-
<blockquote class="ipsBlockquote" data-author="JC" data-cid="515570" data-time="1442178013">
<div>
<p>Yeah, I've got that. I'm not going to engage with someone whose debating style is to call everyone <span style="color:#ff0000;">who disagrees with him an idiot</span>. As a rule I never trust the arguments of anyone who tells you what things won't do but never puts their neck on the line and says what will happen.</p>
<p> </p>
<p>If you're interested in why the QE plan won't work I'll tell you what I think but it's one of the driest things you'd ever read. </p>
</div>
</blockquote>
<p> </p>
<p>Where\ have I done this?</p> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="515516" data-time="1442148019">
<div>
<p>I understand what money is and how the UK treasury pay their bills. You don't based on this comment. .</p>
<p> </p>
<p><strong>And your comment re investing in housing is idiotic</strong>. It's not spending on welfare so that the poor can afford to eat and pay for their power etc. This is another topic to debate. It's investing in a valuable asset that will almost certainly increase in value over time.</p>
<p> </p>
<p>But the brainwashed have been convinced that a company or person running up debt is OK if this debt finance is invested wisely. But not the Govt doing the same re housing. Even though the UK Govt's deficit spending can be financed by zero interest BoE reserves. This is just a fact as is being done INDIRECTLY by QE.</p>
</div>
</blockquote>
<p> </p>
<p>Umm, right there Winger.</p> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="515591" data-time="1442184753"><p>The UK is monetary sovereign.<br>
<br>
So money can't flow out of the UK. (unlike Euro countries) as only UK banks can hold UK money<br>
<br>
if someone wants to reduce their holding of Uk pounds they need a buyer of those pounds to swap for the currency they want. This is what determines the exchange rates. So the currency might fall but money stays in the UK</p></blockquote>
<br>
So investors might not balk at he prospect of funding Corbyns fantasies through higher taxes and take their business elsewhere? -
<blockquote class="ipsBlockquote" data-time="1442184972" data-cid="515592" data-author="Winger"><p>Where on his website<br> <br>Please give me a direct link</p></blockquote><br>Here you go Winger:<br><br><a data-ipb='nomediaparse' href='http://www.jeremyforlabour.com/winning_with_a_greener_future'>http://www.jeremyforlabour.com/winning_with_a_greener_future</a><br><br>•A modern, green, resource-efficient economy - creating 1 million new green climate jobs<br><br>More lies from the propaganda media?
-
<blockquote class="ipsBlockquote" data-author="Kirwan" data-cid="515596" data-time="1442185457">
<div>
<p>Umm, right there Winger.</p>
</div>
</blockquote>
<p> </p>
<p>I said his COMMENT was idiotic. Not that he was an idiot</p>
<p> </p>
<p>But I have been called a moron on this thread. But I accept that as part of a robust debate. Although it does reflect on the poster.</p> -
<p>OK, at the risk of patronising everybody here goes.</p>
<p> </p>
<p>QE is actually a managed form of debt monetisation, by which central banks issue currency that becomes part of the government's debt. It's not in itself a bad thing.</p>
<p> </p>
<p>There's a lot of sound economic theory that suggests that in principle running government debts of many multiples of GDP is reasonably harmless for an economy that is fundamentally sound and growing. So for example the US's current level of debt, despite what the politicians tell everyone, isn't necessarily bad. People tend to think of governments as bigger versions of individuals and interpolate govt debt down to their own level. That leads them to perform largely meaningless calculations which say each person's share of the debt is [insert a frightening number]. But governments aren't individuals. If you had a debt of 10 times your income that you had to repay over time there would be 2 main hurdles, first you'd need to make sure that in any given term the amount you repaid exceeded the amount of interest accrued, otherwise the interest would compound and you'd have an increasing debt. But if you can manage that the other issue is enough years to make the repayments before your income source dries up (i.e. you retire or die).</p>
<p> </p>
<p>But governments don't retire or die, so the time to repay is, in theory, never an issue, and the minimum repayments can be taken care of because the government can simply create money whenever they have to make an interest payment.</p>
<p> </p>
<p>The argument is very seductive in an abstract sense. If you can simply roll the debt on and pay the interest at no cost you can use the debt you manufacture to fund all sorts of things. And it won't have escaped the notice of Corbyn that QE has pumped in £350 to £400bn without hyperinflation resulting, with the US and EU having similar "success", so he appears to think that is a trick that can be repeated ad infinitum. But I reckon he's wrong on a couple of fronts.</p>
<p> </p>
<p>First, nobody knows yet just what the long-run impacts of QE will be. The data's just not there. But inflation may yet set in. (If you've done any economics, draw yourself an aggregate supply and demand curve for the scenario with output on the x axis and inflation rate on the y axis, QE pushes the aggregate demand up and to the right, where inflation is raised. But output now exceeds potential output and the short-run aggregate supply curve will begin to shift up and to the left to compensate, so that output comes back to where it should be. You'll see that the inflation rate (where the demand and supply curves cross) is now significantly higher.)</p>
<p> </p>
<p>Second, there is a good argument that the absence of inflation in QE environments is in fact a bad sign, in that the QE has masked an underlying severe contraction of the economies. Again, we don't yet know.</p>
<p> </p>
<p>Third the debt issued through QE will one day or another need to be honoured and that will mean the QE funds will be taken back out the economy. That will potentially mean disinflation which the markets will punish the government for, and maybe a reduction in government programs as they simply have less to spend for a time on social programs. Both would be politically unpopular, so successive governments will try to defer it. But the debt is still there on the balance sheet. It continually tests the resolve of the FX markets and just because so far they have been lenient doesn't mean that will continue indefinitely. The UK is benefiting - for now - from a lack of credible alternatives (i.e. most of the rest are worse) and a belief that the Bank of England is basing its QE decision purely on money supply and not for political expediency. I can tell you from hard experience that the moment that perception changes the goodwill will go and they will sell off. Then you'd see a crash in the value of Sterling and marked inflation. </p>
<p> </p> -
<blockquote class="ipsBlockquote" data-author="jegga" data-cid="515598" data-time="1442185558">
<div>
<p>So investors might not balk at he prospect of funding Corbyns fantasies through higher taxes and take their business elsewhere?</p>
</div>
</blockquote>
<p> </p>
<p>I don't agree with higher tax</p>
<p> </p>
<p>I do agree with higher deficits (by either lower taxes esp for the low income or higher spending esp on housing) to stop a depression. That is inevitable is Govt continue to cut their deficit</p> -
<blockquote class="ipsBlockquote" data-author="Rancid Schnitzel" data-cid="515602" data-time="1442186512">
<div>
<p>Here you go Winger:<br><br><a data-ipb='nomediaparse' href='http://www.jeremyforlabour.com/winning_with_a_greener_future'>http://www.jeremyforlabour.com/winning_with_a_greener_future</a><br><br>
•A modern, green, resource-efficient economy - creating 1 million new green climate jobs<br><br>
More lies from the propaganda media?</p>
</div>
</blockquote>
<p> </p>
<p>Thanks</p>
<p> </p>
<p>This is fantasy. Labor hopefully does not go there and will not generate 1 million jobs. Its a fantasy</p>
<p> </p>
<p>But both main parties almost 100% backed this idiotic Ed Miliband climate change Act. I would support repealing this foolish act but neither party will do it.</p> -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="515605" data-time="1442186868">
<div>
<p>OK, at the risk of patronising everybody here goes.</p>
<p> </p>
<p>QE is actually a managed form of debt monetisation, by which central banks issue currency that becomes part of the government's debt. It's not in itself a bad thing.</p>
<p> </p>
<p>There's a lot of sound economic theory that suggests that in principle running government debts of many multiples of GDP is reasonably harmless for an economy that is fundamentally sound and growing. So for example the US's current level of debt, despite what the politicians tell everyone, isn't necessarily bad. People tend to think of governments as bigger versions of individuals and interpolate govt debt down to their own level. That leads them to perform largely meaningless calculations which say each person's share of the debt is [insert a frightening number]. But governments aren't individuals. If you had a debt of 10 times your income that you had to repay over time there would be 2 main hurdles, first you'd need to make sure that in any given term the amount you repaid exceeded the amount of interest accrued, otherwise the interest would compound and you'd have an increasing debt. But if you can manage that the other issue is enough years to make the repayments before your income source dries up (i.e. you retire or die).</p>
<p> </p>
<p>But governments don't retire or die, so the time to repay is, in theory, never an issue, and the minimum repayments can be taken care of because the government can simply create money whenever they have to make an interest payment.</p>
<p> </p>
<p>The argument is very seductive in an abstract sense. If you can simply roll the debt on and pay the interest at no cost you can use the debt you manufacture to fund all sorts of things. And it won't have escaped the notice of Corbyn that QE has pumped in £350 to £400bn without hyperinflation resulting, with the US and EU having similar "success", so he appears to think that is a trick that can be repeated ad infinitum. But I reckon he's wrong on a couple of fronts.</p>
<p> </p>
<p>First, nobody knows yet just what the long-run impacts of QE will be. The data's just not there. But inflation may yet set in. (If you've done any economics, draw yourself an aggregate supply and demand curve for the scenario with output on the x axis and inflation rate on the y axis, QE pushes the aggregate demand up and to the right, where inflation is raised. But output now exceeds potential output and the short-run aggregate supply curve will begin to shift up and to the left to compensate, so that output comes back to where it should be. You'll see that the inflation rate (where the demand and supply curves cross) is now significantly higher.)</p>
<p> </p>
<p>Second, there is a good argument that the absence of inflation in QE environments is in fact a bad sign, in that the QE has masked an underlying severe contraction of the economies. Again, we don't yet know.</p>
<p> </p>
<p><span style="color:#ff0000;">Third the debt issued through QE will one day or another need to be honoured </span>and that will mean the QE funds will be taken back out the economy. That will potentially mean disinflation which the markets will punish the government for, and maybe a reduction in government programs as they simply have less to spend for a time on social programs. Both would be politically unpopular, so successive governments will try to defer it. But the debt is still there on the balance sheet. It continually tests the resolve of the FX markets and just because so far they have been lenient doesn't mean that will continue indefinitely. The UK is benefiting - for now - from a lack of credible alternatives (i.e. most of the rest are worse) and a belief that the Bank of England is basing its QE decision purely on money supply and not for political expediency. I can tell you from hard experience that the moment that perception changes the goodwill will go and they will sell off. Then you'd see a crash in the value of Sterling and marked inflation. </p>
</div>
</blockquote>
<p> </p>
<p>This is where you go wrong</p>
<p> </p>
<p>It MUST NOT ever be paid back. Just keep on rolling it over</p>
<p> </p>
<p>Govt DEBT increases = Non Govt SAVINGS increases. </p>
<p> </p>
<p>Govt DEBT decreases = Non Govt SAVINGS decreases.</p>
<p> </p>
<p>This is factual. and this saving is initially reflected in either company profits or non company income. so reducing debt worldwide would result in a depression. This is guaranteed and totally unnecessary</p>
<p> </p>
<p>And as we age we want to save. So an aging population needs another entity to take on debt. Without this = no savings</p> -
<blockquote class="ipsBlockquote" data-time="1442187138" data-cid="515607" data-author="Winger"><p>Thanks<br> <br>This is fantasy. Labor hopefully does not go there and will not generate 1 million jobs. Its a fantasy<br> <br>But both main parties almost 100% backed this idiotic Ed Miliband climate change Act. I would support repealing this foolish act but neither party will do it.</p></blockquote><br>Yes it is a fantasy. Just like most of his policies.<br><br>Corbyn's one and only strength is his belief in what he says. That is what attracted him to people who are sick and tired of being lied to and farked around. The minute Corbyn starts changing things up and compromising, he loses what differentiated him from all other politicians. I certainly admire him for his convictions, but his policies are nuts.
-
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="515614" data-time="1442187674">
<div>
<p>This is where you go wrong</p>
<p> </p>
<p>It MUST NOT ever be paid back. Just keep on rolling it over</p>
<p> </p>
<p>Govt DEBT increases = Non Govt SAVINGS increases. </p>
<p> </p>
<p>Govt DEBT decreases = Non Govt SAVINGS decreases.</p>
<p> </p>
<p>This is factual. and this saving is initially reflected in either company profits or non company income. so reducing debt worldwide would result in a depression. This is guaranteed and totally unnecessary</p>
<p> </p>
<p>And as we age we want to save. So an aging population needs another entity to take on debt. Without this = no savings</p>
</div>
</blockquote>
<p>Did you read any further down that paragraph? If you give the market a signal that you will never pay it back, you are implying that you will expand the money supply without limit. If I were still in the game I would interpret that in a couple of ways. First, the impact of the reduction in value of fixed income assets held by creditors would be immediate and increasing over time, so institutions and investors holding them immediately become less attractive to me, so I will sell them. Second, it would appear that monetary policy would have become entirely political. I would become disincentivised to hold assets issued by the government, in general because I could not trust their policy intentions, and specifically because those assets would, by design, decrease in value while I held them. I would sell them.</p>
<p> </p>
<p>Another thought: reducing the value of the fixed income cash reduces the wealth of the creditors who hold it (from the point of view of a traditional socialist wealth redistributing politician this is probably seen as a good thing I suppose) but doesn't impact real assets, such as houses which you'd expect to increase in value. I can't imagine that helps the housing problem.</p>
<p> </p>
<blockquote class="ipsBlockquote">
<p> </p>
<p> </p>
<span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">And your comment re investing in housing is idiotic. It's not spending on welfare so that the poor can afford to eat and pay for their power etc. This is another topic to debate. It's investing in a valuable asset that will almost certainly increase in value over time.</span></blockquote>
<p> </p>
<p>I didn't make a comment about investing in housing. I said there was not a UK housing shortage, there is a <strong>South East England</strong> housing shortage. That is demonstrably true, with large swathes of the north full of empty houses. But recent history has proven that immigrants to the UK prefer to live in London. I'm not certain what proportion of the immigrants Corbyn proposes to allow will choose to live elsewhere but there's no evidence to suggest they won't also want to live in London too. Now I may be wrong but could it be that the increased house building might only benefit people who are not yet even in the UK?</p>
<p> </p>
<blockquote class="ipsBlockquote">
<p> </p>
<p><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">The UK is monetary sovereign.</span></p>
<p style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;"> </p>
<p style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">So money can't flow out of the UK. (unlike Euro countries) as only UK banks can hold UK money</p>
<p style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;"> </p>
<p style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">if someone wants to reduce their holding of Uk pounds they need a buyer of those pounds to swap for the currency they want. This is what determines the exchange rates. So the currency might fall but money stays in the UK</p>
<div> </div>
</blockquote>
<p>I'm pretty sure when Jegga said money would flow he meant wealth would flow. Does that change your answer to his question?</p> -
<blockquote class="ipsBlockquote" data-author="jegga" data-cid="515628" data-time="1442193261">
<div>
<p>JC that's exactly what I meant and I think Winger knew it too. A country with high taxes that nationalises businesses would see investors moving to greener pastures .</p>
</div>
</blockquote>
<p> </p>
<p>OK explain exactly what you mean by wealth will flow out of the UK.</p>
<p> </p>
<p>IF some investors leave so what (other investors will step in to buy the assets). Govts have surrendered to the markets are king myth. And the people are now paying the price. Euro countries can't do anything now as they have given up their currency. But the UK still can. As long as they let their currency freely float (essential) and run Govt deficits as required. But the powerful want to rule in their interest not the peoples. And the people just let them as they have been brainwashed that it's in their interest. surely by now its obvious that's its not. When somehow its great to sell of valuable assets to pay down debt. Or not build homes and pay for using BoE reserves. Its just bullshit. It will certainly not cause inflation but will create work (lots of EU citizens need work) and needed housing</p> -
I'm not sure what's so hard to understand about a business based in the uk deciding that if Corbyn hiked up the taxes and reduced their profits they'd take their head office to a country with lower tax rates . I think I remember something about Keys former employers moving to Ireland got that reason .
-
<blockquote class="ipsBlockquote" data-author="jegga" data-cid="515636" data-time="1442195346">
<div>
<p>I'm not sure what's so hard to understand about a business based in the uk deciding that if Corbyn hiked up the taxes and reduced their profits they'd take their head office to a country with lower tax rates . I think I remember something about Keys former employers moving to Ireland got that reason .</p>
</div>
</blockquote>
<p> </p>
<p>Companies can move profits as they see fit. It's a part of EU law</p> -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="515625" data-time="1442190710">
<div>
<p>Did you read any further down that paragraph? If you give the market a signal that you will never pay it back, you are implying that you will expand the money supply <span style="color:#ff0000;">(bond can be issued rather than BoE reserves. That's why I would issue bonds not use reserves as it does not result in increased reserves or bank credit. But people have an irrational fear of Govt bond debt)</span> without limit. If I were still in the game I would interpret that in a couple of ways. First, the impact of the reduction in value of fixed income assets held by creditors would be immediate and increasing over time, so institutions and investors holding them immediately become less attractive to me, so I will sell them. Second, it would appear that monetary policy would have become entirely political. I would become disincentivised to hold assets issued by the government, in general because I could not trust their policy intentions, and specifically because those assets would, by design, decrease in value while I held them. I would sell them. <span style="color:#ff0000;">but banks who hold excess reserves or pension funds will always buy them</span></p>
<p> </p>
<p>Another thought: reducing the value of the fixed income cash <span style="color:#ff0000;">????? why would thsi happen</span> reduces the wealth of the creditors who hold it (from the point of view of a traditional socialist wealth redistributing politician this is probably seen as a good thing I suppose) but doesn't impact real assets, such as houses which you'd expect to increase in value. I can't imagine that helps the housing problem.</p>
<p> </p>
<p> </p>
<p>I didn't make a comment about investing in housing. I said there was not a UK housing shortage, there is a <strong>South East England</strong> housing shortage. That is demonstrably true, with large swathes of the north full of empty houses. But recent history has proven that immigrants to the UK prefer to live in London. I'm not certain what proportion of the immigrants Corbyn proposes to allow will choose to live elsewhere but there's no evidence to suggest they won't also want to live in London too. Now I may be wrong but could it be that the increased house building might only benefit people who are not yet even in the UK?</p>
<p> </p>
<p>I'm pretty sure when Jegga said money would flow he meant wealth would flow. Does that change your answer to his question?</p>
</div>
</blockquote> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="515639" data-time="1442195523"><p>
Companies can move profits as they see fit. It's a part of EU law</p></blockquote>
<br>
That's if? Really? That's all you have to say?You can't see any negative effects for Corbyns plans from a decreased tax take and lower employment? -
<blockquote class="ipsBlockquote" data-author="jegga" data-cid="515642" data-time="1442197192">
<div>
<p>That's if? Really? That's all you have to say?You can't see any negative effects for Corbyns plans from a decreased tax take and lower employment?</p>
</div>
</blockquote>
<p> </p>
<p> </p>
<p>Companies do it now. Re employment. House building will increase employment</p> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="515640" data-time="1442196099">
<div>
<p> </p>
<blockquote class="ipsBlockquote" data-author="JC" data-cid="515625" data-time="1442190710">
<div>
<p> <span style="color:#ff0000;">(bond can be issued rather than BoE reserves. That's why I would issue bonds not use reserves as it does not result in increased reserves or bank credit. But people have an irrational fear of Govt bond debt)</span></p>
<p> </p>
<p><span style="color:#ff0000;">but banks who hold excess reserves or pension funds will always buy them</span></p>
<p> </p>
<p>Another thought: reducing the value of the fixed income cash <span style="color:#ff0000;">????? why would thsi happen</span> reduces the wealth of the creditors who hold it (from the point of view of a traditional socialist wealth redistributing politician this is probably seen as a good thing I suppose) but doesn't impact real assets, such as houses which you'd expect to increase in value. I can't imagine that helps the housing problem.</p>
<p> </p>
<p> </p>
<p>I didn't make a comment about investing in housing. I said there was not a UK housing shortage, there is a <strong>South East England</strong> housing shortage. That is demonstrably true, with large swathes of the north full of empty houses. But recent history has proven that immigrants to the UK prefer to live in London. I'm not certain what proportion of the immigrants Corbyn proposes to allow will choose to live elsewhere but there's no evidence to suggest they won't also want to live in London too. Now I may be wrong but could it be that the increased house building might only benefit people who are not yet even in the UK?</p>
<p> </p>
<p>I'm pretty sure when Jegga said money would flow he meant wealth would flow. Does that change your answer to his question?</p>
</div>
</blockquote>
<p> </p>
</div>
</blockquote>
<p> </p>
<p><span style="font-size:12px;color:rgb(255,0,0);">bond can be issued rather than BoE reserves. That's why I would issue bonds not use reserves as it does not result in increased reserves or bank credit. <strong>But people have an irrational fear of Govt bond debt)</strong></span></p>
<p> </p>
<p>I've never found that, so long as the price is right and the risk is OK. But in an economy where the government is committed to a permanent expansion of the money supply what sort of rating do you think the agencies would give to the bonds? You might just have the perfect storm of bonds with little or no yield that are nevertheless not viewed as investment grade. Would you buy a bond like that?</p>
<p> </p>
<p>In any case, fearing bonds issued by a government whose monetary policy is dictated by politicians doesn't sound the least bit irrational to me. It's not that long since the BofE was given its independence and the credibility it gained was greeted with some relief by the markets. How quickly people forget, eh?</p>
<p> </p>
<p><span style="color:rgb(255,0,0);font-size:12px;background-color:rgb(247,247,247);">but banks who hold excess reserves or pension funds will always buy them</span></p>
<p> </p>
<p>Again at what inflationary price? Corbyn and his advisors have defined (for me at least) an economy that is inherently more risky than one in which monetary policy is determined solely by money supply, where politicians are using the Bank of England as a proxy for their social policy. </p>
<p> </p>
<p><span style="font-size:12px;background-color:rgb(247,247,247);">reducing the value of the fixed income cash </span><span style="font-size:12px;color:rgb(255,0,0);">????? why would thsi happen</span></p>
<p> </p>
<p>Remember economics 101? Changes in the stock of money lead to proportional changes in the price level. Increasing the money supply is inflationary, and inflation destroys wealth.</p>
<p> </p>
<p>Look, I know it's probably cynical but when I hear socialist and monetary policy in the same sentence I can't help but think of command economies. China's one isn't going so well at the moment is it?</p>
British Politics