Government Debt, QE and printing money.
Discussion
Abdul Abulbul Amir said:
ATG said:
Abdul Abulbul Amir said:
ATG said:
ToastMan76 said:
Didnt Brown also sell off all our gold at the bottom of the market around ‘99 which would show in this graph?
Why would it show on the graph? He took an asset of the BoE and converted it into another asset still owned by the BoE. That doesn't create debt.It is easy to look back at this transaction with the benefit of hindsight. But let's look at the data:
Gold had been declining in nominal value (and massively declining in real terms) since the early 1980s. Looking backwards from when GB made the call, gold was a spectacularly stupid thing to have invested in over so long. This is that inflation-adjusted trend:
In real terms, it had lost 90% of its value since the 1980.
So, why don't we call out Lamont and Clarke and Major and Lawson and so on for squandering the nation's wealth by holding onto a declining asset for so long?
The only reason we criticise GB is because the price subsequently went up. If all of us could have predicted what the economy would do up to and around the GFC, I think we'd all be a lot richer
But even if GB had held the gold, and sold later, the difference in price would have covered only a few weeks of the UK's fiscal deficit in, say, 2010/11.
This whole thing is a right royal red herring.
skwdenyer said:
The Gold was swapped for holdings in other foreign currencies, notably USD.
It is easy to look back at this transaction with the benefit of hindsight. But let's look at the data:
Gold had been declining in nominal value (and massively declining in real terms) since the early 1980s. Looking backwards from when GB made the call, gold was a spectacularly stupid thing to have invested in over so long. This is that inflation-adjusted trend:
In real terms, it had lost 90% of its value since the 1980.
So, why don't we call out Lamont and Clarke and Major and Lawson and so on for squandering the nation's wealth by holding onto a declining asset for so long?
The only reason we criticise GB is because the price subsequently went up. If all of us could have predicted what the economy would do up to and around the GFC, I think we'd all be a lot richer
But even if GB had held the gold, and sold later, the difference in price would have covered only a few weeks of the UK's fiscal deficit in, say, 2010/11.
This whole thing is a right royal red herring.
Golds intrinsic value … paper weight. It cannot produce more value. It is easy to look back at this transaction with the benefit of hindsight. But let's look at the data:
Gold had been declining in nominal value (and massively declining in real terms) since the early 1980s. Looking backwards from when GB made the call, gold was a spectacularly stupid thing to have invested in over so long. This is that inflation-adjusted trend:
In real terms, it had lost 90% of its value since the 1980.
So, why don't we call out Lamont and Clarke and Major and Lawson and so on for squandering the nation's wealth by holding onto a declining asset for so long?
The only reason we criticise GB is because the price subsequently went up. If all of us could have predicted what the economy would do up to and around the GFC, I think we'd all be a lot richer
But even if GB had held the gold, and sold later, the difference in price would have covered only a few weeks of the UK's fiscal deficit in, say, 2010/11.
This whole thing is a right royal red herring.
skwdenyer said:
We need to fix the culture.
Agreed. You see it from the top down, I see it from the bottom up. We need productive people at the bottom, and good management at the top. The problem is politics, because the managers can be voted out so have to keep the people happy. And the people demand more and more, with the media to amplify their voice. Ever noticed how much of the 'news' is just people complaining about something?I don't see an answer. Like the markets, global shifts are out of our hands so we will just have to go along with it.
Ouroboros said:
skwdenyer said:
Have you run the numbers recently? There are benefits calculators online that will tell you what you can get, and how / why.
Yes I worked on the hotline. Some got more in rent than I earnt a month.We should have let house prices crash in 2009. We should have turned off help to buy and other incentives. We should have ensured house building kept up. And we changed the definition of affordable housing so now it is "just a bit cheaper than market" and not "a lot cheaper than market."
But we didn't. So now we have to pay a certain level of benefits. The housing benefit levels these days are really low - 30th percentile for a wide area is the local housing allowance. It can't really go any lower.
As for your wages, why were you earning so little? Surely the official Govt line is that you should take on another job or just move to a higher-paying job? (I'm not being serious, of course - it is stupid advice).
So what's the solution? We need wages to rise. We need costs to fall. We need a Govt who actually manage the economy for the benefit of those in it. We haven't had that in well over a decade.
skwdenyer said:
This is what we get when we insist on rising houses prices (and use Govt money to prop them up), but do nothing about building the economy and tackling wage stagnation.
We should have let house prices crash in 2009. We should have turned off help to buy and other incentives. We should have ensured house building kept up. And we changed the definition of affordable housing so now it is "just a bit cheaper than market" and not "a lot cheaper than market."
But we didn't. So now we have to pay a certain level of benefits. The housing benefit levels these days are really low - 30th percentile for a wide area is the local housing allowance. It can't really go any lower.
As for your wages, why were you earning so little? Surely the official Govt line is that you should take on another job or just move to a higher-paying job? (I'm not being serious, of course - it is stupid advice).
So what's the solution? We need wages to rise. We need costs to fall. We need a Govt who actually manage the economy for the benefit of those in it. We haven't had that in well over a decade.
Well on wagesWe should have let house prices crash in 2009. We should have turned off help to buy and other incentives. We should have ensured house building kept up. And we changed the definition of affordable housing so now it is "just a bit cheaper than market" and not "a lot cheaper than market."
But we didn't. So now we have to pay a certain level of benefits. The housing benefit levels these days are really low - 30th percentile for a wide area is the local housing allowance. It can't really go any lower.
As for your wages, why were you earning so little? Surely the official Govt line is that you should take on another job or just move to a higher-paying job? (I'm not being serious, of course - it is stupid advice).
So what's the solution? We need wages to rise. We need costs to fall. We need a Govt who actually manage the economy for the benefit of those in it. We haven't had that in well over a decade.
We have China working for low wages but now pushing for more / better standard of living.
National living wage up 6.6% impacting more and more
nd0000 said:
Government debt isn't like your personal debt. Countries don't have a 45 year working life. If we control our currency we can create new money.
This obsession with national debt leads to governments cutting back at points where the economy needs stimulus. It's partly to blame for real wage and productivity stagnation in the UK since about 2010.
This link and quote below is interesting and backs up your point 'if' we are increasing the supply of goods and services, but at least as far as the covid related debt burden is concerned (and there must be others) this is not the case.This obsession with national debt leads to governments cutting back at points where the economy needs stimulus. It's partly to blame for real wage and productivity stagnation in the UK since about 2010.
This link is to an article that has a detailed (but mostly followable) delve into the consequences of high debt
https://carnegieendowment.org/chinafinancialmarket...
"It is important again to recognize that rising debt is not a problem when it causes the supply of goods and services to rise along with the demand it creates. When that happens, the debt is effectively self-liquidating, with debt rising no faster than the real debt-servicing capacity of the economy (for which GDP is usually a proxy). This doesn’t mean that rising debt in such cases is irrelevant. To the extent that it causes shifts in the distribution of income, it may benefit individual sectors of the economy at the expense of others, but this is a problem of income distribution, not of debt."
So in essence if the money borrowed goes to good and productive uses, all good.............is that true for us? certainly not 100%
Whilst the concept of Financial Repression was first introduced in 1973 by Stanford economists Edward Shaw and Ronald McKinnon, the policy had, in fact, been used - again without any public debate - to pay for Government debt arising from WW2: The UK's savers had bought war bonds to fund the fighting of the war - successive post war governments allowed inflation to rise in order to 'inflate away' savers loans to the state. Bit of a kick in the teeth for all those patriotic savers - but then perhaps it could be justified in that the loss for many citizens was greater than mere money?
But, around 14 years ago, with the introduction of Artificially Low Interest Rates and Quantitative Easing, the British authorities sunk to a new low. Without any public discussion, Financial Repression - a form of Currency Debasement was introduced to bail out not (just) the State (again), but the Government's and the BoE's 'friends' in the city. All those corrupt and broken banks: Corporate Financial Repression.
Corporate Financial Repression - privatising corporate profits after socialising corporate loses.
Of course, at the time, this might have seemed the best, if not the only, option - in order to 'save' the financial sector.
But once politicians, representing political parties of all hues, realised they could just show their political largesse, by spending money without recourse to the politically inexpedient necessity of actually having to justify tax rises to the electorate; they became addicted to Quantitative Easing.
2009 The GFC £200bn
2010 Eurozone Debt Crisis £175bn
2016 Brexit referendum result £70bn
2020 Covid-19 (so far) £450bn
Source: https://www.bankofengland.co.uk/monetary-policy/qu...
Successive Governments, since Gordon Brown's - through the Bank of England - have printed £895bn - or £13,000 for every man, woman and child in the country!
Has any of this QE ever been reversed over the economic cycles since 2007-8? There is no indication that our illustrious political class and their bankster* paymasters will do anything to curtail the use of their miraculous money tree.
But, around 14 years ago, with the introduction of Artificially Low Interest Rates and Quantitative Easing, the British authorities sunk to a new low. Without any public discussion, Financial Repression - a form of Currency Debasement was introduced to bail out not (just) the State (again), but the Government's and the BoE's 'friends' in the city. All those corrupt and broken banks: Corporate Financial Repression.
Corporate Financial Repression - privatising corporate profits after socialising corporate loses.
Of course, at the time, this might have seemed the best, if not the only, option - in order to 'save' the financial sector.
But once politicians, representing political parties of all hues, realised they could just show their political largesse, by spending money without recourse to the politically inexpedient necessity of actually having to justify tax rises to the electorate; they became addicted to Quantitative Easing.
2009 The GFC £200bn
2010 Eurozone Debt Crisis £175bn
2016 Brexit referendum result £70bn
2020 Covid-19 (so far) £450bn
Source: https://www.bankofengland.co.uk/monetary-policy/qu...
Successive Governments, since Gordon Brown's - through the Bank of England - have printed £895bn - or £13,000 for every man, woman and child in the country!
Has any of this QE ever been reversed over the economic cycles since 2007-8? There is no indication that our illustrious political class and their bankster* paymasters will do anything to curtail the use of their miraculous money tree.
Scootersp said:
So in essence if the money borrowed goes to good and productive uses, all good.............is that true for us? certainly not 100%
1.5 billion on ppe that was junk.
150 million on unused immigration centre.
13 billion on failed mod stuff
etc is there a pattern?
''Government has risked & lost “unacceptable” billions of taxpayers’ money in its Covid response - and must account to the generations that will pay for it
“As the PAC has made clear across a series of reports on the costs of Covid, lack of preparedness and planning, combined with weaknesses in existing systems across Government, have led to an unacceptable level of mistakes, waste, loss and openings for fraudsters which will all end up robbing current and future taxpayers of billions of pounds.''
https://committees.parliament.uk/committee/127/pub...
Ouroboros said:
15 billion lost to cv fraud
1.5 billion on ppe that was junk.
150 million on unused immigration centre.
13 billion on failed mod stuff
etc is there a pattern?
''Government has risked & lost “unacceptable” billions of taxpayers’ money in its Covid response - and must account to the generations that will pay for it
“As the PAC has made clear across a series of reports on the costs of Covid, lack of preparedness and planning, combined with weaknesses in existing systems across Government, have led to an unacceptable level of mistakes, waste, loss and openings for fraudsters which will all end up robbing current and future taxpayers of billions of pounds.''
https://committees.parliament.uk/committee/127/pub...
The £15bn (if it turns out to be true) was basically stimulus money. Most of it will have stayed in the economy. Annoying, yes, but not the worst outcome possible.1.5 billion on ppe that was junk.
150 million on unused immigration centre.
13 billion on failed mod stuff
etc is there a pattern?
''Government has risked & lost “unacceptable” billions of taxpayers’ money in its Covid response - and must account to the generations that will pay for it
“As the PAC has made clear across a series of reports on the costs of Covid, lack of preparedness and planning, combined with weaknesses in existing systems across Government, have led to an unacceptable level of mistakes, waste, loss and openings for fraudsters which will all end up robbing current and future taxpayers of billions of pounds.''
https://committees.parliament.uk/committee/127/pub...
skwdenyer said:
The £15bn (if it turns out to be true) was basically stimulus money. Most of it will have stayed in the economy. Annoying, yes, but not the worst outcome possible.
"based on their turnover, which they self-declared."Pretty pertinent yes, seems like it was stimulus money, used for suitcases full of cash leaving the country, fast cars, gambling, watches, holidays. The free money tree pumping out billions. These are the cases they know about.
https://www.google.com/amp/s/www.dailymail.co.uk/n...
MuddyK said:
These big spend 'projects' need to stop, and MPs need to be held liable with the public's money.
Priti Patel - Rwanda - £125m?
Chris Graylings -£500m ships was it?
HS2 - How many Billions?
Always one f
k up after another.
How much did the Labour caused IMF bailout in the 1970’s cost us (in todays £)?Priti Patel - Rwanda - £125m?
Chris Graylings -£500m ships was it?
HS2 - How many Billions?
Always one f
k up after another. Welshbeef said:
How much did the Labour caused IMF bailout in the 1970’s cost us (in todays £)?
I’m not sure you can call it “Labour-caused” - there were a wide range of issues, not least the ramifications of the preceding years.What most don’t know is the UK had been using IMF funds frequently since the mid 1940s.
The real cause of the 1976 Sterling crisis was the failure to make proper use of the Marshall aid nearly 30 years earlier - rather than rebuilding our economy, it was used to prop up the crumbling edifice of empire.
In many ways, what we’re seeing today might just be the start of the final end of that empire
skwdenyer said:
The only reason we criticise GB is because the price subsequently went up. If all of us could have predicted what the economy would do up to and around the GFC, I think we'd all be a lot richer
But even if GB had held the gold, and sold later, the difference in price would have covered only a few weeks of the UK's fiscal deficit in, say, 2010/11.
This whole thing is a right royal red herring.
I believe he was criticised mainly for announcing the desire to sell beforehand causing a slump in the price.But even if GB had held the gold, and sold later, the difference in price would have covered only a few weeks of the UK's fiscal deficit in, say, 2010/11.
This whole thing is a right royal red herring.
He also used part of the proceeds to pay off debt, which he then subsequently spent.
MuddyK said:
These big spend 'projects' need to stop, and MPs need to be held liable with the public's money.
Priti Patel - Rwanda - £125m?
Chris Graylings -£500m ships was it?
HS2 - How many Billions?
Always one fk up after another.
https://amp.theguardian.com/uk-news/2013/oct/31/hs2-labour-true-friendPriti Patel - Rwanda - £125m?
Chris Graylings -£500m ships was it?
HS2 - How many Billions?
Always one f
k up after another. Abdul Abulbul Amir said:
I believe he was criticised mainly for announcing the desire to sell beforehand causing a slump in the price.
He also used part of the proceeds to pay off debt, which he then subsequently spent.
I know what he was criticised for at the time (although if you look at the graphs above, you'll see it made little difference - gold was at the end of a 20-year fall). But with hindsight he's frequently criticised for selling given what subsequently happened to the price of gold.He also used part of the proceeds to pay off debt, which he then subsequently spent.
As regards the proceeds, if debt was paid down, why was that bad?
Even with all the money spunked up the wall, still the UK is fked worse than Europe.
"On Wednesday, Mr Bailey told a European Central Bank forum that "the UK economy is probably weakening rather earlier and somewhat more than others".
He said: "I think that's been somewhat evident now for a few months."
Andrew Bailey is the Governor of the Bank of England and Chair of the Monetary Policy Committee, Financial Policy Committee and the Prudential Regulation .
ked worse than Europe."On Wednesday, Mr Bailey told a European Central Bank forum that "the UK economy is probably weakening rather earlier and somewhat more than others".
He said: "I think that's been somewhat evident now for a few months."
Andrew Bailey is the Governor of the Bank of England and Chair of the Monetary Policy Committee, Financial Policy Committee and the Prudential Regulation .
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