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TheBlueCat

Question For The Nulab Types Out There

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The UK now has a shadow chancellor who thinks that cutting the rate of public sector borrowing is unnecessary. The real chancellor has called him on it albeit in a less than eloquent fashion. Let's suppose for a moment that the government did a major volte-face and said to hell with deficit reduction, we're going to borrow even more and try to spend our way out of this mess. The consequences would seem very clear to anyone with half a brain. Interest rates on UK government debt would rise rapidly - the only way to borrow more when people aren't convinced they're going to get their money back is to offer to pay them extra interest to compensate for the extra risk after all. The real question is how far would they rise and where would the breaking point be? The current rate on new issues is around 4% so a rise to 7% (where Portugal currently trades) wouldn't necessarily be totally crippling as it's only the debt taken on (including rolled over debt) whilst the higher rate applies that matters. But that's not the real problem. The UK needs to borrow serious money: 10-15 billion net new a month. At some point, the big money (primarily pensions, sovereign wealth funds and banks) will take fright and not buy at all. That leaves the speculative players who just don't have the money to soak up those quantities of new issuance. At some point, the exact level being unclear, the market for UK government debt would fail and, rather than deficit reduction under the control of an elected parliament, the choices would then be one of:

Call in the IMF - which may not have enough money to help somewhere the size of the UK anyway - and enact their chosen plan of cuts instead?

Default or restructure the existing debt? Well, that's possible, but no-one is going to lend the UK anything at all after that so, along with the default, there would need to be a plan to live instantly within the tax base (which would include extra social security costs for all those people whose pensions had gone away along with the UK government bonds underlying them). That doesn't sound like a lot of fun.

Monetize the debt, otherwise known as printing money, lots of it. This would send inflation through the roof wiping out savers and clearing the debts of borrowers. Doesn't sound like the sort of thing most people on HPC would favour...

So, the question to all you NuLab deficit deniers out there is then, are you feeling lucky punk?

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We must borrow, as its the only anchor left preventing hyperinflation!

1. Money linked to gold.

then

2. Money linked to promises to pay back later(debt)

then

3. Money linked to nothing!

2-3 is a thin transition!

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The beauty of the scenario you have pointed out is that we are on a path that is almost impossible to get off that leads to the inevitable conclusion of currency collapse and relative poverty for the UK. The deficit cuts being made are p1ssing in the wind and ultimately our debt will cripple us. It will happen a bit quicker if the coalition collapses, a new election is held and an ignorant public vote 'magic money bags' Labour back in (fingers crossed). Ultimately the end game is the UK being a lot poorer as a nation, it is baked into the cake. How we get there, whether it is via direct default leading to a collapsed currency or inflation leading to a collapsed currency is the only question. The important thing is for the individual, who has something to lose from what is coming, to take the appropriate action to protect their finances before it is too late.

Edited by General Congreve

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No need for the interest rate on government debt to rise ever again. We can always get Merv to print up some more £s and buy Gilts with them at whatever price the Treasury likes. Probably the next time we do this will be to bail out another failed bank, but there's no reason a Labour Chancellor couldn't use the same trick to pay for school 'n hospitals or state pensions instead. At least the common man might get something from the deal that way, not just our bankster overlords.

And yes, this road leads to hyperinflation eventually.

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The UK now has a shadow chancellor who thinks that cutting the rate of public sector borrowing is unnecessary.

If this is your premise no point reading further. He may think it but it is not policy. The policy is to cut 50% of the deficit in one parliament. It can't be any clearer.

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Dont Kid yourself.

The New Labour Spin and Bullsh1t machine is in full force on other forums.

For Instance, whilst browsing the most popular Student forum on the web this morning: The Student Room.

I came across this question and answer:

Question: From AJ12

How much did Labour increase the size of the public sector? How much of it was necessary and how much of it was just Labour making a bigger state for the sake of it creating non jobs and such. I know they made it bigger but I want to know how much bigger and how much of it was actually needed.

Answer: From Quady

....In real terms (against rise in RPI) that equates to £490bn, so approx 35% increase in the size of the public sector..... I'm happy, as a young person I'm better off than I would have been in '97

This kind of misinformation, backed up by fictitous calculations, are constant occurences. Rammed down the throats of young people. The next generation to be suckered by Labour.

The site seems to be just full of Labour Party members, out to brainwash, lie, manipulate, and spin.

http://www.thestuden...d.php?t=1533106

Edited by Dan1

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Dont Kid yourself.

The New Labour Spin and Bullsh1t machine is in full force on other forums.

For Instance, whilst browsing the most popular Student forum on the web this morning: The Student Room.

I came across this question and answer:

Question: From AJ12

Answer: From Quady

[/size][/u]

This kind of misinformation, backed up by fictitous calculations, are constant occurences. Rammed down the throats of young people. The next generation to be suckered by Labour.

The site seems to be just full of Labour Party members, out to brainwash, lie, manipulate, and spin.

http://www.thestuden...d.php?t=1533106

I would not worry too much, socialist youth always have the biggest smuggest mouths

The young peeps in their 20s (abotu 3 or 4) that I know, and many of them with labour voting boomer parents, are intrinsicaly conservative - a few years in the normal world outside education have cleared their heads of student socialist nonsense and they speak and think sense.

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I consider that Nulab, or New Labour, ended the day that Tony Blair handed over the reins to Gordon Brown. So the banking crisis occurred during a time when there was no political vision, not even a theme. And then Gordon Brown's government panicked and made a monumental misjudgement by bailing out the reckless banks with our money, a kind of reverse socialism. The current government is just continuing the injustice by accepting that it's the public who have to pay for the wrongs done by the banks. The government should be increasing taxation on the big banks, allowing less drastic cuts in public services.

Edited by Hyperduck Quack Quack

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  • 277 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%



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