Jump to content
House Price Crash Forum
Trampa501

Cameron: Bank Can Support Economy As Cuts Hit

Recommended Posts

Reuters news

Printy! Printy!

Yep, don't know why anyone thought that the policy of 'printing your way out of trouble' was going to be any less alluring to the Tories than it was to Labour - money printing is like catnip for politicos.

The bottom line is that we are facing a major economic problem due to the potential (massive) contraction of the total money supply coupled with the fact that lots of people - the government prominent among them - are up to their necks in debt, making for a recipe for disaster.

Given that the government through the BoE have the power to create unlimited supplies of new money it's not too hard to see what decision a politician, any politician, is going to make is it?

On the one hand, take the hard but 'correct in the long term' decision not to print money and let a massive recession/depression hit in the near term and see your paymasters in the banking system go bust along with the state and millions of indebted voters

OR

Screw the prudent and future generations and print, print, print - getting yourself, your bankster bosses and lots of potential voters off the hook and looking like an economic wizard. At least, until hyperinflation hits and the masses are truly shafted.

Hmmmm ... what's a clever politician to do .... :lol:

I suspect that much of the deflationist viewpoint here comes from wishful thinking from those who have avoided debt and have substantial savings who imagine that somehow they are going to be rewarded. Fat chance, the whole point of non-gold-backed fiat currency is to avoid deflation.

Share this post


Link to post
Share on other sites

Yep, don't know why anyone thought that the policy of 'printing your way out of trouble' was going to be any less alluring to the Tories than it was to Labour - money printing is like catnip for politicos.

The bottom line is that we are facing a major economic problem due to the potential (massive) contraction of the total money supply coupled with the fact that lots of people - the government prominent among them - are up to their necks in debt, making for a recipe for disaster.

Given that the government through the BoE have the power to create unlimited supplies of new money it's not too hard to see what decision a politician, any politician, is going to make is it?

On the one hand, take the hard but 'correct in the long term' decision not to print money and let a massive recession/depression hit in the near term and see your paymasters in the banking system go bust along with the state and millions of indebted voters

OR

Screw the prudent and future generations and print, print, print - getting yourself, your bankster bosses and lots of potential voters off the hook and looking like an economic wizard. At least, until hyperinflation hits and the masses are truly shafted.

Hmmmm ... what's a clever politician to do .... :lol:

I suspect that much of the deflationist viewpoint here comes from wishful thinking from those who have avoided debt and have substantial savings who imagine that somehow they are going to be rewarded. Fat chance, the whole point of non-gold-backed fiat currency is to avoid deflation.

Nail on head.

Share this post


Link to post
Share on other sites

And if one is to avoid deflation whilst the whole country is frantically paying down debt, then there must be more central bank money.

Credit down, CB money up: Biflation.

Share this post


Link to post
Share on other sites

So, just to sum up:

- Debauched currency.

- Rampant inflation.

- Poor pay.

- Lunatics in charge of the Country.

- Trade wars.

- Resource shortages.

Everything seems to be in order. Nothing to worry about.

Edited by Errol

Share this post


Link to post
Share on other sites

A quote from the Avatar film: "Sometimes your whole life boils down to one insane move."

The insane move right now is shifting ones entire wealth out of Sterling and into something that can hold value, gold most probably. The reason that choice feels insane is the price of gold and bubble-like nature of it, but while ever central banks and politicians are backing endless printing then the choices are becoming very limited indeed.

Share this post


Link to post
Share on other sites

Oh dear, Mr Camoron has just alienated the Thatcherites who believed in monetarism.

How will this hold down the cost of borrowing and what will he spend it on, he has no plan for growth?

This is evidence that the job is too much for him. Plausible man to many, but weak.

Share this post


Link to post
Share on other sites

What good is it cranking up the printing presses again when the debt saturated sheep are now turning their backs/unable to take on any more debt? The result will be deflation in the end, no?

Share this post


Link to post
Share on other sites

Is this the same David Cameron who at the Tory conference in October said:

If we win the election, we will have to confront Labour's debt crisis, deal with it, and take the country with us. I want everyone to understand the gravity of our situation.

Our national debt has doubled in the last five years and our annual deficit next year will be over £170bn.

That's twice as big as when we nearly went bankrupt in the 1970s. It is a massive risk to our economy. If we spend more than we earn, we have to get the money from somewhere.

Right now, the government is simply printing it. Sometime soon that will have to stop, because in the end, printing money leads to inflation. Then the government will have to borrow it.

But we'll only be given the money if lenders are confident we can pay it back. If they're not, we'll have to pay higher interest rates and that could stop our economic recovery in its tracks.

So we have three choices.

Option one: we can just default on the debt. Not pay it. Other countries have done that in the past. But I don't think anyone in this country wants to go down that road.

Option two: we could encourage inflation, which would wipe out the value of the debt, making it easier to pay off. But that's not just an economic disaster – it's a social disaster too. It doesn't just wipe out debts, it wipes out people's hard-earned savings.

So we have the third option — for me the only option. We must pay down this deficit. The longer we leave it, the worse it will be for all of us.

I know there are some who say we should just wait.

Don't talk about the deficit. Don't even plan for what needs to be done. Just wait. Don't they understand – it's the waiting that's the problem.

The longer we wait for a credible plan, the bigger the bill for our children to pay. The longer we wait, the greater the risk to the recovery. The longer we wait, the higher the chance we return to recession.

Here's the most obvious reason we can't wait. The more we wait, the more we waste on the interest we're paying on this debt.

Next year, Gordon Brown will spend more money on the interest on our debt than on schools. More than on law and order, more than on child poverty.

So I say to the Labour party and the trades unions just tell me what is compassionate, what is progressive about spending more on debt interest than on helping the poorest children in our country?

The progressive thing to do, the responsible thing to do is to get a grip on the debt but in a way that brings the country together instead of driving it apart. That means showing leadership at the top which is why we will cut ministers' pay and freeze it for a parliament.

It means showing that we're all in this together, which is why we'll freeze public sector pay for all but the one million lowest paid public sector workers for one year to help protect jobs.

And it means showing that the rich will pay their share which is why for now the 50p tax rate will have to stay and child trust funds for those on middle and higher incomes will have to go.

Yes we have made some tough choices. But in British politics today that is the only responsible thing to do.

Dealing with this debt crisis is not just about cuts in the short term. We must also live within our means over the long term

http://www.guardian.co.uk/politics/2009/oct/08/david-cameron-speech-in-full

Share this post


Link to post
Share on other sites

Oh dear, Mr Camoron has just alienated the Thatcherites who believed in monetarism.

It's warning bells time, but still in the realm of cryptic hints which hopefully won't happen.

How will this hold down the cost of borrowing and what will he spend it on, he has no plan for growth?

Cost of government borrowing is currently being held down by excess funds desperately looking for a home. Though that applies more to the US than here.

Until :ph34r::ph34r:

This is evidence that the job is too much for him. Plausible man to many, but weak.

we live in interesting times.

Share this post


Link to post
Share on other sites
So we have three choices.

Option one: we can just default on the debt. Not pay it. Other countries have done that in the past. But I don't think anyone in this country wants to go down that road.

Option two: we could encourage inflation, which would wipe out the value of the debt, making it easier to pay off. But that's not just an economic disaster – it's a social disaster too. It doesn't just wipe out debts, it wipes out people's hard-earned savings.

So we have the third option — for me the only option. We must pay down this deficit. The longer we leave it, the worse it will be for all of us.

There is a fourth option available: All of the above.

1. Default. Don't wanna piss off China or the markets, so do it on domestic promises (benefits, pensions, etc).

2. Inflate. But don't try to wipe everything out - just fill the holes caused by deflation with new CB money.

3. Eliminate the deficit to stop things getting any worse. Don't try and pay off the debt though. Let time do that.

Share this post


Link to post
Share on other sites

There is a fourth option available: All of the above.

1. Default. Don't wanna piss off China or the markets, so do it on domestic promises (benefits, pensions, etc).

2. Inflate. But don't try to wipe everything out - just fill the holes caused by deflation with new CB money.

3. Eliminate the deficit to stop things getting any worse. Don't try and pay off the debt though. Let time do that.

4. Talk cobblers and hope it all goes away.

Share this post


Link to post
Share on other sites

4. Talk cobblers and hope it all goes away.

Of course you are right, that is option 4.

My post should have started: "Option 5: All of the above".

Share this post


Link to post
Share on other sites

There appears to have been an error in the quote, I think he meant to say this.

"The right stance was to deal with the deficit -- the problem facing Britain -- and at the same time that allows the Bank of England to keep monetary policy and interest rates relatively expansionary inflationary (hopefully not hyper)," Cameron said in a BBC television interview.

Ludwig von Mises describes the endgame brought on by reckless expansion of credit: "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."

Still it's not like it's going pear shaped is it....

Edited by interestrateripoff

Share this post


Link to post
Share on other sites

This is the problem............the lunatics running the asylum wont help us, how do we protect our savings? (other than buying gold/silver?)

not even sure about PMs...if the currency fails, you'd have to sell them into the new currency....and people would probably be demanding THAT rather then PMs....same with houses....houses would be revalued to match the new currency...and MBS wont be available for a long time.

Share this post


Link to post
Share on other sites

4. Talk cobblers and hope it all goes away.

The power of speaking b*llocks is much underestimated

Sometimes talking cobblers and doing nothing is the wisest course.

I believe old foreign office mandarins used to call it 'masterly inaction' because 'doing things' just makes the situation worse (just ask the Irish)

Given the high probability of a major blow up in the Eurozone etc and the fact he has no intention of undertaking any serious banking reform himself, Cameron may well just be playing for time and see how 'events' unfold.

Edited by realcrookswearsuits

Share this post


Link to post
Share on other sites

This is the problem............the lunatics running the asylum wont help us, how do we protect our savings? (other than buying gold/silver?)

Buy a couple of new-build flats you can rent out :P

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.