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Paul Krugman Attacks Britain's Austerity Drive As 'deeply Destructive'


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QE was to bail out the Govt, not the banks. They just used the commercial banks to recycle the gilt money back into it's own coffers so it didn't fall foul of the Maastricht treaty.

You might as well bang your head against the wall.

The evil banksters stole all our money

and this is why politicians cannot now give us all the free stuff they promised us so we would vote for them

Apparently

:blink:

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You might as well bang your head against the wall.

The evil banksters stole all our money

and this is why politicians cannot now give us all the free stuff they promised us so we would vote for them

Apparently

:blink:

banksters havent stolen anything...they have created too much credit and demand they are the first in line for payment....hence, a "liquidity" crisis.

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You seem not to understand.

Most of us, the bottom 90% of society or so is a net payer of interest on debt. This holds true even if you have no debt yourself. Even if you are debt free you are buying goods and services from those who must pay interest on debt and thus you must pay more for goods and services than you would otherwise would. You can imagine it as a great root system entangling the bottom 90% of society channeling interest from debt to the top 10% of our societies.

A default on unpayable debts includes a mass of corporate, government and household debt, arising from the debt fueled bubble that grew over the last 30 years. That frees us (or mostly frees us) from that great system of channeling money/wealth upwards. Without that the wealth of the elites collapses, and much of the growing redistributive effect of the government is nolonger needed. Thus the government can cut and the masses are still better off, their is no austerity, as any cuts are outweighed by the lifting of the debt burden.

P.S. For Greece if the interest payments are stripped out government spending was in near balance with tax revenues last year. With the continuing collapse that may have changed however.

Err........

You can default if you like - or print money

but ultimately you cannot avoid being forced to live within your means.

All we are really arguing about is whether it is better to die slowly and painfully or go out in a spectacular blaze of glory

either way the endgame is unavoidable

and the endgame is a vastly smaller state

:blink:

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You might as well bang your head against the wall.

The evil banksters stole all our money

and this is why politicians cannot now give us all the free stuff they promised us so we would vote for them

Apparently

:blink:

It doesn't matter how many times you tell people, it just doesn't seem to sink in.

All western democratic states have grown fat on the credit expansion of the last 30 years

Politicians were able to turn their pipe dreams into reality by lumping the costs onto their grandkids credit card bill.

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The BBC must have loved that episode.

Krugman is of course wrong, and a Keynesian idiot. But he is also a full time professional economist that spends all day every day rehearsing his arguments. Putting him up against two people that were correct yet lacked the polished delivery of countering his soviet thinking was a brilliant BBC tactic to make him look masterful and them clueless.

If Krugman had gone up against say Andrew Lilico or a Peter Schiff, he would have been destroyed utterly. But the BBC knew that.

Do you think next week they will have a program where Andrew Lilico or Peter Schiff browbeat a Labour MP and Labour supporting businessman??? Will they [email protected] the biased left wing [email protected]

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The BBC must have loved that episode.

Krugman is of course wrong, and a Keynesian idiot. But he is also a full time professional economist that spends all day every day rehearsing his arguments. Putting him up against two people that were correct yet lacked the polished delivery of countering his soviet thinking was a brilliant BBC tactic to make him look masterful and them clueless.

If Krugman had gone up against say Andrew Lilico or a Peter Schiff, he would have been destroyed utterly. But the BBC knew that.

Do you think next week they will have a program where Andrew Lilico or Peter Schiff browbeat a Labour MP and Labour supporting businessman??? Will they [email protected] the biased left wing [email protected]

Why is Krugman a Keynesian? There are no Keynesian economists.

Idiots yes but not Keynesian.

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The smartest solution is that proposed by Steve Keen: do a another run of QE but don't give it to the banks- instead inject it directly into the bank accounts of Joe Public.

If they have debt the cash injection must go to paying it down- if they have no debt they get to spend the cash.

The banks lose because the debt (for them) is an income stream- but the public wins either due to debt reduction or a cash windfall- both of which translate into a boost of demand and more jobs as there is more income available for spending.

This will never happen as the income from debt is to be preserved at all costs-to the benefit of a small number at the top.

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The BBC must have loved that episode.

Krugman is of course wrong, and a Keynesian idiot. But he is also a full time professional economist that spends all day every day rehearsing his arguments. Putting him up against two people that were correct yet lacked the polished delivery of countering his soviet thinking was a brilliant BBC tactic to make him look masterful and them clueless.

If Krugman had gone up against say Andrew Lilico or a Peter Schiff, he would have been destroyed utterly. But the BBC knew that.

Do you think next week they will have a program where Andrew Lilico or Peter Schiff browbeat a Labour MP and Labour supporting businessman??? Will they [email protected] the biased left wing [email protected]

It would have been better had he been up against people who weren't clueless, except they didn't think they were clueless. Hence the scary part MPs get made head of this or that and they haven't a clue what they are doing. MPs are very well trained in media manipulation and she flopped big time.

As I said above some spending would seem useful so I found myself agreeing. Also this govt have just gone after a political "smaller state". For me as I have been affected by the cuts due to me and Mrs losing work, they need to transition more slowly(more effectively)between a large public sector and a private sector.

Currently we have cuts cuts cuts and no strategy for the out of work or people who have had hours cut etc..

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The smartest solution is that proposed by Steve Keen: do a another run of QE but don't give it to the banks- instead inject it directly into the bank accounts of Joe Public.

If they have debt the cash injection must go to paying it down- if they have no debt they get to spend the cash.

The banks lose because the debt (for them) is an income stream- but the public wins either due to debt reduction or a cash windfall- both of which translate into a boost of demand and more jobs as there is more income available for spending.

This will never happen as the income from debt is to be preserved at all costs-to the benefit of a small number at the top.

I thought this was daft due to fractional reserve banking. i.e. The pound from the treasury is then multiplied many times when lent out.

I could be wrong as I have been once or twice in the past :)

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It would have been better had he been up against people who weren't clueless, except they didn't think they were clueless. Hence the scary part MPs get made head of this or that and they haven't a clue what they are doing. MPs are very well trained in media manipulation and she flopped big time.

As I said above some spending would seem useful so I found myself agreeing. Also this govt have just gone after a political "smaller state". For me as I have been affected by the cuts due to me and Mrs losing work, they need to transition more slowly(more effectively)between a large public sector and a private sector.

Currently we have cuts cuts cuts and no strategy for the out of work or people who have had hours cut etc..

They have got to you, how did they do it, do they lay their eggs in your brain, is it like invasion of the body snatchers or something??

Cuts should be faster deeper harder, and cut taxes&regulation!!

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[/b]

Have you got any figures for this? Is this figure net of the EU bailout money and post previously implemented cuts? How are future unfunded liabilities weighted?

Can you also clarify exactly what you mean by net payer of interest on debt?

http://www.financialmirror.com/blog-details.php?nid=942

Left-wing Syriza party leader Tsipras has said if he wins the June elections, he will keep Greece in the eurozone, but instead negotiate better repayment terms. His biggest negotiating tool is the fact that Greece’s primary deficit – that’s the government deficit excluding interest payments – will be 1% of gross domestic product in 2012.

As for being a net payer of interest..... Our monetary system exists as debt so that debt is distributed all across our society. Individuals in that society receive interest from money they hold as well as paying interest on debts they have. At different points in time an individual will be paying more in interest or receiving more in interest depending on their financial status, for example paying more after just buying a house, and receiving more when retired. You also need to consider that even if an individual is not in debt he/she is also helping to pay the debts of others through the price of goods and services. The best example of this is renting a home, where much of the rent goes to pay interest on that properties mortgage.

Now on cumulative basis over a persons lifetime he/she may be a net payer or receiver of interest. The bottom 90% or so of society are net payers, that is they pay more interest on debts they have or via the prices of goods and services, than interest they receive on money they have saved. The inverse is true for the top 10%. In effect its a great funnel for channeling wealth upwards. Worse still the poorer you are the greater a net payer of interest you are. A minimum wage earner will earn very little interest on his/her savings over their lifetime, and though they may not have debt themselves, they are paying for others debt through increased prices of goods and services. In effect the debt based monetary system is a redistributive mechanism from the poorer to the richer.

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Err........

You can default if you like - or print money

but ultimately you cannot avoid being forced to live within your means.

All we are really arguing about is whether it is better to die slowly and painfully or go out in a spectacular blaze of glory

either way the endgame is unavoidable

and the endgame is a vastly smaller state

:blink:

Not true at all. You could have a state that was 90% of the economy as long as it took in 90% of the money via taxes. I'm not going to go into what should be the size of the state. But the state can be of any size as long as taxes matches the amount it spends. Whether an economy where 90% of it is the state is the most efficient way of organizing a nation is of course a different matter.

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Not true at all. You could have a state that was 90% of the economy as long as it took in 90% of the money via taxes. I'm not going to go into what should be the size of the state. But the state can be of any size as long as taxes matches the amount it spends. Whether an economy where 90% of it is the state is the most efficient way of organizing a nation is of course a different matter.

But the current problem is state spending isn't matching taxes.

That's why the deficit is ballooning.

As you have highlighted the problem is if the state is 100% of the economy it won't be efficient at distributing resources.

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The smartest solution is that proposed by Steve Keen: do a another run of QE but don't give it to the banks- instead inject it directly into the bank accounts of Joe Public.

If they have debt the cash injection must go to paying it down- if they have no debt they get to spend the cash.

The banks lose because the debt (for them) is an income stream- but the public wins either due to debt reduction or a cash windfall- both of which translate into a boost of demand and more jobs as there is more income available for spending.

This will never happen as the income from debt is to be preserved at all costs-to the benefit of a small number at the top.

Yes, QE1 should have started this way, until workers wages increase ahead of inflation there will be a fall in demand, low/no growth and no chance to pay down the debt, which seems pretty obvious since 2008. Inflationary pain yes but at least I think could have worked out and probably would have avoided the prolonged waste of money and resources we are still enduring with no end in sight or ever lightly to end. Cutting the public sector is reducing demand that also cuts the private sector which is so entangled with public money anyway. The private sector benefits for the productive outputs of the public sector, such as education and the NHS (healthier better educated work force etc.).

We've had some tax breaks for the few at the top, a lot of free money, plus a lot of other negative policies and consequences... and the usual 'trickle down' BS economics. Who's in charge here? Worse than useless! :rolleyes:

Someone has to try something different cause the current plans are not going to work until we are all $2 a day slaves. Unfortunately this is probably something near where Schiff's incarnation of 'free market' economics eventually end up also.

Edited by DarkHorseWaits
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I thought this was daft due to fractional reserve banking. i.e. The pound from the treasury is then multiplied many times when lent out.

I could be wrong as I have been once or twice in the past

The idea is not to lend out at all- which simply creates more debt- the idea is to 'retire' some of the the debt that already exists.

The current method of using the FB effect has not worked for two reasons- Keen says- first because it's based on a flawed understanding of how spending power is created in the economy and second because it's just an attempt to layer on more debt to a debt saturated system.

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Not true at all. You could have a state that was 90% of the economy as long as it took in 90% of the money via taxes. I'm not going to go into what should be the size of the state. But the state can be of any size as long as taxes matches the amount it spends. Whether an economy where 90% of it is the state is the most efficient way of organizing a nation is of course a different matter.

BS.

as the economy is 90% Gov, how could you collect that 90% from the remaining 10%?

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It wont happen because its bonkers, although Ed Balls's proposals might which are equally insane.

Can you offer a more detailed critique? On the face of it the ideas that Keen proposes make sense- a lot more sense than flooding the banks with yet more money to lend out- in an economy already drowning in debt.

It's extreme yes- but why do you say it would not have the desired effect- which is to 'retire' some the existing debt that is currently killing the system?

Edited by wonderpup
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In effect the debt based monetary system is a redistributive mechanism from the poorer to the richer.

Which is why any proposal based on reducing debt will be dismissed as 'bonkers'- it's not in the interest of the people running the system to allow that debt to be diminished.

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It doesn't matter how many times you tell people, it just doesn't seem to sink in.

All western democratic states have grown fat on the credit expansion of the last 30 years

Politicians were able to turn their pipe dreams into reality by lumping the costs onto their grandkids credit card bill.

This is not really true, its only true in the sense that you/we have accepted the money men and the monetary system they have imposed on us.

Yes there are trade deficits among some nations amounting to a couple percent of gdp. A gap which could easily be bridged with western levels of productivity, by a small percentage of the currently unemployed or miss-allocated workers being put to productive use.

Outside of that future consumption in any nation of goods and services is not in reality constrained at all.

So unless we have somehow created worm-holes in time and space and are shipping goods/services from the future to now, in exactly what way are future individuals western societies constrained to reduce their consumption and quality of life? In what way except in an absurd monetary way that we have self-imposed on ourselves (or at least self-accepted) are future generations constrained?

The limit on what we consume should be decided by what productivity enables us to produce, by the earths limits, and by what we collectively decide on a rational basis should be the limit, not by an idiotic monetary system. We are not medieval self-flagellating monks that must punish ourselves for the sake of it.

Edited by alexw
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Not true at all. You could have a state that was 90% of the economy as long as it took in 90% of the money via taxes. I'm not going to go into what should be the size of the state. But the state can be of any size as long as taxes matches the amount it spends. Whether an economy where 90% of it is the state is the most efficient way of organizing a nation is of course a different matter.

The endgame is a vastly smaller state because as in all socialist economies the amount of money taken by the state from its citizens has now killed virtually all genuine wealth creation in the economy.

:blink:

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BS.

as the economy is 90% Gov, how could you collect that 90% from the remaining 10%?

That's not how it works.

If the economy is 90% gov, then of the total system (90% gov + 10% private), 90% is taken in taxes and spent by the gov.

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