Uk Slump To Last At Least Until 2020

[SuperChimp]

This whole subject is extremely simple,

Running a budget deficit for any length of time is simply not possible, with out either printing money to oblivion and/or defaulting eventually.

I think it is more fundamental than this. Ask yourself why can private banks create credit but the government cannot? Why must the government get into debt to fund public spending instead of just creating its own money?

Under the current economic system there is no alternative to default unless these fundamental problems are addressed.

[frederico]

I think it is more fundamental than this. Ask yourself why can private banks create credit but the government cannot? Why must the government get into debt to fund public spending instead of just creating its own money?

Under the current economic system there is no alternative to default unless these fundamental problems are addressed.

A currency only ever has perceived value, in fact that goes for anything.

Confidence in a currency is all a currency is.

[SuperChimp]

A currency only ever has perceived value, in fact that goes for anything.

Confidence in a currency is all a currency is.

The government tells you to pay your taxes in Sterling. If you don't you go to prison. This gives it value.

By saying that you can only pay your taxes in something created through debt enslaves us all.

[frederico]

The government tells you to pay your taxes in Sterling. If you don't you go to prison. This gives it value.

By saying that you can only pay your taxes in something created through debt enslaves us all.

Interesting point,I was referring to the confidence from foreign traders, who do have alternatives.

Imports and exports have to take place for our economy to function.

If the externally perceived value drops, then we will get inflation and be unable to compete.

Even services need energy and imported goods.

[SuperChimp]

Interesting point,I was referring to the confidence from foreign traders, who do have alternatives.

Imports and exports have to take place for our economy to function.

If the externally perceived value drops, then we will get inflation and be unable to compete.

Even services need energy and imported goods.

I agree. One worry is that a large proportion of Sterling is held abroad. I read somewhere that it has been a way of exporting our inflation since the 1990s.

If Sterling where to fall dramatically (say as the result of a budget crisis) this may cause Sterling to flood into the country, sending inflation through the roof. I have wondered for a while if that is one cause of sky high property prices in London, foreign owners of Sterling are moving their holdings of the paper currency into property in the capital as they are worried about further Sterling devaluation.

Buying shares in the FTSE is another option I suppose, inflating the stock market and moving ownership of UK corporations outside of the UK.