What you saying Hammond.... - Politics Forum.org | PoFo

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By B0ycey
#15158361
What you saying Hammond? That our Covid response may have been a tad bit expensive. :lol:

https://www.bbc.co.uk/news/uk-politics-56190776

This is what is called the mother of all contraditions. Now we have spent, we need to control urgently. But we need to spent to protect livelihoods and the economy. So we will have to spend more now and push whatever cluaterfuck that is inevitable down the road. I don't see the next crisis being diverted without hyperinflation. Too much money floating in the system with our being drawn back in.

But remember guys, most people wanted lockdown.
#15158362
The problem with opposition during a national crisis like this one is that it's divisive and negative. That is why Starmer has been avoiding it.

Hammond gives a modicum of opposition from within the Tory party just to keep any conversation going and to gauge on the public's reaction and expectations about our post-covid tax recovery.

Which is a good question because several old high street taxes can no longer be justified and the remaining taxes from the basket of possible increases are not a lot, other than corporation tax at 19%, income taxes are already relatively high so there are not many available sources for increases, certainly not any that could make a dent on the finances.

Boris also avoids talk of tax on mega digital platforms because it goes against his 'global Britain' message.

So that leaves us with no candidates, the Tories want the public to give them a way out and even better the left.
#15158365
The thing with this crisis is the truth has never been given Noemon. It isn't political to leave the government to make their own mess. Labour should stay out of it and demand the impossible because they are the opposition. That has been going on in politics for as long as I can remember.

The truth was that this virus was always going to be mitigated and never eradicated. Only now has Boris started to reveal that. The truth is that all governments overacted and continue to this day make out this is a bigger crisis than it needed to be. The truth is the NHS never went over its capacity and can be compared to 2018 when they did and beds were set out in corridors to fulfil their shortages. The truth is money should have been spent on hospital capacity in any case than shutting down the economy and a recruitment drive should have begun last April to build up new skills in the NHS and the truth is China growth figures today is not because they got on top of the crisis but because thet have been doing what I said to some extent and kept their economy going despite their unreported Covid deaths. These are the truths. And now we have to pay for our stupidity or pay the economic crisis sometime down the road. Hammond sees it. I see it. I suspect you see it too.
#15158367
B0ycey wrote:The thing with this crisis is the truth has never been given Noemon. It isn't political to leave the government to make their own mess. Labour should stay out of it and demand the impossible because they are the opposition. That has been going on in politics for as long as I can remember.


Things are so blurry it is impossible to say if traditional partisanship will have a positive effect on Labour's poll figures.

I cannot think of any political messages capable of being deployed with effect against Boris right now.

Boycey wrote:The truth was that this virus was always going to be mitigated and never eradicated. Only now has Boris started to reveal that. The truth is that all governments overacted and continue to this day make out this is a bigger crisis than it needed to be. The truth is the NHS never went over its capacity and can be compared to 2018 when they did and beds were set out in corridors to fulfil their shortages. The truth is money should have been spent on hospital capacity in any case than shutting down the economy and a recruitment drive should have begun last April to build up new skills in the NHS and the truth is China growth figures today is not because they got on top of the crisis but because thet have been doing what I said to some extent and kept their economy going despite their unreported Covid deaths. These are the truths. And now we have to pay for our stupidity or pay the economic crisis sometime down the road. Hammond sees it. I see it. I suspect you see it too.


Every government has to balance economics, lockdown, relief, tax revenues and projections. The British have not done a bad job at finding a compromise between all these parametres. I do not think that the British figures of Covid-19 permit a lesser lockdown.

I agree with your assertion about China but the most noteworthy remark on China's economy is that the service sector is not as large as in western economies and the service sector is the one most affected by the lockdowns.

I think everybody understands that the relatively generous social cushion provided right now will have to be paid by somebody down the line.
#15158937
I think everybody understands that the relatively generous social cushion provided right now will have to be paid by somebody down the line.


No, it's widely contested and not just on the left:



Why we don't need to pay for Covid - Because we already have

Why we don’t need tax rises to pay for Covid

The scare stories about government debt are back. Ignore them


Of those saying it must be paid for, few are talking about sovereign debt crisis or imminent insolvency. Those claims are becoming untenable. They're talking about fiscal consolidation sometime, possibly decades, in the future if/when inflation returns. Which anyone might have said pre-Covid.

Hammond comes close to admitting the real fear of fiscal conservatives: that people will become immune to their scaremongering.
#15158941
SueDeNîmes wrote:They're talking about fiscal consolidation sometime, possibly decades, in the future if/when inflation returns. Which anyone might have said pre-Covid.


But I would say that is the issue now. It certainly would be if rates were above .1%. Besides we're haven't seen the impact with inflation once everyone starts spending in any case. And nobody is talking about paying off the debt just consolidation. Perhaps austerity has taught us that there isn't a real need to pay back borrowing. But Weimar has taught us what occurs with unrestrained spending. If the money tree isn't ceased soon I see no other outcome but high inflation.
#15158947
B0ycey wrote:
But Weimar has taught us what occurs with unrestrained spending. If the money tree isn't ceased soon I see no other outcome but high inflation.



You're ignoring the reparations; which had to be paid in hard currency.

A lot of this new borrowing is the government taking out debt against itself. It should work, but I don't think it's ever been done at this scale.

" Approximately a third of this debt is owned by the British government due to the Bank of England's quantitative easing programme, so approximately 1/3 of the cost of servicing the debt is paid by the government to itself, reducing the annual servicing cost.."
https://en.wikipedia.org/wiki/United_Kingdom_national_debt

I would expect you will see more of that in the future.
#15158952
late wrote:You're ignoring the reparations; which had to be paid in hard currency.

A lot of this new borrowing is the government taking out debt against itself. It should work, but I don't think it's ever been done at this scale.

" Approximately a third of this debt is owned by the British government due to the Bank of England's quantitative easing programme, so approximately 1/3 of the cost of servicing the debt is paid by the government to itself, reducing the annual servicing cost.."
https://en.wikipedia.org/wiki/United_Kingdom_national_debt


Weimar is a warning when too much currency is in circulation due to cashflow. I could have used the Zimbabwean Dollar that didn't have WW1 reparation and reach the same conclusion. Besides, I am not talking about paying the debt off just fiscal consolidation. Or are you one who thinks that inflation is just fiction?
#15159041
B0ycey wrote:
Weimar is a warning when too much currency is in circulation due to cashflow. I could have used the Zimbabwean Dollar that didn't have WW1 reparation and reach the same conclusion. Besides, I am not talking about paying the debt off just fiscal consolidation. Or are you one who thinks that inflation is just fiction?



Macroeconomists worry less about the size of the debt than the purposes it is used for.
#15159044
late wrote:Macroeconomists worry less about the size of the debt than the purposes it is used for.


I would dispute that sentence. But even if it was 100% true, what does that have to do with fiscal consolidation or the dangers of high inflation?
Last edited by B0ycey on 02 Mar 2021 07:39, edited 1 time in total.
#15159045
late wrote:Macroeconomists worry less about the size of the debt than the purposes it is used for.


There are many caveats to that claim. For instance, does the indebted country face credit constraints or expect to face them? If so, then size does matter.
#15159051
B0ycey wrote:
I would dispute that sentence. But even if it was 100% true, what does that have to do with fiscal consolidation

or the dangers of high inflation?



Economics is still keen on Keynes..

There doesn't seem to be many worried about high inflation, but I don't really pay attention to economics in England or Europe, so see what these guys have to say:

https://voxeu.org/article/post-covid-inflation-risks-uk
#15159053
late wrote:Economics is still keen on Keynes..

There doesn't seem to be many worried about high inflation, but I don't really pay attention to economics in England or Europe, so see what these guys have to say:

https://voxeu.org/article/post-covid-inflation-risks-uk


WHO THE FUCK IS AGAINST KEYNES!

Nonetheless what about Hammond... a Former chancellor and Macroeconomist? Also nobody knows the danger of mass borrowing yet. Perhaps lessons have been learnt from 2008 when we borrowed heavily and inflation was barely noticeable. Having said that we do know the problems of excess spending and flooding a market with currency. Which is basically what Hammond and others all calling for. There seems to be a confusing here on pay off the national debt and fiscal consolidation. Besides, the money we are spending at the moment isn't on a infrastructure or growth or even business but on keeping our economy CLOSED! Perhaps think of that before using the great name of Keynes in haste.
#15159063
B0ycey wrote:Also nobody knows the danger of mass borrowing yet.


I know what you mean and agree with your gist. I also want to add any country that is outside the G10 knows the dangers of mass borrowing quite well. Only the very top countries have had the privilege of mass borrowing without runaway inflation and even that is dubious.

The idea of the magic money tree has been shown to be wrong several times.

And as you said this is just to keep us in lockdown, that is we are borrowing to keep paying salaries that are not producing any output and that is piled on pre-existing massive debt so we are not financing growth and the debt is already in the red zone, which may be orange for the UK due to its position in the global economic system but it would have been purple zone for a smaller EU country and black zone for any other.
#15159241
SueDeNîmes wrote:They're talking about fiscal consolidation sometime, possibly decades, in the future if/when inflation returns. Which anyone might have said pre-Covid.


B0ycey wrote:But I would say that is the issue now. It certainly would be if rates were above .1%.

Central banks have been maintaining ultra-low rates to stave off deflation. People spend less, not more, as the price of money rises.

Besides we're haven't seen the impact with inflation once everyone starts spending in any case. And nobody is talking about paying off the debt just consolidation. Perhaps austerity has taught us that there isn't a real need to pay back borrowing. But Weimar has taught us what occurs with unrestrained spending. If the money tree isn't ceased soon I see no other outcome but high inflation.


I think that's a minority opinion. It doesn't appear to be what Hammond is saying. According to The Bank of England,

"Our analysis suggests that the accumulation of saving has been concentrated among wealthier and less financially distressed households.

These households may be less likely to spend their savings in support of the recovery: higher-income households tend to spend a smaller fraction of their income, both on average and in response to a positive shock to their finances.

Only 10% of the households that increased their savings (less than 3% of the whole sample) planned to spend the money they had saved. About 70% said they planned to continue to hold the savings in their bank accounts. Others planned to use their savings to pay off debts, invest, or top up their pensions."



Increased money supply is insufficient condition for hyperinflation. Generally, there is collapse in productive capacity coupled with massive foreign currency debt. The money printing comes after. UK "debt" is all £sterling and the furlough/relief schemes are maintaining productive capacity so that we can supply as demand returns.

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