Do you want this government out?

[Chrysalis]

I have given explanations and here they are again so you dont need to search.

The welfare state clearly will boost the economy as people are given the ability to spend when they otherwise would be out on the streets, someone on the streests with no money isnt buying anything from shops, not renting from a landlord and so on. Whilst a benefit claimant is doing those things, even if its not earnt money it is still been done. Taxation and welfare is enforced circulation of money which is crucial to an economy, if money stops circulating then the economy stops with it.

Same principles to other government spending, it is enforced circulation of money, it makes jobs that would otherwise probably not exist and supplies work to the private sector. Reduced taxation/spending would make 'some' people better of, I dont dispute this however the benefit would be to a minority of society who dont depend on any part of the state. There is a magnitude of reasons why rely on just the private sector for growth isnt going to work, one been that we now live in a global marketplace, the uk competes with other countries for business. There is cheaper countries to employ staff and cheaper countries to set up businesses. The best days are behind us. What we going to see over the next decades is the wealth shift from western countries to developing countries as a balance correction. The only thing that can truly save us in a way you will like is if we develop something that can be exported en masse and create employment here. The problem is we tend to sell the invention rather than the product as its a quicker profit.

But the problem is that we need to keep borrowing money as a country to meet even the current spending requirements, and if we are not seen to be trying to lower our debts, the interest rates on the money we need to borrow will go up, so we will have less to spend, so we need to borrow more, and it's a never-ending spiral into even more debt (at greater and greater cost).

Fine for us, not so good for our kids.

[Chrysalis]

its a spiral yes, but I dont think its fixable without fixing inflation.

Try reducing a money supply when inflation is growing, impossible.

I remember inflation - over 15% in the 80s and 90s.....

[spanna]

Inflation over 15% ??

Interest rates certainly .. in a vain attempt to try and stay in the ERM


Edit: My mistake - just googled it and 15% in 1980

[Jimmy-J]

We're told to tighten our belts Britain is skint, and yet we give millions upon millions of pounds away in aid to countries such as Pakistan to create jobs and educate their children. Why?

Originally Posted by spanna

Inflation over 15% ??

Interest rates certainly .. in a vain attempt to try and stay in the ERM


Edit: My mistake - just googled it and 15% in 1980

My mistyping as well - I meant 70s and 80s.

Link

Hit a peak of 26.9% in August 1975 (but was in double figures 74-77) and 21.9 in May 1980 (but again double figures from 79-82).

[Chrysalis]

Originally Posted by Hugh

I remember inflation - over 15% in the 80s and 90s.....

real inflation is probably around the 10% mark now.

the 80s was an era where the low paid got poorer nothing to be particularly proud off.

however the money supply wasnt reduced then, it was increased, there was credit been dished out, wages were going up faster then as well. But crucially the internet hadnt taken off at that point so the global marketplace was much less of an issue then although was starting to become an issue. Then the recession at the end of the 80s which was the certian correction bound to occur in such a situation.

---------- Post added at 21:12 ---------- Previous post was at 21:10 ----------

Originally Posted by Product 13

We're told to tighten our belts Britain is skint, and yet we give millions upon millions of pounds away in aid to countries such as Pakistan to create jobs and educate their children. Why?

funny enough that budget was even ringfenced. Another oddity for a country that is supposedbly close to calling the IMF.

[Arthurgray50@blu]

I am a definate yes, Since this government has been in we have;

CUTS in nearly every service going, Now we have the armed services being cut, the Armed services keep our shores safe,

AND yet they are giving millions of pounds to overseas countries and today Cameron agreed to give a country 600 Million pounds in aid.

WE pay our taxes, and we the ones being shafted.

Originally Posted by Chrysalis

real inflation is probably around the 10% mark now.

the 80s was an era where the low paid got poorer nothing to be particularly proud off.

however the money supply wasnt reduced then, it was increased, there was credit been dished out, wages were going up faster then as well. But crucially the internet hadnt taken off at that point so the global marketplace was much less of an issue then although was starting to become an issue. Then the recession at the end of the 80s which was the certian correction bound to occur in such a situation.

---------- Post added at 21:12 ---------- Previous post was at 21:10 ----------



funny enough that budget was even ringfenced. Another oddity for a country that is supposedbly close to calling the IMF.

RPI 5.5% Link

[Chrysalis]

I said real not government figures.

[Ignitionnet]

Originally Posted by Arthurgray50@blu

I am a definate yes, Since this government has been in we have;

CUTS in nearly every service going, Now we have the armed services being cut, the Armed services keep our shores safe,

AND yet they are giving millions of pounds to overseas countries and today Cameron agreed to give a country 600 Million pounds in aid.

WE pay our taxes, and we the ones being shafted.

How much tax have you paid this year Arthur? If you want shafting this is how much I gave the government as of 28th February 2011 for the year 2010-2011

PAYE to date 29147.33
Net Nat Ins Employees 4381.96
Net Nat Ins Employers 11314.82

You actually just got a tax cut, paid for by a tax rise for me and everyone else who now pays top rate tax.

So presumably I should pay more as cuts are impossible to consider and we can't really borrow any more with borrowing already going up to >80% GDP even on the OBR's rather selective figures?

---------- Post added at 22:39 ---------- Previous post was at 22:37 ----------

Originally Posted by Chrysalis

funny enough that budget was even ringfenced. Another oddity for a country that is supposedbly close to calling the IMF.

No-one suggested that we are 'close' to calling in the IMF.

---------- Post added at 22:43 ---------- Previous post was at 22:39 ----------

Originally Posted by Chrysalis

The welfare state clearly will boost the economy as people are given the ability to spend when they otherwise would be out on the streets, someone on the streests with no money isnt buying anything from shops, not renting from a landlord and so on. Whilst a benefit claimant is doing those things, even if its not earnt money it is still been done. Taxation and welfare is enforced circulation of money which is crucial to an economy, if money stops circulating then the economy stops with it.

The welfare state will still exist, people won't be dumped en masse onto the streets. You're, again, exaggerating.

Originally Posted by Chrysalis

Same principles to other government spending, it is enforced circulation of money, it makes jobs that would otherwise probably not exist and supplies work to the private sector. Reduced taxation/spending would make 'some' people better of, I dont dispute this however the benefit would be to a minority of society who dont depend on any part of the state. There is a magnitude of reasons why rely on just the private sector for growth isnt going to work, one been that we now live in a global marketplace, the uk competes with other countries for business. There is cheaper countries to employ staff and cheaper countries to set up businesses. The best days are behind us. What we going to see over the next decades is the wealth shift from western countries to developing countries as a balance correction. The only thing that can truly save us in a way you will like is if we develop something that can be exported en masse and create employment here. The problem is we tend to sell the invention rather than the product as its a quicker profit.

The section I put into bold speaks volumes. There are reasons why those jobs otherwise wouldn't exist.

Again for money to be put into public spending it has to be taken out via taxation, either now or later with interest paid in the interim. Far more elegant and efficient to just leave that money in people's pockets to spend as they see fit. Lower taxes encourage investment and consumption and incentivise work and enterprise both on a national and internationally competitive basis.

You would love the kind of cuts I would institute, I would have the state providing basic services, health care and a social security safety net and as little as possible outside of this core mission. If people want those additional services I'll keep the taxes down so that they have the money to go and purchase them themselves. Now that's ideological

[Chrysalis]

By not existing I meant alternate jobs from the private sector wouldnt exist Rather than the actual positions.

The problem with keeping the money in people's pockets is it will build up in fewer pockets instead of been spread out amongst more people, that will cause a weaker economy because ultimately no matter how rich a person is they will only buy what they need for themselves, they wont buy it twice just because they richer. A nightmare scenario for a government I suspect is people hording cash in bank accounts just saving it for a rainy day, whilst that is prudent it is actually a killer for the economy. Probably why conditions have been manipulated to make that unattractive.

[Ignitionnet]

Many people are doing exactly what they should be, exactly what the government should be, they are deleveraging themselves, trying to pay down the debt they accumulated in the past decade.

It might not be too kind for the economy but has to be done sooner preferably rather than later.

[Ignitionnet]

Oh look.

This is interesting given how utterly dependent we apparently are on consumer spending fuelled by government wealth redistribution through the tax system. Anyone would think the private sector is actually capable of generating jobs and wealth.

The economy seems to be starting the process of rebalancing from unsustainable dependency on debt fuelled consumption to actually producing goods and services - this is a very good thing!