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Uk Should Cut Taxes, Expand Qe If Economy Falters - Imf

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http://uk.reuters.com/article/2011/08/01/uk-britain-imf-report-idUKTRE7703LP20110801

The government should cut taxes and the central bank take more steps to pump money into the economy if Britain looks to be heading into a long phase of weak growth, the International Monetary Fund said on Monday.

In its annual report about Britain's economy and policies, the IMF largely echoed the assessment published after its talks with authorities in early June, repeating that the economy should continue to recover and grow by 1.5 percent this year and 2.3 percent next.

However, the IMF gave more detailed advice about how the government and the Bank of England should react if the risks stemming from the euro zone crisis, the uncertain impact of the spending cuts and volatile commodity prices materialise.

"The UK government should be nimble in its policy response if it looks as though the economy is headed for a prolonged period of weak growth, high unemployment, and subdued inflation," said Ajai Chopra, Deputy Director of the IMF's European department and chief to the mission to Britain in a blog accompanying the IMF's report.

"Currently, we don't expect this scenario to happen. But if such a scenario appears to be in prospect, we recommend responding quickly with some combination of further quantitative easing by the Bank of England and temporary tax cuts," he said.

Genius plan, I mean what could possible go wrong.

The junkies need their fix and should be given it no matter what.

So the govt is going to cut taxes and carry on with their current spending plans?

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Heavens, we're ruled by idiots! In one breath we don't save enough (if any) for pensions and, in the next, off we go to devalue sterling. I don't see much difference between the political parties, none can be relied upon. We're doomed.

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It's pretty bloody obvious what's going to happen if inflation does fall. :angry:

Fall, not fall, doesn't really matter. Yet more money printing is 100% assured.

The debts are un-repayable so it'll be either 'soft' default by debt monetisation>currency debasement>inflation in which the banks get bailed out, the government gets bailed out and rich people stay rich .... or outright 'hard' default (likely forced by the markets) which would make things very difficult for those in charge as it would trigger a brutal crash and jack up the cost of borrowing massively. A lot of 'rich' leveraged people would lose their shirts.

Hmmm, wonder which course our ruling elite will chose. :lol:

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Yes, they'll need to make sure inflation goes up and quickly to inflate our unpayable debts away

Don't think loan and mortgage debt will be inflated away.....too much printing will only bring forward higher interest rates...there will be no winners.....printing only enables the economy to maintain its momentum. ;)

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Heavens, we're ruled by idiots! In one breath we don't save enough (if any) for pensions and, in the next, off we go to devalue sterling. I don't see much difference between the political parties, none can be relied upon. We're doomed.

Not sure why you had any faith in them anyway....they are mostly just like you and me...only power mad, self serving and greedy.

The problem with the ruling classes is the ruling classes.

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Fall, not fall, doesn't really matter. Yet more money printing is 100% assured.

The debts are un-repayable so it'll be either 'soft' default by debt monetisation>currency debasement>inflation in which the banks get bailed out, the government gets bailed out and rich people stay rich .... or outright 'hard' default (likely forced by the markets) which would make things very difficult for those in charge as it would trigger a brutal crash and jack up the cost of borrowing massively. A lot of 'rich' leveraged people would lose their shirts.

Hmmm, wonder which course our ruling elite will chose. :lol:

The rich will lose their shirts either way, though hyperinflation or deflationary default will affect different rich people in different ways depending on which assets they hold. They can use the political system to delay the correction, but this will likely only deepen and lengthen the trough that will follow it. I think in a couple of decades the UK will be a much more equal society like it was in the 1950s/60s.

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The rich will lose their shirts either way, though hyperinflation or deflationary default will affect different rich people in different ways depending on which assets they hold. They can use the political system to delay the correction, but this will likely only deepen and lengthen the trough that will follow it. I think in a couple of decades the UK will be a much more equal society like it was in the 1950s/60s.

The really rich will hold the majority of their wealth as physical assets or investments, which are relatively inflation proof. They are also well positioned to hold assets/foreign currency offshore.

The people who will be really reamed will be cash savers and pensioners and of course anyone earning a wage will see it diminish in real terms as pay never keeps pace with inflation.

The idea is to transfer the losses of the banks, to the people. You can be sure that the banksters will work the system to cream off even more wealth for themselves on top of this (we've seen it already, with banks which would be insolvent without state aid paying their top staff massive bonuses even as savers see risible returns in an inflationary environment).

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The rich will lose their shirts either way, though hyperinflation or deflationary default will affect different rich people in different ways depending on which assets they hold. They can use the political system to delay the correction, but this will likely only deepen and lengthen the trough that will follow it. I think in a couple of decades the UK will be a much more equal society like it was in the 1950s/60s.

If they have actual assets, why would they worry about hyper inflation, deflation or anything at all?

This is NOT about the rich...its about banking.

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The rich will lose their shirts either way, though hyperinflation or deflationary default will affect different rich people in different ways depending on which assets they hold. They can use the political system to delay the correction, but this will likely only deepen and lengthen the trough that will follow it. I think in a couple of decades the UK will be a much more equal society like it was in the 1950s/60s.

Hmmm. From today's FT:

http://www.ft.com/cms/s/0/d640b376-bc6b-11e0-acb6-00144feabdc0.html#axzz1Trp5YwEl

One group has sailed unscathed through the global financial crisis, the recession and the fiscal squeeze: the executives at the helm of UK’s big companies. The banks, still paying hefty bonuses on the back of taxpayer subsidies, provide the most egregious example. Barclays distributes a large slice of its profits to a few hundred employees. Bob Diamond and his colleagues, though, are not alone in their excesses.

As my FT colleague Brian Groom has detailed, the chief executives of FTSE 100 companies saw their pay rise last year by a median 32 per cent. That compares with 2 per cent for most workers. This was not a blip. In 1998, the average pay of these business leaders was 47 times higher than that of employees. By 2010 the multiple had soared to 120. Yet the real value of their companies hardly changed. So much for claims that pay matches performance.

The upshot has been a new plutocracy whose interests and incentives are wholly detached from the rest of society. The share of national income taken by the top 0.1 per cent has returned to the level of the 1940s. Soon we will be back in Victorian times.

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The really rich will hold the majority of their wealth as physical assets or investments, which are relatively inflation proof.

I think this assumption that all of the rich have zero leverage is pretty naive. The same market forces apply to rich people as everybody else. If you turn up at an estate agent with only your cash savings, you will be outbid by other people on the same income as you who are willing to leverage up those savings with debt. Why wouldn't that apply further up the income scale?

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The really rich will hold the majority of their wealth as physical assets or investments, which are relatively inflation proof. They are also well positioned to hold assets/foreign currency offshore.

The people who will be really reamed will be cash savers and pensioners and of course anyone earning a wage will see it diminish in real terms as pay never keeps pace with inflation.

The idea is to transfer the losses of the banks, to the people. You can be sure that the banksters will work the system to cream off even more wealth for themselves on top of this (we've seen it already, with banks which would be insolvent without state aid paying their top staff massive bonuses even as savers see risible returns in an inflationary environment).

I wouldn't be too sure about that.

when it becomes even more painfully obvious that they have been basically obtaining money by deception,a lot of the "uber-mensch" will find themselves getting a serious hiding by the productive class.

that does not mean that we will end up at marxist utopia...as the dialectic was indeed envisaged and promoted by marxists,to use a reverse-psychology tactic..in order to achieve communism(or corporate socialsm at the elites have planned).......it won't pan out that way.

...but it will mean a significant adjustment in the disparity between mega-rich and the poor.....and the mega rich will not like it at all.

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I never understood why they didn't do this the first time round; print money and give it to people who work, rather than print money and give it to scoungers/bankers.

Same here. Hopefully they are coming around to figuring it out, but I doubt it. My original plan was to use the 175 billion QE first round to simply get rid of the VAT for a time, which brings in 75 billion a year.. and cut the income tax in half for a time, which would cost another 80 billion. And then spend more on building projects we need.

They basically printed the 175 billion, gave it to a few bankers, and it sits on a balance sheet somewhere, never having made it into the economy.

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Same here. Hopefully they are coming around to figuring it out, but I doubt it. My original plan was to use the 175 billion QE first round to simply get rid of the VAT for a time, which brings in 75 billion a year.. and cut the income tax in half for a time, which would cost another 80 billion. And then spend more on building projects we need.

They basically printed the 175 billion, gave it to a few bankers, and it sits on a balance sheet somewhere, never having made it into the economy.

Banks were bailed out without QE money right?

QE money was used to buy corporate bonds right?

so all the big corps spent their QE money on commodities and have made a tonne of money of the rise in commodity prices, whilst joe public is out of a job or forced to survive on the same salary as he had a year ago - is that about right?

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  • 338 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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