Genuinely not to understand the government's economic policy

[Thisishowyoudisappear]

This is a genuine question, I'm not trying to start a political argument. For the record I am fairly left wing.

So GO says the govt needs to make huge cuts in order to reduce the deficit. The cuts are going to be made at least in part from 'welfare'.

I guess I am wondering what all this deficit cutting is supposed to be achieving. I don't know, in real life, anybody who's been made better off under this govt. I don't understand this idea that 'balancing the books' for the whole economy a)bears any resemblance to doing same for a household or small business; b)is doing anything for the vast majority of people.

I don't understand how 'welfare' can be cut much more without starting on pensioners, which surely isn't going to happen.

I also don't understand why anyone except the seriously well-off vote Conservative. Why would you, when they are cutting services and not giving anything in tax cuts or whatever? Genuine question again.

I'm intelligent and take more than a passing interest in politics. So AIBU (or just a bit dim) or what??

YANBU, OP. There is an argument that the size of the deficit is entirely irrelevant. For one thing, we have a fiat currency and the government cannot default on its debts. The real issue is the amount of real resources the country is producing. It is obviously more wasteful to have people paid to do nothing when they can't get a job, than it would be to pay them to do something productive. If the private sector isn't creating jobs, the public sector must. This doesn't mean that the government can spend willy nilly as that would increase inflation, but the size of the deficit itself is a bit of a red herring.

Ye gads, Chandler. I thought I was on to something by pointing out how lax ours was. You've certainly out-councilled us there!

debbie we may have a fiat currency, but ever heard of inflation and international devaluation - 24% in the mid 70's.

OP - You are misunderstanding the purpose of government.

The purpose of government is to control the people and harness their labours, for the benefit of maintaining the status quo. This is done by understanding what is happening in the world, what is likely to happen in the future, and to mentally prepare the masses for changes that will inevitably occur in a timely and measured manner.

Every 'developed' county operates the same system. You have two parties, both acknowledging the same inevitability (at this point it is the acknowledgement that financially the country is no longer sustainable and that too few people are paying into a system that too many people are drawing out of), and so both parties talk/argue about the issues, all the while keeping the populous focused on the fact that contraction is coming and conditioning them to accept the situation when it arrives.

One party will be blamed, but the big secret no-one tells you is that whichever party was in power, the same thing would have happened. You have the illusion that your fellow countrymen voted in this status quo, but in reality those who govern, those who place them their, those who legislate, those who finance, and those who plan, do so in their own best interests.

Government tells you exactly what you need to hear. That is what they do. So long as you pay your taxes and cast you vote, and so long as you are happy to maintain and enforce the status quo, they care not a hoot about you.

The purpose of deficit cutting is not to achieve anything. It is to prepare the people for the depression in the economy that is going to happen. It is not 'might happen', it is a mathematical inevitability in each country. The discussion points of ministers are designed to create discourse among the people, not seek a solution. Those in government know firstly that they are not the ones who pull the strings, secondly that they are privileged to be in a position to act in the best interest of their families prior to everyone else, and thirdly they learn how countries are really run.

How many people in government do not fail to act in the best interests on their families BEFORE the rest of the population know what is happening? How many people in positions of understanding do not become stronger, more wealthy, more secure family units? And yet for the rest of us, I'd say maybe 40% of us can go a generation without noticeably improving the wealth of our family units.

If you believe that government is there to debate choice with you and act in your best interests, then ask yourself why your food bill has never gone down in price over a year anytime in your lifetime? It's not like apples have become harder to grow, or more nutritious. It doesn't cost more today than it did 10 years ago to grow a potatoes or make a loaf of bread.

No. The £ in your pocket gets smaller and smaller every year, and that is because the debt in the country gets bigger and bigger every year. The government has reached a point where it realises that it must address the issue or default. It will not default. It will take us to war, because war is the greatest money generator known to man, and at the same time, offers both an incentive to the people to accept serious austerity (for the war effort), and a reason to blame an enemy for the collapsing economy at home.

m.youtube.com/watch?v=AYVZKpH3pnM

Yes, as I pointed out the government can't just spend money regardless or inflation will increase which will help nobody. But cutting spending in the short term with the aim of reducing the deficit is likely to be more costly in the long run.

Sorry, that was in response to carol but was a bit slow.

Government spending is best I agree to provide jobs and if this means cutting benefits then so be it

I think elephantpoo's text was extremely unfair on party donors. Of course it matters which party is in government! If it made no difference at all I wouldn't be making such massive political contributions. If I find that our lobbying has gone down the toilet there will be hell to pay. I can tell you!

How can any country operate successfully when less than half the population is engaged in direct revenue generating labour? We need nurses, teachers, police, etc, but their wages have to be paid for by taxing those who get money from non-government sources. Nurses, teachers, police etc pay tax, but that tax comes from taxes paid by others, it is not new money entering the system or building wealth or prosperity in the country. Printing banknotes also doesn't make a people richer. No wealth or prosperity is created by printing banknotes. Zimbabwe made all their citizens trillionaires overnight, but it didn't stop their country going into depression.

Money doesn't have to be new. It just needs to move quickly.

Dora I asked upthread Does that make people who save rather than spend anti-social? and I think you have answered my question!

@debbie - Inflation is created by the fiat currency. When the Bank of England creates a bank note, or a digit on a commuter screen saying the government can spend a banknote that isn't printed on paper, there is a debt created between the government and the Bank of England, and that debt is for the return of the banknote (an IOU) plus interest. Every single bank transaction creates more debt. When you take out a loan, they don't go and get Aunt Penny's savings and give you it, they create a debt out of thin air. In a fractional reserve banking system it is impossible to ever repay the debt, because the borrowed money is created, but not the interest to be paid for it, a county only has three options. 1) default. 2) borrow more and more money creating ever increasing amounts of debt. 3) plunder another nations resources and steal their wealth to pay for our own debt. Inflation is not some magical thing government tries to control, it is a creation they make, and it reduces the value of your pay packet every single year.

DoraGora - so you are invested in the government and you have a financial is entice to believe it has your best interests at heart. Ever wonder if they would act in your interests if you didn't pay them money? Ever wonder if the other side would tell you what you wanted to hear if you paid them the same money? Ever consider that they are in fact both wings on the same beast?

caroldecker Thu 04-Dec-14 21:06:05

debbie we may have a fiat currency, but ever heard of inflation and international devaluation - 24% in the mid 70's

Japan has just issued a fuckton of QE in order to deliberately devalue the Yen and boost exports. They've fired the opening salvo in what will be, according to Jim Rickards, a global currency war. Said currency war will be stopped when either China or Russia back their national currency with gold, a substance they've both been mining and buying.

We should be hedging by buying gold. And yes, I know Gordon Brown sold 400 tonnes of our gold reserve. He did it at the recommendation of either JP Morgan or Goldman Sachs, can't remember which, though it was probably the former as they were then, as they are now, technically bankrupt. Mind you, without QE all the banks are.

Savers are not anti social but at times of recession money is best in the hands of those with lower incomes as they are more likely to spend

Dora - Well we could always pretend we're doing better economically by adding in guesstimates for things like prostitution and drug smuggling, and then comparing our growth to last year and, hey presto, Britain is doing swimmingly.

Last year I earned 15K, but this year I earned 10k but my kids stole their clothes and food from MajiMart, so we're doing better as a family.

Know which other country added prostitution and drug smuggling to their GDP figures this year? Greece. And they are doing so well that they are having to pay more of their invented wealth into the EU also.

I guess that's what happens when you fudge the figures to make your country look good, give the peoples a little pat on the head, and then get called on your figures, eh.

No, because I didn't go to school with Labour, New Labour, or whatever it calls itself this week. No one in my club has ever been let down by a Tory government and nor do we expect to be so. I expect the other lot have their shinnanegans, and they're welcome to them. But, a wise man backs the horse he knows. They're not putting restrictions on finance and banking because they know which side the bread is buttered on. You can't trust the other lot to see sense when it matters. It's a question of breeding. Sitting your bum on the red benches or the green benches is no substitute for that.

Tron - The CFR has already proposed that countries should start just printing money and giving it directly to the poor, because they are the least likely to consider saving it. Helicopter economics. It's been tried and it has never succeeded yet. No country has ever in the the history of mankind, managed to print their way out of debt. And no fiat currency ever in history has not gone to zero. Still, why the hell would you ever want to learn anything from history, eh? What good did it do them, they're all dead!

Does anyone vote Tory for reasons other than self-interest?

Does anyone vote Tory for reasons other than self-interest?

Not in my experience.

Neither the Conservative led government or the Labour opposition have sensible economic ideas. The SNP or even the Monster Raving Loony Party with their 99p coin to save giving change have more idea.

Dora - Do you know how currency is created? Actually how it comes into being? And if so, how can you possible explain the mathematical truth that you cannot add up a series of negative numbers and come up with a positive one. Fiat currency is designed to fail, from the outset. No fiat system has ver not gone to zero. Ever. Every single one has become worthless, with the average lasting about 42 years.

Our current GBP is 43 years old. The Federal Reserve Note is 44 years old. Our economies don't look like we're going to make it into the 20's without global economic reset.

Now, I can fully appreciate being pragmatic and playing the political game, but recognise it for what it is. It is a game designed to maintain the status quo, and you seem to have said as much yourself. Breeding. Keep those who work working, and those who own the businesses, owning the businesses and squirrelling away their cash for their future generations.

We have legacy wealth, and they have their welfare handouts. Only I choose to call it out for what it is.

I was not suggesting they 'print money' but that they invest in the infrastructure for example creating jobs, and cut non productive payments

But countries have nationalised themselves and paid everybody's salary directly. It seems to work until some Western bum rocks up and tries to get you to spend twelve or thirteen times your GDP on intercontinental ballistic missiles.

A sensible economic idea is not possible in a democratic system, because the majority of people always vote for the party they see as offering them the biggest bribe. They care not about the country as a whole. They never see anything outside of what is shown on their television or their newspaper, and they have no interest in understanding why economic systems work or don't work. When fewer than 1% of the population even know where money comes from, and let's face it, it's something we ask as kids, and are palmed off with the same bullshit our parents told us, then is it any wonder that nothing other than rhetoric and dogma comes out of our educated classes.

FluffyMcnuffy's posts way upthread attempting to justify George Osborne hugely increasing both the national debt and the national deficit because of the recession was interesting - but GO said today that there has been no recession during this government. Is he deluded?

To be fair, how can anyone actually trust Osborne's economic plan when he has no educational background in or knowledge of the subject (he has a 2nd in history)? He's painfully out of his depth.