Giving up the will to live...
Look policy is simple...
1. Raise Taxes
2. Reduce Spending
3. Mild inflation > interest rates
Hey presto debt paid off in no time.
Anything else is pissing in the wind...
1) Raise taxes:
I have explained the Laffer curve to you but you refuse or cannot understand.
2) Reduce Spending
When the government says it will reduce spending it means it will reduce the amount it increases the deficit. That is like someone who is building up a debt of £500/month on their credit card saying that they have reduced spending because now it's only £450/month. You are too gullible and naive to understand.
3. Mild inflation > interest rates
The problem is that you don't understand what inflation is and you don't understand how interest rates are set.
Saying 'Mild inflation' is like saying a little bit pregnant. At one point you said taxes curb inflation "
Raise taxes - demand side management to curb inflation", then you say
"Exchange rates are NOT centrepiece of UK monetary policy. It is control of inflation. Exchange rates are consequence of interest rate, inflation and BoP".
For someone who keeps saying "Basic Economics" it is clear that you don't know the difference between Monetary Policy and Fiscal Policy. You also have never heard of an inflationary depression.
Inflation is an expansion of the Money Supply.
When was the last time you heard an analyst say: "The stock market is inflating"?
When was the last time you heard an analyst say: "The price of gold is inflating"?
Doesn't make sense does it?
Similairly, when was the last time you said that you need to raise your tyre or a balloon?
Doesn't make sense either.
Prices go up and down, money supply inflates and deflates. A balloon expands and increases in size when it is inflated, and likewise, money supply expands or increases in size when it is inflated.
The definition of inflation has changed over time and is now accepted to mean something
very different from its original definition. Dictionaries only reflect what is currently popular, so such definitions should not be blindly accepted.
An increase in the money supply might not necessarily lead to rising prices, but if you have rising prices after a huge increase of the money supply then you would have to conclude it is a direct consequence of the money supply expansion. Much like what is happening now.
If modern economists were miners, they would walk into a coal mine with a canary and upon seeing the canary drop dead they would begin to theorise on what might have killed it. One would say that perhaps it was a heart attack, another would say that it may have died of a brain tumour, another would say it was malnutrition. The modern economist miners will keep theorising about what killed the canary until they all dropped dead from inhaling noxious gases.
Increasing the money supply - Debasement. (BASIC ECONOMICS!)
When gold and silver was used in legal tender a government that wanted to spend more money than it had would increase the supply of money by altering the quantity of gold and silver in the coins. By adding less valuable metals in the mix it could make more coins out of the supply of gold and silver that it had.
This is simple arithmetic.
1 ounce gold makes 1 x 1 ounce coin with a face vaue of £100-
Mix gold with copper:
Result
1 ounce gold makes 2 x 1 ounce coins with a face vaue of £100-
Currency has been debased but the Government tries to pass it off as pure gold. Smart people know that each coin is now worth only HALF what it used to so they now demand two coins as payment for their goods and services.
Result, prices have risen as a direct result of debasement or expansion of the money supply.
Bad money drives out good.
As people begin to realise that their money is being devalued they hoard the 'good' money so it is now removed from circulation until only the new, 'bad' money is in the economy. Because there is less money circulating in the economy the Government would have to make hoarding illegal, but it would be too costly and inconvenient to send police from door to door to find and confiscate the pure gold coins.
Solution?
Paper money. The government can increase the money supply so that it can spend more than it earns. The government does not have to worry about hoarding because any money that you 'hoard' is devalued automatically.
Result? Prices rise.
Inflation is also known as a stealth tax as it robs hard working citizens of their purchasing power. A government would be very unpopular if it taxed citizens 5% a year on their savings in the bank. It is much easier to reduce purchasing power by 5% a year because most people are like Atilla in that they don't understand economics and what is really going on.
The smart people know what is going on and they try to 'hoard' money by buying gold or other fixed assets that the Government cannot debase, or they change their money into a different, more sound currency.
Result?
Local money loses value against other currencies. Imports become more expensive. If imported raw materials become more expensive then any locally produced products which use those raw materials also become more expensive.
Inflation and interest rates.
If inflation is a debtors best friend then it must logically follow that inflation is a creditors worst nightmare. Who would lend out money if they were to get less in return? NOBODY (apart from Atilla), that is who!
When you put money in the bank you are essentially a creditor of the bank.
Who in their right mind would want to earn a rate of interest that is less than the rate of inflation? The answer is - nobody apart from Atilla, who thinks it is a brilliant idea.
So, nobody (apart from Atilla) will keep their money in the bank. Result? Interest rates need to rise to encourage savings so the bank has capital that it can use to make loans.
How does the Bank of England override this and keep interest rates artificially low so that Government can keep spending newly printed, debased money?
Answer: Debt Monetization and Q.E
How does the Government pay for this?
Increased taxes!
So, as you become impoverished by having to pay more money for your food, more money for your gas, more money for your electricity, more money for your clothing, more money for your petrol, more money for your rent, and more and more taxes while earning less income on your savings, just say to yourself that Atilla thinks it is all wonderful. None of this will fix the economy.
