Is England really in debt?

[Wildcat]

You presumably speak as someone with no savings and not on a fixed income (not linked to inflation), and without any empathy for those who do rely on income from savings or other fixed income.

 

My income isn't fixed, I am public sector worker targetted to pay back the bulk of the debt with no pay rises of any significance (continuing a 5 year trend) and attacks on our pensions and jobs. We keep hearing we are all in it together, something which rings rather hollow when it is your income targetted.

 

I have plenty of empathy for the poor and those that didn't benefit out of the unsustainable boom years that benefited investors and no one else, and furthermore with the crash to the obvious detriment of everyone else.

 

Inflation helped the US and West devalue their debts after the second world war, the investment in infrastructure and job creation created the boom years of the 50s reducing the debts to manageable levels. We know it works, it targets those that disproportionately benefited. The arguments against it are monetarist and we now know that theory was false and never worked, it was tested by the recession when on Dec. 16, 2008 the federal reserve reduced interest rates to zero. Monetarist Theory if it worked would have stopped the recession in its tracks. It didn't it failed monetarism was exposed as being the equivalent of the emperor's new clothes.

 

My arguments have nothing to do with self interest they are about the evidence and history of what works, I don't believe in monetarist fairies to turn the economy around... I prefer to base my opinions on history and what has been shown to work.

[Cyclone]

Yes, I realise that. If your income was fixed then you wouldn't think hyper inflation was a good idea.

 

I don't understand your complete dismissal of monetary theory either, who ever claimed that it could stop a recession in it's tracks?

 

Edit - to echo Andikay's post below, the majority of the debt will be paid back through reduced spending in general, which affects everyone. The public services are only having reasonable cuts made, particularly to their unsustainable pension structures which the rest of us have been subsidising for a generation.

[andikay]

My income isn't fixed, I am public sector worker targetted to pay back the bulk of the debt with no pay rises of any significance (continuing a 5 year trend) and attacks on our pensions and jobs. We keep hearing we are all in it together, something which rings rather hollow when it is your income targetted.

 

I have plenty of empathy for the poor and those that didn't benefit out of the unsustainable boom years that benefited investors and no one else, and furthermore with the crash to the obvious detriment of everyone else.

 

Inflation helped the US and West devalue their debts after the second world war, the investment in infrastructure and job creation created the boom years of the 50s reducing the debts to manageable levels. We know it works, it targets those that disproportionately benefited. The arguments against it are monetarist and we now know that theory was false and never worked, it was tested by the recession when on Dec. 16, 2008 the federal reserve reduced interest rates to zero. Monetarist Theory if it worked would have stopped the recession in its tracks. It didn't it failed monetarism was exposed as being the equivalent of the emperor's new clothes.

 

My arguments have nothing to do with self interest they are about the evidence and history of what works, I don't believe in monetarist fairies to turn the economy around... I prefer to base my opinions on history and what has been shown to work.

 

You are not being asking to pay any of the money back that you have been given, the government is just cutting what they are giving you because its unsustainable. The public sector can’t pay the debt back that’s left to the private sector to do as well as to keep paying for the public sector.

 

Many public sector workers benefited from Labours excessive spending and without that spending many public sector workers wouldn’t have a job.

[Wildcat]

Yes, I realise that. If your income was fixed then you wouldn't think hyper inflation was a good idea.

 

I don't understand your complete dismissal of monetary theory either, who ever claimed that it could stop a recession in it's tracks?

 

A critical article explains it here:

 

Edwards is part of a school of thought that replaced Keynesianism. The discipline of economics includes many different groups — the monetarists, the Chicago school and supply-side economics. The Keynesians used taxes and government deficits as their main tools for steering the economy. The anti-Keynesians thought you could have the same effect just by using the central bank — the Federal Reserve — to carefully control interest rates. If the economy overheats, raise rates. If it starts to sputter, lower them.

 

The Keynesians and anti-Keynesians fought some bitter battles through the 1980s. But by the time of the Clinton administration, most economists agreed on the basics: Some of Keynes' ideas are useful, but in a post-Keynesian world, the interest rate is the most effective tool.

 

This view held sway until a month ago — Dec. 16, 2008, to be precise. That's the day the Federal Reserve tried to stabilize the economy by lowering the interest rate all the way down to zero percent. The Fed can't go lower, but the economy has kept worsening. The one effective tool seemed to have stopped working.

 

Monetarism, the Chicago School, Supply Side Economics all fundamentally didn't work.

 

http://www.npr.org/templates/story/story.php?storyId=100018973

 

Edit - to echo Andikay's post below, the majority of the debt will be paid back through reduced spending in general, which affects everyone. The public services are only having reasonable cuts made, particularly to their unsustainable pension structures which the rest of us have been subsidising for a generation.

 

Reasonable cuts...lol

 

40% slashing of spending is vandalism

 

Public sector Pensions are deferred pay.. It is like someone telling you that they have gone in to negotiation with your employer and are now imposing a cut in your pay back dated to the very first year of your employment. Everything you banked on the calculations you used to justify remaining in employment torn up before your eyes.

 

As for sustainability...The cost of public sector pensions is falling. As noted in the Hutton Report, public sector pensions cost 1.9% of GDP today, but will fall to 1.4% by 2060. Both the National Audit Office and Public Accounts Committee reports agree.

http://leap-lrc.blogspot.com/2011/06/public-sector-pensions-facts.html

[Wildcat]

You are not being asking to pay any of the money back that you have been given, the government is just cutting what they are giving you because its unsustainable. The public sector can’t pay the debt back that’s left to the private sector to do as well as to keep paying for the public sector.

 

A) See post above.

 

B) History tells the opposite story.

 

Many public sector workers benefited from Labours excessive spending and without that spending many public sector workers wouldn’t have a job.

 

The only excessive spending by Labour was on privatisations and privatised sectors like the railways that cost us far more in private sector hands than it ever did in public hands because not only is there a public need to provide a safe and efficient infrastructure for the workings of the economy, but the shareholders also want a return on their investments escalating costs.

 

The excessive spending that caused us problems was private not public specifically through the banks rewarding creditors and debtors through the smoke and mirrors of repackaged debts etc.

[Cyclone]

Has the UK government ever subscribed to or claimed to steer the economy through only monetary policy though? Or is that just one of the tools that they can and should and do use? (that's rhetorical by the way, the answer is they don't and they haven't).

You can see this clearly because the government has made multiple tax changes (keynesian economics) in order to help stimulate the economy, as well as keeping the interest rate low (despite the unwanted high rate of inflation).

 

Which reminds me, how do you think that your reference to keynesian economics supports your assertion that we should inflate our way out of the debt we owe (thus devaluing the pound and harming everyone on a fixed income or with savings).

 

The only excessive spending by Labour

This is just wilful ignorance.

[Wildcat]

Has the UK government ever subscribed to or claimed to steer the economy through only monetary policy though? Or is that just one of the tools that they can and should and do use? (that's rhetorical by the way, the answer is they don't and they haven't).

You can see this clearly because the government has made multiple tax changes (keynesian economics) in order to help stimulate the economy, as well as keeping the interest rate low (despite the unwanted high rate of inflation).

 

Which reminds me, how do you think that your reference to keynesian economics supports your assertion that we should inflate our way out of the debt we owe (thus devaluing the pound and harming everyone on a fixed income or with savings).

 

This is just wilful ignorance.

 

Keynes's tax cuts that Roosevelt never implemented? There are seperate reasons for knowing tax cuts don't affect growth. Basically you can look at Western economies since Supply Side economics theories played out and you can see the tax cuts the wealthy received haven't trickled down all they have done is increase the income gap. Better to stimulate the economy directly through public expenditure rather than the myth of trickle down economics.

 

How do you think it doesn't support it? the reference making that argument was earlier in the thread. This article does not however conflict with that view. The fact of the matter is that is precisely how debts of the depression and Second World war were dealt with. Inflation was kept under control at higher rates than we have now, but under control all the same by direct public spending on the causes of inflation... unemployment & lack of economic growth.

[Cyclone]

I didn't mention trickle down economics or tax cuts for the rich, and I wasn't talking about 50 year old US history, I was talking about tax changes made by this government.

 

You've convinced yourself that the only way of affecting the economy is through government spending, you're no better than someone who believes that only the interest rate can have any affect. Each of these things has an impact, each of them is a useful tool and each of them has to be applied in the real world (the real world where UK debt is too high and more spending isn't an option for example).

 

For my enlightenment, what levels of inflation existing for 2 decades after the end of WWII?

[Wildcat]

you were taking about keynesian tax cuts, I was directly addressing your point.

[Wildcat]

it is reckless spending cuts that is the absolutist ideological position.