Sunday, Nov 16, 2008
Debt to be monetised
Telegraph: Cutting taxes or spending more – the Government's options
Its happened. The first mention of printing money as a solution in the mainstream UK press. Let us put our(your) doubts aside, we are facing a deflationary recession and its going to be a stinker.
Posted by stillthinking @ 10:23 PM (598 views) Add Comment
4 Comments
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1. planning4acrash said...
Ehem, correction, we would be heading for a deflationary depression (Good thing in the long run), but, with government monetizing debt and creating more liquidity than is destroyed, if they achieve that, we see stagflation. This is a totally artificial thing, only caused by government intervention.
2. uncle tom said...
Just keep people working - constructively.
Best thing government can do right now is to identify MOD and other govt sites that are not needed, short circuit the planning process and get people building houses - immediately, as though we were at war on the home front..
3. planning4acrash said...
Uncle Tom. Enough sites have been given permission. The problem is, that, with fractional reserve banking, we have seen corporate monopolies that can hoard land banks. We need deflation to wipe those guys out, and for more, smaller builders with sound money. You would be surprised how many buildings got built then, we have way more houses approved than the country needs, and planning permission is incredibly cheap. What needs to be gotten rid of is money developers must give to pay for social housing, because social housing just keeps up house prices, and poor people simply need cheap house prices!!!
4. Kruador said...
Apparently, if we borrow lots, sterling will drop and we'll have huge inflation. If we print money, sterling will drop and we'll have huge inflation. However, if we go with option B we won't have a huge debt to repay later. My vote's for option B. Rein in the bank fractional reserve/capital requirements so they can't ramp up debt-based money as a reaction, and I think it's the safer course.
It really doesn't matter whether it's the government creating money or the banks creating money. All I'll say is that when the fractional reserve concept was invented, debt was the same size as the 'free' money supply, and it's now nearly 60 times the free money supply. That's a huge amount of unearned income for banks.