I'm still getting up to speed on my economics, but the book I'm reading says a way for governments to pay off bonds if for them to print the money. So what is to stop Gordon Brown and new Labour/ new Tories printing money to pay off the enormous debt?
It may cause inflation, but not if taxes rose, and the labour market was opened to increased immigration, and imports. Also a big inflation would solve the problem of excessive mortgage and personal debt, and increased gilt yields would solve the pensions crisis.
Is this the real reason why the gold price is increasing, because there are plans to print money?
If you print more of it, the value drops. Inflation causes massive instability in the public finances, and in peoples personal finances. It makes credit to start up new businesses very expensive, it makes the nation not a good investment destination. It causes massive pay demands from workers to keep up parity.
It is very easy to print money, it is very easy to screw up an economy. A global marketplace can spot a fraud like that, and will punish accordingly.
At the expense of business, personal savers, pensions you name it.
Old Labour did this and turned the country into a basket case. We really did nearly go under.
UK Ltd had to be bailed out by the IMF and the terms of the loan quite correctly imposed financial disciplines that many in Old Labour couldn't stomach (as usual the left in denial) hence them pushing the self destruct.
Supposedly, we now have an independent BoE so now longer under Brown's control.
As for inflation solving personal debt - f**k em.
One thing, at the first sign it does happen, draw out all your savings and borrow like there is no tomorrow then buy the best house you can afford. The pain will be all gone inside two years provided you can ensure a few 'meaty' pay rises so get yourself in a good union, nowadays this means public sector, otherwise without pay rises you will be f**ked.
It really could be something for nothing, in the short term, which of course is the problem.
Ok, they may not have been on strike. They may have been protesting about the next-to-non-existent enforcement of the working at height regulations by the HSE. (Dozens of builders are killed each year, a lot more than police who get all the publicity.)
On 17 Jan 2006 13:06:54 -0800, "Dave" mysteriously appeared thru the usenet mist to inform us thus...
Eventually markets usually punish governments who print money. It's always tempting to start the printing machines but never advised.
In the overall scheme of things, it's more likely because Greenspin in the US has been pumping up the US money supply for the last ~15 years causing huge bubbles, first the dot.com bubble then the housing bubble, now it's the gold bubble. He's a bubble blower.
Remember that he is talking about big inflation which may lead to high interest rates but not necessarily economic growth. In this worst case scenario with rampant unemployment caused by economy contraction, excessive morgage and personal debt problems are solved but not in the desired manner.
On Wed, 18 Jan 2006 00:35:32 +0100, abelard mysteriously appeared thru the usenet mist to inform us thus...
Which part of the above do you disagree with and what evidence do you have? Fact: Greenspin has been pumping up the money supply in the US and has caused the bubbles mentioned. Don't argue with facts lardy.
If current monetary policy is still in place, then the increased interest rate implemented to counter the inflation would result in increased gilt yields wouldnt it?
it is hard to know just what is in your mind.... eg...do you propose that these higher rates of 'interest' are going to also be inflated away?
it is really not sensible to think in terms of 'interest rates'...much better to think in terms of money supply..... that is the way it actually works/is implemented.... eg...contracting the money supply drives up interest rates by normal supply and demand mechanisms....and vice versa....
in this post your q. is strictly about gilts...but i would expect you to want to think that through in terms of other effects... everything interacts...
go read my document on inflation... try to understand it...then ask more focussed questions.
you don't understand 'bubbles'...among other matters.... bubbles are more money chasing less goods....they are primarily a mob phenomenon...only secondarily a monetary issue in current circs....
much of this is a matter of education... i am working to teach people to understand money/inflation.... i treat money primarily as a communication device....
that is not the way it is being taught at present.... further....a great deal of what is going the rounds is bull droppings...
the system/situation is *dynamic* much of how it acts is dependent on fashion and beliefs.....
some of the things that are from time to time believed set off bubbles for very little else than the changing beliefs... many in the market are trying to control those beliefs for their own gain....
iow they are attempting to manipulate your behaviour....
but... the numbers trying that are rapidly growing and they are to a degree cancelling out.... ie....you are in the midst of an unsane herd with a relatively few would-be manipulators.... the more i can get people to understand the mechanisms the more stable the system will become(imv) and the less the manipulators will be able to panic the herds...particularly the less they will be able to manipulate the ones who understand
meanwhile the poor and pensioners will continue to get stuffed until you get better politicians
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