Pound in biggest monthly fall against the dollar since 2016...

[big-all]

if you have a given size off pot and you stretch it further no matter what you call it or how you describe it each unit is worth less

 

[wellyfish]

if you have a given size off pot and you stretch it further no matter what you call it or how you describe it each unit is worth less

It seems you didn't read the article or the WGA report. If you had you wouldn't have posted that simplistic post.

 

[securespark]

- if you can't afford something, do without it.

The modern interpretation of this is: "even if you can afford it, claim for it on expenses: let the taxpayer foot the bill."

 

[wellyfish]

The modern interpretation of this is: "even if you can afford it, claim for it on expenses: let the taxpayer foot the bill."

The issue here is that the UK govt is not fiscally constrained in any way, it can 'afford' anything and everything (including all idle labour) for sale in £s.

The constraint the UK govt faces is purely about what resources are available.

For example, let's say we decided we wanted the best health and care service we could have.

Could we 'afford' it? Absolutely. Anything we can do we can 'afford' to do.

Creating the £s necessary to acquire the resources needed is the trivial part, the difficult part is acquiring the resources.

 

[Pat ex]

Creating the £s necessary to acquire the resources needed is the trivial part, the difficult part is acquiring the resources.

I would agree with you, until the balance of payments became so lopsided that our global creditworthiness would make it impossible for us, as a country, to borrow anymore in order to acquire resources on the international market.

 

[wellyfish]

I would agree with you, until the balance of payments became so lopsided that our global creditworthiness would make it impossible for us, as a country, to borrow anymore in order to acquire resources on the international market.

I could explain via easily available facts and reference to legislation/process that none of that is true i.e.

. Global creditworthiness is not a concept that applies to the UK
. The UK govt never needs to borrow it's own currency

If you are prepared to suspend your beliefs on how govt fiscal ops work, for a while, I'd be quite happy to have a conversation.

 

[Pat ex]

I could explain via easily available facts and reference to legislation/process that none of that is true i.e.

. Global creditworthiness is not a concept that applies to the UK
. The UK govt never needs to borrow it's own currency

If you are prepared to suspend your beliefs on how govt fiscal ops work, for a while, I'd be quite happy to have a conversation.

Surely, on a global market, in order to have funds to continue obtaining resources, on that global market, a country would have to continually invent more and more money, which would lead to raging inflation, and if they couldn't back that with gold reserves or borrowed funds, e.g. Zimbabwe, Cambodia and Germany pre WW1, eventually leading to a total collapse of that currency.

 

[wellyfish]

Surely, on a global market, in order to have funds to continue obtaining resources, on that global market, a country would have to continually invent more and more money, which would lead to raging inflation, and if they couldn't back that with gold reserves or borrowed funds, e.g. Zimbabwe, Cambodia and Germany pre WW1, eventually leading to a total collapse of that currency.

Zimbabwe and Weimar Germany (post WW1) are similar in many respects, not least in the manner of their supply-side collapse and continued deficit spending ... but we can come back to that later if you like.

Back to basics - I don't mean to be condescending here so if I am then please tell me - but the UK hasn't been on the gold standard for a very long time.

First, I'll ask you a question:

How would you explain to someone where £s come from (it's ok to say you don't really know, most people don't)?

 

[big-all]

It seems you didn't read the article or the WGA report. If you had you wouldn't have posted that simplistic post.

no point reading up on something i can do nothing about' i will research where i can give help to make sure the help is as accurate as i can make it but where something is no more than an opinion i will give my opinion and move on

 

[ajohn]

I would agree with you, until the balance of payments became so lopsided that our global creditworthiness would make it impossible for us, as a country, to borrow anymore in order to acquire resources on the international market.

We were managed on the basis of trade balance for a lengthy period. Rather odd way. A prof came up with a model with various sizes of orifices. Pour water through it and watch what comes out of the holes. The hole sizes calibrated on the basis of various factors. LOL Maybe the maths was too complicated for the civil service. There has probably been other ideas aimed at achieving a similar balance.

Then comes globalisation. What to do. Effectively change the style of economics used. There has been moans. One Tory at the time "you can't run and economy on the basis of selling hamburgers to each other" Occasional economists now - It's crazy to run a country on the basis of how much people spend - the GDP effectively. The problem is some ways is what are the alternative? Business sets what globalisation does. Profit in other words. There are signs that the early shifts to lower labour rates leaves countries in a better position to expand. IMHO anyway but a lot depends on where money is put in and the area that gets it. Take S Korea for instance. Some time ago rip them off making cheap clothes. Now they are churning out cars and all sorts. Taiwan is another example but has expanded in a different way. Biden wants his semiconductor chips back so get them to build a large factory in the USA. LOL They are saying it is too expensive an option. Be interesting to see how it goes.

There are some countries that have a surplus. We aren't one of them. One thought I heard of some pundit is switch entirely to a service based country as expanding manufacture wont happen here to a sufficient extent. I don't see it like that but there are difficulties - getting money into that area is one. Profit rules. I also wouldn't expect it to offer as many jobs as it did either. Automation wins in the end which means less people.

 

[wellyfish]

no point reading up on something i can do nothing about' i will research where i can give help to make sure the help is as accurate as i can make it but where something is no more than an opinion i will give my opinion and move on

I never said you could 'do anything about' it. I was trying to help you understand it.

The Whole of Government Accounts (WGA) is not 'opinion', it's the official publication of HMT signed off by the House of Commons. More here

The article isn't opinion either, it explains exactly how QE works and walks through the accounting with references to official publications to support everything.

 

[big-all]

thank you for taking the time to explain i do appeciate it

 

[Deleted member 18243]

Sure, it's inflation but it's not hyperinflation, at least not yet.

Back to the question, it's a genuine one, where do you think £s come from?

It is hyperinflation. My (and everybody else's) gas bill has tripled in the last few weeks due to the cost of covid.

£s come from trade and industry, nowhere else. Nowhere else apart from crime that is - swindlers such as Ritchie Sunak and Gordon Brown.

Yes you can create as many £s as you like by fiat, but that does not mean that you should.

 

[fillyboy]

you go into a pub 10 people put 10 pound in the kitty so £100 you then have a another person print another £10 voucher as quantitive easing [no added value but worth the same] you now have 11 people sharing the £100 so your 10 pounds is now worth £9 and a few pence

Not if it were a Wetherspoons, the £100 would be worth £150

 

[Vinty]

Truss is a neoliberal monetarist

What does that mean?