = private consumption + gross investment + government spending + (exports - imports).
So a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
As I said in the other thread a good chunk of that £4 trillion looks a bit questionable. So a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
Fittster said:
The point of thread was, the Labour government increased spending during the recession when many of the people here were saying we couldn't afford it, today there are signs of improvement in the economy.
impossible to say, one thing following the other does not imply causation. i'm inclined to think the boe bailing out over stretched borrowers with 0.5% rates has had more to do with any semblance of recovery than throwing tens of billions more borrowed pounds at the non-productive public sector in the vague hope some will stick. increasing spending in a recession makes sense if you've saved up for it. obviously prudence brown didnt. when you're mortgaged up to the eyeballs and lose your job you move to a smaller house, you dont get the amex out and go on holiday.
Fittster said:
As I said in the other thread a good chunk of that £4 trillion looks a bit questionable.
a bit? it's complete bo11ocks. if they are going to make up potential liabilities they forgot nuclear accident indemnity.Edited by fbrs on Wednesday 14th July 18:33
turbobloke said:
Apparently GDP = private consumption + gross investment + government spending + (exports - imports).
So a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
No apparently about itSo a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
http://www.thisislondon.co.uk/standard-business/ar...
"The figures showed a 1.5% rise in Government spending added 0.4% to GDP growth - meaning without it Britain would still be in recession."
Fittster said:
130R said:
You're easily impressed. Any idiot can borrow money, paying it back is the difficult bit.
I'm pretty open minded about the situation, although I don't go along with the line that everything bad is the fault of Gordon Brown and CMD will lead us all to the promised land.The huge cuts in public spending that many are calling for on this forum certainly has associated risks to a weak, consumer economy like the UKs. Failing to acknowledge those risks undermines the arguments positive sides. To avoid the recession turning into a depression New Labour/Gordon's policy was Keynesian(ish),it would have been better to start with surplus but the electorate had decided they liked lots of public spending so there you go. I don't recall much anger when the policy was initially directed at the financial services industry. Can we be sure it has worked? No, but the early signs are positive.
Paying back debt isn't hard if you have a printing press (I thought everyone was comfortable with Merv getting busy knocking up shiny new pounds). If slashing public spending triggers deflation and a weaker economy paying the debt would become ever more difficult.
Things aren't as black and white as many on PH would like to paint them.
NoelWatson said:
"The figures showed a 1.5%8.6bn rise in Government spending added 0.4%5.6bn to GDP growth - meaning without it Britain would still be in recession."
you gotta love the ONS. 
oh one other thing. from '08 to '09 spending went from 576bn to 622bn. now im no statisitian but that looks more like and 8% increase not 1.5
Edited by fbrs on Wednesday 14th July 19:08
staceyb said:
Mojocvh said:
AllTorque said:
Mojocvh said:
The real Apache said:
Because of savings?
Nope. Means tested JSA, small (and I mean freaking small) input from paymaster general. One off = both dobbed over.
Good Luck.
kthem..Edited by Mojocvh on Wednesday 14th July 18:59
I have to say I'm surprised and confused about the effectiveness of QE up until now. I think the whole concept of fiat money and global finance is under question. What is money, if you can print more and not suffer inflation?
I suspect Gordon is in the right company now, debating these very things with people of similar intellect and ability. Shame Tony isn't in the same institution!
I suspect Gordon is in the right company now, debating these very things with people of similar intellect and ability. Shame Tony isn't in the same institution!
turbobloke said:
Apparently GDP = private consumption + gross investment + government spending + (exports - imports).
So a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
Without QE financing much of the budget deficit with new money, the rise in gov't spending would have to have been funded by reductions in other components of the equation. I don't therefore see it as the Keynesian element itself which has added to output, but QE. [That's not to say that QE is doing its job, though.]So a government spending hike of suitable magnitude can itself boost GDP.
Those who said the country couldn't afford it were probably correct, with national debt at £4trillion and the deficit running at £155bn.
ETA: We also don't know that the outcome would have been any different if QE was financing private, rather than public, debt.
ETA2: Then there's the question of whether QE will actually bring about real effects, rather than just nominal.
Edited by ZondaMark on Wednesday 14th July 21:05
Edited by ZondaMark on Thursday 15th July 00:49
Mojocvh said:
staceyb said:
Mojocvh said:
AllTorque said:
Mojocvh said:
The real Apache said:
Because of savings?
Nope. Means tested JSA, small (and I mean freaking small) input from paymaster general. One off = both dobbed over.
Good Luck.
kthem..Fittster said:
130R said:
You're easily impressed. Any idiot can borrow money, paying it back is the difficult bit.
I'm pretty open minded about the situation, although I don't go along with the line that everything bad is the fault of Gordon Brown and CMD will lead us all to the promised land.The huge cuts in public spending that many are calling for on this forum certainly has associated risks to a weak, consumer economy like the UKs. Failing to acknowledge those risks undermines the arguments positive sides. To avoid the recession turning into a depression New Labour/Gordon's policy was Keynesian(ish),it would have been better to start with surplus but the electorate had decided they liked lots of public spending so there you go. I don't recall much anger when the policy was initially directed at the financial services industry. Can we be sure it has worked? No, but the early signs are positive.
Paying back debt isn't hard if you have a printing press (I thought everyone was comfortable with Merv getting busy knocking up shiny new pounds). If slashing public spending triggers deflation and a weaker economy paying the debt would become ever more difficult.
Things aren't as black and white as many on PH would like to paint them.
s like Brown get into power when there are morons like you to put them there.He, Blair and the rest of them, formed the most unsuccessful, financially inept, disastrous Governments ever seen in this Country and we will be paying for it for decades.
And you see some good in him? FFs
Fittster said:
"The number of people unemployed in the UK fell by 34,000 to 2.47m in the three months to May, official figures show.
I can’t be bothered to address any of your points on the economy, as with a quick glance through this thread, it's fairly obvious that the old saying about statistics is alive and well on Pistonheads 
The point I can and will address is the unemployment stats, your selective tractor and boot production figure style post seems to miss the point made by many of the broadsheets analysing the employment figures, that the majority of the new jobs are part time "McJobs" where the jobs lost due to winky & co's incompetence, were apparently mostly of full time skilled blue and white collar positions, the sort of technical jobs that don’t come back once the skills have been lost and the businesses closed . . . . . . . . . Corus being a very sad example.
yes it may be to many a subtle difference and I wouldn’t expect the average labour supporter to understand it (after all in the election earlier this year, they were almost all unable to recognise that the economy encompasses both public AND private sector!) however it is a very important difference and seemingly symptomatic of labours 13 year race to the bottom
Fittster said:
Call it what you like but do you think it would have been right for the government to have cut public sector in the middle of the recession? The point of thread was, the Labour government increased spending during the recession when many of the people here were saying we couldn't afford it, today there are signs of improvement in the economy. So with the benefit of hindsight were the government economic decisions during the recession correct? It's only a topic of discussion to fill a dull afternoon.
The vast majority of the increased deficit was in the form of the so called 'automatic stabilisers', benefits automatically rising and tax receipts falling in a recession. The largest part of Labour's stimulus package was a cut in the Vat rate that was of very questionable value at best. The package itself was by necessity quite small by international standards because of the size of the fiscal hole. As to what we can't afford it was not the deficit at the height of the recession, but the massive increase in the structural deficit that only became visible when the bubble popped. This, combined with existing demographic trends, has left us in a very perilous fiscal situation.
JagLover said:
As to what we can't afford it was not the deficit at the height of the recession, but the massive increase in the structural deficit that only became visible when the bubble popped. This, combined with existing demographic trends, has left us in a very perilous fiscal situation.
Yup. Whichever way you look at things if you spent your way into trouble you sure as hell aren't going to spend your way out of it. ZondaMark said:
ETA: We also don't know that the outcome would have been any different if QE was financing private, rather than public, debt.
That's the big part that's missing in this discussion. Yes, spending does stimulate growth in the short-term - but that's just a static analysis - with that extra spending comes extra debt which leads to higher financing costs and eventually taxes.As an analogy, if it was your household budget and you want to increase income you would perhaps borrow to spend on training for a new job, a car to get you to work, or you could save money e.g reducing utilities or cycling to work - you won't improve your situation by spending it on a new kitchen or a bigger TV. It just seems to me that Keynesian economics is the lazy politicians's excuse for not cutting back on waste (or maximising your chances of winning an election?). Anyway, i need some sleep.
Edited by fido on Thursday 15th July 01:19
staceyb said:
Mojocvh said:
AllTorque said:
Mojocvh said:
The real Apache said:
Because of savings?
Nope. Means tested JSA, small (and I mean freaking small) input from paymaster general. One off = both dobbed over.
Good Luck.
I'm in the same boat, which grates a tad, having been a higher-rate taxpayer for most of my working life.
Meanwhile, on the other side of town, swamp donkey with no intention of ever working, just needs to open her legs for 5 minutes in order to get housing and benefits, with no compulsion to look for work until the youngest skiprat is 14.
Jesus. At that age I myself had a job.
fido said:
ZondaMark said:
ETA: We also don't know that the outcome would have been any different if QE was financing private, rather than public, debt.
That's the big part that's missing in this discussion. Yes, spending does stimulate growth in the short-term - but that's just a static analysis - with that extra spending comes extra debt which leads to higher financing costs and eventually taxes.As an analogy, if it was your household budget and you want to increase income you would perhaps borrow to spend on training for a new job, a car to get you to work, or you could save money e.g reducing utilities or cycling to work - you won't improve your situation by spending it on a new kitchen or a bigger TV. It just seems to me that Keynesian economics is the lazy politicians's excuse for not cutting back on waste (or maximising your chances of winning an election?). Anyway, i need some sleep.
Edited by fido on Thursday 15th July 01:19
Mobile Chicane said:
staceyb said:
Mojocvh said:
AllTorque said:
Mojocvh said:
The real Apache said:
Because of savings?
Nope. Means tested JSA, small (and I mean freaking small) input from paymaster general. One off = both dobbed over.
Good Luck.
I'm in the same boat, which grates a tad, having been a higher-rate taxpayer for most of my working life.
Meanwhile, on the other side of town, swamp donkey with no intention of ever working, just needs to open her legs for 5 minutes in order to get housing and benefits, with no compulsion to look for work until the youngest skiprat is 14.
Jesus. At that age I myself had a job.
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