Do you want to discuss boring politics? (63 Viewers)

[Sky Blue Pete]

Pretty sure the government has increased taxes by £40bn pa and changed fiscal rules to increase borrowing by the same per annum. Combined that’s an extra £300-£400bn over the parliament

We currently spend £100bn+ pa servicing debt. Inflation is still nearly double target. You borrow more and debt servicing costs will increase further as we have zero credibility as the markets don’t believe the party will allow treasury to control spending.

I agree that reeves policies in particular NI increase have damaged growth though. It was idiotic and has also probably indirectly increased inflation. The government should’ve had the bottle to just raise main taxes and promised to reduce once finances were in better state….and blamed the Tories. Any above inflation public sector pay rises should’ve had strings attached

I bow to your and grendels greater knowledge and experience of managing the uk economy

Thanks for suggesting alternative solutions
Is she just stupid then or genuinely believed that the tories didn’t care and if you care things will be better

 

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[Sky Blue Pete]

Question for one of the many economists we have on here:

What's the benefit of servicing debt and borrowing? If all of the major economies have huge national debt, I assume it can only be to the banks, but they'll be privately owned and therefore investing back in those same economies. Why wouldn't an economy like ours, look at quantitative easing and create the money to match their debt then slowly reduce it over time? It would short term devalue the currency, but long term you only owe to yourselves and stop paying interest on interest. I've thought it for a while and pretty sure I'm missing a trick somewhere as greater minds than mine must've considered and dismissed the idea.

It’s a reform policy isn’t it?

 

[rob9872]

It’s a reform policy isn’t it?

Is that genuine? Honestly never heard it anywhere. If it is, that makes me think even more that I'm wrong!

 

[rob9872]

Is that genuine? Honestly never heard it anywhere. If it is, that makes me think even more that I'm wrong!

I've just Googled it and actually says the reverse, in that they are looking to ban QE ... so maybe I'm onto something after all!

 

[Sky Blue Pete]

I've just Googled it and actually says the reverse, in that they are looking to ban QE ... so maybe I'm onto something after all!

They do something with the debt that isn’t mainstream
I should pay more attention

 

[fernandopartridge]

Question for one of the many economists we have on here:

What's the benefit of servicing debt and borrowing? If all of the major economies have huge national debt, I assume it can only be to the banks, but they'll be privately owned and therefore investing back in those same economies. Why wouldn't an economy like ours, look at quantitative easing and create the money to match their debt then slowly reduce it over time? It would short term devalue the currency, but long term you only owe to yourselves and stop paying interest on interest. I've thought it for a while and pretty sure I'm missing a trick somewhere as greater minds than mine must've considered and dismissed the idea.

Pension funds are large holders of government bonds. They represent a rock solid investment under written by the issuer of the currency which is obviously better than gambling pensions on the stock market or in property investments. They are not strictly necessary though and government literally create all the money it wishes to spend.

 

[rob9872]

Pension funds are large holders of government bonds. They represent a rock solid investment under written by the issuer of the currency which is obviously better than gambling pensions on the stock market or in property investments. They are not strictly necessary though and government literally create all the money it wishes to spend.

Thanks for the reply, although doesn't really form any part of why they should or shouldn't do the same to eradicate the national debt. Presumably those bonds and the pensions would temporarily be weaker, but still guaranteed to their locked in %. It's the interest on the debt that could be used to benefit services I'm looking to drive down and at the same time wouldn't need a tax raise to cover it.

 

[fernandopartridge]

Thanks for the reply, although doesn't really form any part of why they should or shouldn't do the same to eradicate the national debt. Presumably those bonds and the pensions would temporarily be weaker, but still guaranteed to their locked in %. It's the interest on the debt that could be used to benefit services I'm looking to drive down and at the same time wouldn't need a tax raise to cover it.

Why would you want to eradicate the national debt?

 

[rob9872]

Why would you want to eradicate the national debt?

Because we're paying £111bn each year to service that £3tr debt. Surely ot would be better to have no debt and pump that £111bn into services instead of interest? As I say, I'm a novice in this area, so I need someone to explain to me in Janet and John style words, why it's not a good a idea to get rid of it.

 

[CCFCSteve]

Question for one of the many economists we have on here:

What's the benefit of servicing debt and borrowing? If all of the major economies have huge national debt, I assume it can only be to the banks, but they'll be privately owned and therefore investing back in those same economies. Why wouldn't an economy like ours, look at quantitative easing and create the money to match their debt then slowly reduce it over time? It would short term devalue the currency, but long term you only owe to yourselves and stop paying interest on interest. I've thought it for a while and pretty sure I'm missing a trick somewhere as greater minds than mine must've considered and dismissed the idea.

I’m no economist and it’s complex but I will try to explain my view…you might be better trying Google Ai though !

Firstly, I’d imagine if you proposed this the market for U.K. gilts would collapse as anyone holding would likely sell off due to uncertainty and knowing they are being paid back with money printed/made out of thin air. All making large losses potentially causing huge pension, bank and investor issues

Id also imagine we’d lose all credibility as a country and again due to uncertainty Sterling would sell off/devalue, this would massively increase import costs/prices (as we all know we manufacture fuck all). As costs increase on the back of this, people would start to charge more because they’re worried prices of their inputs will continue to increase, employees will want more pay etc ….so inflation would likely snowball. Who would invest in a country where this is happening ? Everyone’s savings and investments would also suddenly be worth a lot less due to debasement. Anyone holding significant amounts of Sterling would sell/exchange, devaluing it further. I’d imagine the experiment would end very quickly with a financial crisis.

Japan are the only large economy that have semi done what your suggesting recently, their debt to gdp is 250%+ and the Bank of Japan owns about 50% of government debt. They’ve done it more to control borrowing costs rather than full replacement. I personally think they’re in the shit, time will tell. Smaller countries have ended up with hyper inflation.

My overriding view of QE has always been it negatively impacts the poorest (who don’t own assets) most. Id rather us front up to the public and tax people more which is a fairer/more progressive solution that QE. I also believe QE has been totally misused in recent years (fair enough in 2009) which is possibly one of the biggest drivers behind the massive increase in wealth inequality. Thats not to say it doesn’t have a place in terms of liquidity etc like during financial crisis or to help fund/boost economy during times of major recessions where inflation is less of a risk

It’s not a silly question though, many on the left believe stuff like this is possible. Maybe it is but I personally wouldn’t want us to try it and wouldn’t hang around to see the results

 

[rob9872]

I’m no economist and it’s complex but I will try to explain my view…you might be better trying Google Ai though !

Firstly, I’d imagine if you proposed this the market for U.K. gilts would collapse as anyone holding would likely sell off due to uncertainty and knowing they are being paid back with money printed/made out of thin air. All making large losses potentially causing huge pension, bank and investor issues

Id also imagine we’d lose all credibility as a country and again due to uncertainty Sterling would sell off/devalue, this would massively increase import costs/prices (as we all know we manufacture fuck all). As costs increase on the back of this, people would start to charge more because they’re worried prices of their inputs will continue to increase, employees will want more pay etc ….so inflation would likely snowball. Who would invest in a country where this is happening ? Everyone’s savings and investments would also suddenly be worth a lot less due to debasement. Anyone holding significant amounts of Sterling would sell/exchange, devaluing it further. I’d imagine the experiment would end very quickly with a financial crisis.

Japan are the only large economy that have semi done what your suggesting recently, their debt to gdp is 250%+ and the Bank of Japan owns about 50% of government debt. They’ve done it more to control borrowing costs rather than full replacement. I personally think they’re in the shit, time will tell. Smaller countries have ended up with hyper inflation.

My overriding view of QE has always been it negatively impacts the poorest (who don’t own assets) most. Id rather us front up to the public and tax people more which is a fairer/more progressive solution that QE. I also believe QE has been totally misused in recent years (fair enough in 2009) which is possibly one of the biggest drivers behind the massive increase in wealth inequality. Thats not to say it doesn’t have a place in terms of liquidity etc like during financial crisis or to help fund/boost economy during times of recession where inflation is less of a risk

It’s not a silly question though, many on the left believe stuff like this is possible. Maybe it is but I personally wouldn’t want us to try it and wouldn’t hang around to see the results

Thanks

 

[CCFCSteve]

Thanks

Probably all bollocks but I tried

 

[rob9872]

Tbf Sterling has already devalued massively since his Liverpool and Man City days.

 

[CCFCSteve]

For anyone interested and not fast asleep after my post, this is a pretty good explanation of QE

Quantitative easing

Quantitative easing (QE) is one of the tools we use to meet our 2% inflation target. QE lowers long-term borrowing costs to support spending in the economy and hit the inflation target.

www.bankofengland.co.uk

 

[Mucca Mad Boys]

Right wing press peddling “disinformation”…

 

[Mucca Mad Boys]

I’m no economist and it’s complex but I will try to explain my view…you might be better trying Google Ai though !

Firstly, I’d imagine if you proposed this the market for U.K. gilts would collapse as anyone holding would likely sell off due to uncertainty and knowing they are being paid back with money printed/made out of thin air. All making large losses potentially causing huge pension, bank and investor issues

Id also imagine we’d lose all credibility as a country and again due to uncertainty Sterling would sell off/devalue, this would massively increase import costs/prices (as we all know we manufacture fuck all). As costs increase on the back of this, people would start to charge more because they’re worried prices of their inputs will continue to increase, employees will want more pay etc ….so inflation would likely snowball. Who would invest in a country where this is happening ? Everyone’s savings and investments would also suddenly be worth a lot less due to debasement. Anyone holding significant amounts of Sterling would sell/exchange, devaluing it further. I’d imagine the experiment would end very quickly with a financial crisis.

Japan are the only large economy that have semi done what your suggesting recently, their debt to gdp is 250%+ and the Bank of Japan owns about 50% of government debt. They’ve done it more to control borrowing costs rather than full replacement. I personally think they’re in the shit, time will tell. Smaller countries have ended up with hyper inflation.

My overriding view of QE has always been it negatively impacts the poorest (who don’t own assets) most. Id rather us front up to the public and tax people more which is a fairer/more progressive solution that QE. I also believe QE has been totally misused in recent years (fair enough in 2009) which is possibly one of the biggest drivers behind the massive increase in wealth inequality. Thats not to say it doesn’t have a place in terms of liquidity etc like during financial crisis or to help fund/boost economy during times of major recessions where inflation is less of a risk

It’s not a silly question though, many on the left believe stuff like this is possible. Maybe it is but I personally wouldn’t want us to try it and wouldn’t hang around to see the results

Look at the cost of housing… assets have ballooned so not only are houses difficult for ordinary people to buy, they’re also spending record %s of their income on maintaining a house.

I’m finalising a purchase of a house and my deposit was significantly more than my mum’s mortgage for the family home.

The Blairite consensus (1997-) is dying and what comes next needs a real radical shake up. With Starmer, he’s one of history’s ‘nearly men’ and is just not the right person to lead the country in today’s political climate.

The gilt market shock that kicked out Truss was a watershed. It will paralyse this governments spending commitments and the budget this autumn will be designed to keep this in check. Hence unpopular tax rises and/or public spending cuts. I was listening to a podcast recently that stated something like ‘81% of government borrowing is used on paying off old borrowing’.

 

[chiefdave]

Right wing press peddling “disinformation”…

Not sure if you're being genuine here or suggesting iNews is a 'leftie' publication.

The paper and its website were bought by the Daily Mail and General Trust (DMGT) on 29 November 2019, for £49.6 million.

 

[chiefdave]

I’m finalising a purchase of a house and my deposit was significantly more than my mum’s mortgage for the family home.

For reasons unknown my Dad has every bank statement since the dawn of time boxed up and in the loft. Been quite an eye opener looking through them as I've been clearing some of his stuff out (still waiting to find something nobody knew he had that is worth millions!).

The % of his income he spent per month on the mortgage, even under Thatchers mortgage crisis, if far lower than I pay, and I'm living in a far smaller property than my parents.

But the same thing applies to everything, fuel bills, shopping (I can see him withdrawing cash every week for my Mum to do the shopping), even things like holiday payments.

It pretty quickly adds up and shows why despite being in a 'better' job than my Dad, and putting far more hours in, my standard of living is nowhere near what my parents had, and I'm a long way from being at the bottom of the pile.

 

[Mucca Mad Boys]

Not sure if you're being genuine here or suggesting iNews is a 'leftie' publication.

No, I’m being childish and mocking @shmmeee for stating that it was the RW press peddling the idea that the PM was in a bad spot.

As it happens, information that interested me on this topic was from mostly centrist/left leaning sources.

 

[Grendel]

For reasons unknown my Dad has every bank statement since the dawn of time boxed up and in the loft. Been quite an eye opener looking through them as I've been clearing some of his stuff out (still waiting to find something nobody knew he had that is worth millions!).

The % of his income he spent per month on the mortgage, even under Thatchers mortgage crisis, if far lower than I pay, and I'm living in a far smaller property than my parents.

But the same thing applies to everything, fuel bills, shopping (I can see him withdrawing cash every week for my Mum to do the shopping), even things like holiday payments.

It pretty quickly adds up and shows why despite being in a 'better' job than my Dad, and putting far more hours in, my standard of living is nowhere near what my parents had, and I'm a long way from being at the bottom of the pile.

I spent 40% of my income on mortgage alone in 1990 on my first property - it also declined in value by 15% when I sold it.

It was a tiny flat.

 

[chiefdave]

No, I’m being childish and mocking @shmmeee for stating that it was the RW press peddling the idea that the PM was in a bad spot.

As it happens, information that interested me on this topic was from mostly centrist/left leaning sources.

Its a self created problem really. Starmer decided to try and silence the elements of the party further to the left, shouldn't really be a surprise that they don't like that.

Problem becomes when he adds in a few shoot yourself in the foot moments like the WFA, Mandleson etc it becomes an easier job for those on the left to persude others, who maybe aren't so far left, that he isn't doing a great job.

 

[wingy]

Anyway I did read the other day that there was a potential decision where the BOE could slow down the sell off the something or other from the crash time's, sorry not helpful.

 

[Mucca Mad Boys]

For reasons unknown my Dad has every bank statement since the dawn of time boxed up and in the loft. Been quite an eye opener looking through them as I've been clearing some of his stuff out (still waiting to find something nobody knew he had that is worth millions!).

The % of his income he spent per month on the mortgage, even under Thatchers mortgage crisis, if far lower than I pay, and I'm living in a far smaller property than my parents.

But the same thing applies to everything, fuel bills, shopping (I can see him withdrawing cash every week for my Mum to do the shopping), even things like holiday payments.

It pretty quickly adds up and shows why despite being in a 'better' job than my Dad, and putting far more hours in, my standard of living is nowhere near what my parents had, and I'm a long way from being at the bottom of the pile.

This is summarises my situation too. I moved back home in Feb to finishing saving for a house (non-deposit stuff) and looking at my ‘mock’ bills,l to run a house, it’s comfortably 35-45% of my take home salary.

Interest rates of 6-8% are relatively normal and when rates look like they’d get that high when Truss was PM, it was apocalyptic. Let alone the rates that went up to 17-18% under Thatcher (or 1970s, can’t remember).

We’ve built an economic house on sand, so to speak. One wave and it all comes crashing down quite violently.

With hindsight, it was probably a ‘mistake’ for Labour to lose the 2010 election because interest rates were rock bottom and now is the time for real austerity. The electorate won’t like it but things can’t really carry on as it is. Unlike France / Germany, our currency is much more vulnerable to shocks and a debt crisis would be pretty catastrophic for us.

Its a self created problem really. Starmer decided to try and silence the elements of the party further to the left, shouldn't really be a surprise that they don't like that.

Problem becomes when he adds in a few shoot yourself in the foot moments like the WFA, Mandleson etc it becomes an easier job for those on the left to persude others, who maybe aren't so far left, that he isn't doing a great job.

100% - there’s a lot of MPs out there who do not like him personally.

 

[Brighton Sky Blue]

‘Free speech’ ‘Two tier Kier’

Four arrests after images of Trump and Epstein projected on Windsor Castle

Police said four people remain in custody after the "stunt," which coincided with the US president's arrival in the UK.

www.bbc.co.uk

 

[Ccfcisparks]

I spent 40% of my income on mortgage alone in 1990 on my first property - it also declined in value by 15% when I sold it.

It was a tiny flat.

Think thats bad I'm paying 60% of my income and I'm set to lose 25%.

Its a shed.

 

[Brighton Sky Blue]

Think thats bad I'm paying 60% of my income and I'm set to lose 25%.

Its a shed.

Thought it was a wheelie bin?

 

[Ccfcisparks]

Thought it was a wheelie bin?

I'm not a cat

 

[fernandopartridge]

Anyway I did read the other day that there was a potential decision where the BOE could slow down the sell off the something or other from the crash time's, sorry not helpful.

The BOE were carrying out a programme of quantative tightening which is selling the bonds purchased by the BOE to the market to reduce the size of its balance sheet. It is the only central bank in the world to be doing it and it is experimental. It is also effectively competition for the government selling its own bonds. It's about time to the BOE was reigned in imo.

 

[fernandopartridge]

This is summarises my situation too. I moved back home in Feb to finishing saving for a house (non-deposit stuff) and looking at my ‘mock’ bills,l to run a house, it’s comfortably 35-45% of my take home salary.

Interest rates of 6-8% are relatively normal and when rates look like they’d get that high when Truss was PM, it was apocalyptic. Let alone the rates that went up to 17-18% under Thatcher (or 1970s, can’t remember).

We’ve built an economic house on sand, so to speak. One wave and it all comes crashing down quite violently.

With hindsight, it was probably a ‘mistake’ for Labour to lose the 2010 election because interest rates were rock bottom and now is the time for real austerity. The electorate won’t like it but things can’t really carry on as it is. Unlike France / Germany, our currency is much more vulnerable to shocks and a debt crisis would be pretty catastrophic for us.


100% - there’s a lot of MPs out there who do not like him personally.

What is the objective of 'real austerity'?

 

[wingy]

The BOE were carrying out a programme of quantative tightening which is selling the bonds purchased by the BOE to the market to reduce the size of its balance sheet. It is the only central bank in the world to be doing it and it is experimental. It is also effectively competition for the government selling its own bonds. It's about time to the BOE was reigned in imo.

Daughters coming to the end of her five year deal in the spring, what a time to be alive.

 

[Mucca Mad Boys]

What is the objective of 'real austerity'?

Under the Tories in the 2010s, government spending still steadily increased. Likewise, Labour welfare ‘cuts’ was just slowing down the increase in spending. “Real austerity” would mean actually cutting government spending rather than stymying the spending increases.

If interest rates get past 7-8%, the economy will be in a lot of trouble. Particularly for homeowners and anyone with debt, which is a lot of people. Unfortunately, the rate of spending increases and gilts get more expensive, it’s a doom loop because the government needs to pay more to pay its interest, which increases borrowing further and the cycle repeats.

We’re already spending £100+ bn on debt interest alone.

 

[CCFCSteve]

The BOE were carrying out a programme of quantative tightening which is selling the bonds purchased by the BOE to the market to reduce the size of its balance sheet. It is the only central bank in the world to be doing it and it is experimental. It is also effectively competition for the government selling its own bonds. It's about time to the BOE was reigned in imo.

Yeah, it’s mental. Theres a good justification to reduce their balance sheet, to give more wriggle room in a crisis but it’s been awful timing. It’s led to big losses at worst time to replace debt and led to higher longer bonds yields by all accounts, so cost the treasury a fortune. Could’ve just done it more organically rather then proactively. Suppose it’s the problem with having an independent BoE . US has also been reducing balance sheet

 

[wingy]

Under the Tories in the 2010s, government spending still steadily increased. Likewise, Labour welfare ‘cuts’ was just slowing down the increase in spending. “Real austerity” would mean actually cutting government spending rather than stymying the spending increases.

If interest rates get past 7-8%, the economy will be in a lot of trouble. Particularly for homeowners and anyone with debt, which is a lot of people. Unfortunately, the rate of spending increases and gilts get more expensive, it’s a doom loop because the government needs to pay more to pay its interest, which increases borrowing further and the cycle repeats.

We’re already spending £100+ bn on debt interest alone.

So how will you beat that direction of travel if you don't mind me asking?

 

[Mucca Mad Boys]

The BOE were carrying out a programme of quantative tightening which is selling the bonds purchased by the BOE to the market to reduce the size of its balance sheet. It is the only central bank in the world to be doing it and it is experimental. It is also effectively competition for the government selling its own bonds. It's about time to the BOE was reigned in imo.

The Blairite ideal of making everything ‘independent’ was a historic mistake. Ministers are barely responsible for anything now and ultimately, that needs to change.

The OBR for example, is a terrible forecaster yet everyone is to pretend what they say is gospel.

 

[fernandopartridge]

Yeah, it’s mental. Theres a good justification to reduce their balance sheet, to give more wriggle room in a crisis but it’s been awful timing. It’s led to big losses at worst time to replace debt and led to higher longer bonds yields by all accounts, so cost the treasury a fortune. Could’ve just done it more organically rather then proactively. Suppose it’s the problem with having an independent BoE . US has also been reducing balance sheet

agreed, other central banks have done it passively as bond terms expire