Sunday, Jun 21, 2009
Dare to make cuts
Telegraph: Don't believe the hyperinflation hype
Today's danger is creditor revulsion as governments worldwide raise $6 trillion in debt this year. The solution is remarkably simple. Stop borrowing and step up the Friedman monetary blitz to stop loan collapse. Does any nation have the nerve to do it?
Posted by devo @ 12:11 AM (984 views) Add Comment
11 Comments
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1. stillthinking said...
This sounds suspiciously like cut the state sector and lower taxes, which was advocated by so many two years ago.
The problem with government borrowing, is that actually, a better way of viewing it is government lending to the population. New Labour are currently lending us billions and billions. There are two problems with this, we are all involved in paying back our generous loans, but only the state/banking sector receive the money. So huge chunks of the population are on the hook for a huge overdraft which they didn't spend. Also, I and probably many others don't want to borrow money at the moment, and if I did, I would rather borrow money and buy myself a huge flat screen rather than seeing all these debts run up for no personal advantage.
New Labours swan song is a generational transfer of wealth from private to state sector. Repossessions and job losses occur in the private sector alone.
2. letthemfall said...
Come on, stillthinking, you know that's not true. Public sector employees lose their jobs too, though obviously job security is better, naturally since public sector jobs provide necessary public services, quirky quangos notwithstanding. The idea that wealth has been transferred from private to state is also curious. Everyone receives value from the state sector - everytime you drive your car, go to the doctors, call the police, etc, etc. On the contrary, wealth has been transferred to a narrow slice of the private sector, namely the very rich, who have played a large part in the near collapse of the economy. Fortunately there is a state sector to bail out their disastrous mismanagement.
Complaining about the money wasted by the public sector is like fretting over the few pence you lost, ignoring the tenner that fell out of your pocket at the same time.
3. stillthinking said...
If people were truly receiving value from the state sector then 50% of the people we interact with would be state employees who needed no payment. That is absolutely not the case. I don't accept the actually they do provide value you just can't see or touch it argument.
For their running costs state employees should be in your face everywhere doing something, and simply they aren't. Sum up the general public interacting in some way or taking advantage of something in a given locality, with GPs, police station, councils, cleaners, and compare that to supermarkets, corner shops, newsagents, furniture stores, and obviously our world is predominantly provided by the private sector. The level of consumption by the state is staggering in comparison to their productive presence.
Where are the state workers? Aside from that, it is not a few pence, it is a crippling expense.
4. letthemfall said...
The banks became a crippling expense - the doyens of the private sector. Part of the reason for the current huge debt is dealing with the problem of the banks. Supermarkets or a health service? How do you value one against the other? You can't, and it is pointless to do so. However, I would rather see good public services before much of what the private sector offers. In America there is little public provision, and those without money have to suffer.
Both are important parts of the economy. I don't understand your point about 50% people needing no payment; everyone wants paying for the work they do. Why should they be in your face? The services are there when you need them. Perhaps you can offer figures that support your suggestion that public services are overpriced. Certainly the modest salaries its employees are paid do not back this claim. My point about pennies is that the money wasted in the public sector is nothing compared to that wasted by the banks. It amazes me that anyone should be haranguing the public sector when there is such a monumental failure in the private still hanging over our heads.
5. icarus said...
Rubbish collectors £15k a year. Sir F*** Goodwin £15k a week.
6. icarus said...
Back to the article. Nobody really knows what the Fed is up to, except, perhaps, the Fed. A recent Bloomberg report indicated that the Fed wanted to borrow over $3Trill in the year ending 30Sept09. They won't get more than $0.5Trill from China, oil states et al. US investors won't cough up. Where will the other $2.5+Trill come from? Probably the banks, recapitalised by...the Fed. Said banks will get free money and invest it in 4% Treasuries. Now for Bernanke's next trick.............
7. bellwether said...
Lettemfall principally I don't understand your perspective that the banking sector are responsible for the crisis. The crisis was created by the state pursuing economic growth via credit expansion and credit expansion via artifically stimulus of the housing market/exporting production. The banks, suitably deregulated, and a disinhibited consumer were simply the conduit to execute the policy. They were hardly responsible because it is not their job to be responsible.
My persoanl experience of the public sector is one of gross ineffiicency (as compared to the part of the private sector I work in ) but I can't decide if this is to do with scale (too big) and lack of compeitition, as I notice similar traits in large private organisations such as BT or British Gas.
Inefficiency seems to arise when at a corporate level there is complacency and at an individual level job security that is not properly related to performance. I think an absence of competition can be disastorous
8. letthemfall said...
And the introduction of competition can be disastrous too - the internal market nonsense in the NHS for instance. Inefficiency can arise for all manner of reasons; there is as much of it in private as public. As for banks not needing to be responsible... well, that's a good one, the get-out of all get-outs. If doctors kill their patients, is it not their job to be responsible for this? You can blame govts for allowing the credit bubble to happen; but banks are equally responsible for taking all the risks they took, creaming off money from the economy in return for breaking it. Blaming it all on the Govt and public sector is ludicrous.
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11. bellwether said...
lettemfall if you work in the public sector you should declare your interest.
Banks are simply doing what they are set up to do which is pursue short term profits. Generally speaking that is what capitalism is about. Should it be unfettered, of course not. There should be regulation and more importantly an overall direction both led by government. It was a failure in this at a manifest level eg loose monetary policy, failure to take land values into account when calculating inflation, insistence by government that there was an undersupply of property (eg Barker Report), the refusal to intervene througout the whole period when house prices became detached from income, the lauding of banking leaders, it was Sir Fred Goodwin last time I looked, the failure to introduce a land tax system that would reduce speculation in property, the failure to address the laws which make renting such an unpalatable option, the recapitilsation of the banks in exchange for promises to sustain lending at the same levels that broke them in the first place.
The government have a responsibilty to the electorate. The bankers have not responsibilty and were just doing what anyone would do if put in their position. For some reason unusally annoyed at your post. Dunno why