BoE Base Rate, What if...
Discussion
walm said:
Mr Whippy said:
Had we doubled the GBP money supply over the last 9 years since 2007 via helicopter money, would we have a debt crisis right now?
From my simple maths, we'd have salaries around double what they are now, the national debt would be more than halved, and people would be running around like it was christmas buying things and boosting GDP massively?
OK, older people would be shafted by a period of high inflation, but won't they be shafted by the end of all this any way?
I thought BigLion was being harsh calling you naive earlier.From my simple maths, we'd have salaries around double what they are now, the national debt would be more than halved, and people would be running around like it was christmas buying things and boosting GDP massively?
OK, older people would be shafted by a period of high inflation, but won't they be shafted by the end of all this any way?
Now I see that he was being generous!
I would step back from the keyboard if I were you!
I'm not saying I'm right, I think people are missing the question marks at the end of all my sentences. I'm asking questions, not making statements.
Mr Whippy said:
Had we doubled the GBP money supply over the last 9 years since 2007 via helicopter money, would we have a debt crisis right now?
Depends how you did the helicopter drop.Use it to buy out the state pensions of everyone under, say, 30 and it ends up being invested.
Or use it to buy non voting equity in the retail banking sector and you could have a whole pile of benefits.
Just giving a thousand pounds to everyone with a NI number seems to be the least elegant way to do it. Unless you sell booze or lottery tickets.
Adam Ansel said:
Mr Whippy said:
Had we doubled the GBP money supply over the last 9 years since 2007 via helicopter money, would we have a debt crisis right now?
Depends how you did the helicopter drop.Use it to buy out the state pensions of everyone under, say, 30 and it ends up being invested.
Or use it to buy non voting equity in the retail banking sector and you could have a whole pile of benefits.
Just giving a thousand pounds to everyone with a NI number seems to be the least elegant way to do it. Unless you sell booze or lottery tickets.
Mr Whippy said:
I think people are missing the question marks at the end of all my sentences. I'm asking questions, not making statements.
Ah - indeed I had missed that, sorry!Zerohedge/DB argue that we really HAVE been doing helicopter money already...
http://www.zerohedge.com/news/2016-03-07/why-helic...
Uk debt is held primarily by companies and other countries (then boe and households etc.) - devalue sterling through hyperinflation means that the interest rate will be hiked by these 'lenders' to compensate and we lose all financial credibility as well as start to enter money supply issues as who would want to lend to us?
On top of that we will end up devaluing savings and as a consequence the government would most likely change beyond recognition.
Not quite the same, but hyperinflation in Germany helped lead to the rise of the Nazi's as society disintegrated.
On top of that we will end up devaluing savings and as a consequence the government would most likely change beyond recognition.
Not quite the same, but hyperinflation in Germany helped lead to the rise of the Nazi's as society disintegrated.
So what is the fix?
GDP will drop while people don't spend money.
People can't spend money because they're already spending it all on stuff, and a big chunk of debt.
Interest rates can't rise because the cost of servicing debts will rise, and have been lowered to try stimulate growth which isn't happening.
The only solution seems to still be to devalue the debt.
Spending/growth can't come first because there is no money to do so.
Is it just a game of musical chairs between world currencies?
No one wants to be first or last, so they just devalue their currencies in hard to detect ways for years on end to retain some economic credibility?
GDP will drop while people don't spend money.
People can't spend money because they're already spending it all on stuff, and a big chunk of debt.
Interest rates can't rise because the cost of servicing debts will rise, and have been lowered to try stimulate growth which isn't happening.
The only solution seems to still be to devalue the debt.
Spending/growth can't come first because there is no money to do so.
Is it just a game of musical chairs between world currencies?
No one wants to be first or last, so they just devalue their currencies in hard to detect ways for years on end to retain some economic credibility?
BigLion said:
Uk debt is held primarily by companies and other countries...
Roughly a quarter is UK insurance companies and pension funds (acceptable collateral damage?), quarter foreign (you think the Yanks will roll over and let you welch?), quarter BoE (QE), and the rest banks and individuals (again your money). Talk of inflating your way out of debt is plain silly.http://www.dmo.gov.uk/documentview.aspx?docname=pu...
Importantly about a third of the debt is inflation linked so you can't inflate your way out of that however you try. Lastly and often overlooked the long term debt is rolled every week when stuff expires from years ago, you even hint at inflating your way out the debt and rate you pay on your debt starts going up straight away with every new issuance replacing old.
Edited by anonymous-user on Thursday 28th April 21:45
Mr Whippy said:
So what is the fix?
GDP will drop while people don't spend money.
People can't spend money because they're already spending it all on stuff, and a big chunk of debt.
Interest rates can't rise because the cost of servicing debts will rise, and have been lowered to try stimulate growth which isn't happening.
The only solution seems to still be to devalue the debt.
Spending/growth can't come first because there is no money to do so.
Is it just a game of musical chairs between world currencies?
No one wants to be first or last, so they just devalue their currencies in hard to detect ways for years on end to retain some economic credibility?
Errr not sure if your serious but of you pay down debt likr a mortgage rather than just service it like min credit card payment over time you will have more disposable income. We are not talking over night but years of prudence. Think of it this way it's estimated you could save 1 million by time you retired if you put 5 a day away each day an invested it. (It's an American idea). Anyway point is we could spend less on what we don't need and pay down debt. Reduces risk of default over long term an means long term you have more free income I. E. No loans or credit cards and 25 years later no mortgage. People don't like long term but that's the reality of it saving is slower than spending. GDP will drop while people don't spend money.
People can't spend money because they're already spending it all on stuff, and a big chunk of debt.
Interest rates can't rise because the cost of servicing debts will rise, and have been lowered to try stimulate growth which isn't happening.
The only solution seems to still be to devalue the debt.
Spending/growth can't come first because there is no money to do so.
Is it just a game of musical chairs between world currencies?
No one wants to be first or last, so they just devalue their currencies in hard to detect ways for years on end to retain some economic credibility?
Gecko1978 said:
Mr Whippy said:
So what is the fix?
GDP will drop while people don't spend money.
People can't spend money because they're already spending it all on stuff, and a big chunk of debt.
Interest rates can't rise because the cost of servicing debts will rise, and have been lowered to try stimulate growth which isn't happening.
The only solution seems to still be to devalue the debt.
Spending/growth can't come first because there is no money to do so.
Is it just a game of musical chairs between world currencies?
No one wants to be first or last, so they just devalue their currencies in hard to detect ways for years on end to retain some economic credibility?
Errr not sure if your serious but of you pay down debt likr a mortgage rather than just service it like min credit card payment over time you will have more disposable income. We are not talking over night but years of prudence. Think of it this way it's estimated you could save 1 million by time you retired if you put 5 a day away each day an invested it. (It's an American idea). Anyway point is we could spend less on what we don't need and pay down debt. Reduces risk of default over long term an means long term you have more free income I. E. No loans or credit cards and 25 years later no mortgage. People don't like long term but that's the reality of it saving is slower than spending. GDP will drop while people don't spend money.
People can't spend money because they're already spending it all on stuff, and a big chunk of debt.
Interest rates can't rise because the cost of servicing debts will rise, and have been lowered to try stimulate growth which isn't happening.
The only solution seems to still be to devalue the debt.
Spending/growth can't come first because there is no money to do so.
Is it just a game of musical chairs between world currencies?
No one wants to be first or last, so they just devalue their currencies in hard to detect ways for years on end to retain some economic credibility?
If we cut more government spending then GDP really will be negative, so it's self defeating.
We're basically stuck now.
Japan is an example of a small economy stuck in a debt to GDP trap.
The entire EZ is about to find itself there too.
The sound of helicopters is clearly strong in Draghi's mind... I wonder how long it'll be until he's making it sound all sensible a thing to be doing and everyone just goes along with it because of herd mentality. It's ok if everyone else is doing it afterall
sidicks said:
Mr Whippy said:
If we cut more government spending then GDP really will be negative, so it's self defeating.
Which rule of economics says that cutting government spending automatically means that GDP (presumably you actually mean GDP growth?) will be negative?My 'rule' says if we actually spent some made up money on infrastructure to generate loads of jobs, improve economic potential, and a debt we could justify to future generations, we'd probably be doing a lot better than we are now.
I'm struggling here with the double standards used by economists. It's all grey and hard to manage when they f
k up, but then when someone suggests that government shouldn't not spend the tax payers money on them, it's all black and white rules!Economics is tough and arbitrary and vague and hard to manage, or it's black and white rules?
Which is it?
Mr Whippy said:
No rules says it.
My 'rule' says if we actually spent some made up money on infrastructure to generate loads of jobs, improve economic potential, and a debt we could justify to future generations, we'd probably be doing a lot better than we are now.
I'm struggling here with the double standards used by economists. It's all grey and hard to manage when they fk up, but then when someone suggests that government shouldn't not spend the tax payers money on them, it's all black and white rules!
Economics is tough and arbitrary and vague and hard to manage, or it's black and white rules?
Which is it?
As before, it's not as binary as you keep suggesting...My 'rule' says if we actually spent some made up money on infrastructure to generate loads of jobs, improve economic potential, and a debt we could justify to future generations, we'd probably be doing a lot better than we are now.
I'm struggling here with the double standards used by economists. It's all grey and hard to manage when they f
k up, but then when someone suggests that government shouldn't not spend the tax payers money on them, it's all black and white rules!Economics is tough and arbitrary and vague and hard to manage, or it's black and white rules?
Which is it?
sidicks said:
Mr Whippy said:
No rules says it.
My 'rule' says if we actually spent some made up money on infrastructure to generate loads of jobs, improve economic potential, and a debt we could justify to future generations, we'd probably be doing a lot better than we are now.
I'm struggling here with the double standards used by economists. It's all grey and hard to manage when they fk up, but then when someone suggests that government shouldn't not spend the tax payers money on them, it's all black and white rules!
Economics is tough and arbitrary and vague and hard to manage, or it's black and white rules?
Which is it?
As before, it's not as binary as you keep suggesting...My 'rule' says if we actually spent some made up money on infrastructure to generate loads of jobs, improve economic potential, and a debt we could justify to future generations, we'd probably be doing a lot better than we are now.
I'm struggling here with the double standards used by economists. It's all grey and hard to manage when they f
k up, but then when someone suggests that government shouldn't not spend the tax payers money on them, it's all black and white rules!Economics is tough and arbitrary and vague and hard to manage, or it's black and white rules?
Which is it?
sidicks said:
Mr Whippy said:
So why does there need to be an economic rule to say cutting spending will or will not reduce GDP?
WTf?Then you said economics isn't binary.
I'm still confused here.
It sounds like when people want to blame economics for failure, it's arbitrary and wooly and they won't understand.
When you try find any solution that an economist doesn't agree with, it suddenly gets very clear and rule based and you're absolutely wrong in your idea.
Mr Whippy said:
sidicks said:
Mr Whippy said:
If we cut more government spending then GDP really will be negative, so it's self defeating.
Which rule of economics says that cutting government spending automatically means that GDP (presumably you actually mean GDP growth?) will be negative?Mr Whippy said:
You just mentioned a rule about 4 posts up, saying what economic rule meant that reducing public spending will reduce GDP.
No I didn't. I asked you which economic rule supported your claims (I am not aware of one that does).Mr Whippy said:
Then you said economics isn't binary.
It isn't.We can have economic principles ('rules') that work in certain circumstance ('all other things being equal'), however in the real world all other things are rarely 'equal'. Hence the comments about things being much more complex...
Mr Whippy said:
I'm still confused here.
That's fairly obvious!Mr Whippy said:
It sounds like when people want to blame economics for failure, it's arbitrary and wooly and they won't understand.
IT sounds like you want to blame economics without understanding the first thing about it!Mr Whippy said:
When you try find any solution that an economist doesn't agree with, it suddenly gets very clear and rule based and you're absolutely wrong in your idea.
That's not what said.sidicks said:
Mr Whippy said:
If we cut more government spending then GDP really will be negative, so it's self defeating.
Which rule of economics says that cutting government spending automatically means that GDP (presumably you actually mean GDP growth?) will be negative?
GDP=c+g+i+nx
Where c is private consumption, g is government spending, i is investment expenditure and nx is net exports. So all other things being equal (don't ya love that phrase!) lower government spending = lower GDP.
Of course to extrapolate that basic definition to conclude that government can't ever cut spending is simplistic. All other things are not equal and money that government doesn't take off us to waste usually goes into personal consumption and investment.
Edited by anonymous-user on Thursday 28th April 22:28
fblm said:
To be fair, Whippy is completely wrong about most economics but he's almost right about GDP.
GDP=c+g+i+nx
Where c is private consumption, g is government spending, i is investment expenditure and nx is net exports. So all other things being equal (don't ya love that phrase!) lower government spending = lower GDP.
I know that, but the point is that seldom are 'all other things equal!GDP=c+g+i+nx
Where c is private consumption, g is government spending, i is investment expenditure and nx is net exports. So all other things being equal (don't ya love that phrase!) lower government spending = lower GDP.
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