What would be your solution for bringing down the UK's debt? Page 9

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  • RedSparrows 13 Oct 2013 12:38:37 20,762 posts
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    Ginger wrote:
    RedSparrows wrote:
    Vouchers: the best way to make the unemployed feel even more powerless, patronised and pissed upon.
    Might that not be an incentive to look for work perhaps?
    I'd imagine that for most people, actually, there's already enough incentive to find a job. I'd like to see someone actually show me why such a measure is really necessary for 99.9% of the country, without resorting to some ill-defined sense of 'justice' or 'vengeance' against the real slackers.
  • LeoliansBro 15 Oct 2013 14:53:07 41,869 posts
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    Ha! Look at that - that ridiculous and nasty Moneyweek article just dropped into my inbox.

    Well, the first umpteen teaser paragraphs did, anyway.

    LB, you really are a massive geek.

  • bitch_tits_zero_nine 15 Oct 2013 15:01:17 6,654 posts
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    Polish benefit migrants. Smoke and mirrors.
  • Grax 15 Oct 2013 15:01:49 1,200 posts
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    @LeoliansBro hey LB

    am 'trying' to study economics for my first year cima and i have a question i could use your help for

    if the backs are able to multiply credit by loaning money that belongs to someone else. Where does the extra money come from as it must become real money at some point :S

    been driving me up the wall

    also, if i read the books correctly, the best way of bringing down debt is to decrease the exchange rate which would make exports look more appealing and make imports less so.

    obviously this couldnt work for the uk as we do not produce enough produce and import alot from different countries but the theory is correct
  • Mr_Sleep 15 Oct 2013 15:10:52 16,267 posts
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    LeoliansBro wrote:
    Going to be a pariah for saying this, but part of the reason there are so few jobs is because of the level the minimum wage is set at.
    Would it not be more accurate to suggest that there are fewer jobs because there is not the requirement to hire as many people because many processes that people used to be hired for have been streamlined by technology? It has been a similar downward/upward spiral since the industrial revolution, no? With the advent of 3D printing becoming affordable I would imagine this will impact many things too.

    I say all that but in my personal experience efficiency of staff seems to be a big point that companies push for, in a struggling company the work seems to end up being foisted on a smaller and smaller workforce with the work being the same but the man-hours required being largely made up by overworking the remaining staff. None of those jobs were minimum wage and it seems to me that payroll is the first place that gets cut and that leads to less jobs as the job market gets filled by ex-employees.

    I'm sure it's all much more complicated than it appears, as it always is.

    You are a factory of sadness.

  • LeoliansBro 15 Oct 2013 15:26:23 41,869 posts
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    Mr Sleep - tru dat,

    LB, you really are a massive geek.

  • LeoliansBro 15 Oct 2013 15:47:14 41,869 posts
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    Grax wrote:
    @LeoliansBro hey LB

    am 'trying' to study economics for my first year cima and i have a question i could use your help for

    if the backs are able to multiply credit by loaning money that belongs to someone else. Where does the extra money come from as it must become real money at some point :S
    Not sure what you mean. Banks take in 100m of deposits, which they pay out interest on. They then use that 100m as security against a loan from another bank (or ultimately the BoE and the Government) for say 1bn, which they pay interest on. They then lend the 1bn out to consumers and corporates which earns them interest. They make money because the interest they earn is higher than the interest they pay, which is because they are less risky (ahem) than the people they lend to.

    When people talked about the 'liquidity freeze' in recent years what they meant was that there were fewer banks willing to lend the 1bn, and so the system broke down. If it is all working there are in theory enough banks with enough cash sitting around to lend to the other banks who want in turn to lend to corporates (maybe they want to lend to banks because they want less risk on their books). Ultimately the only entities who create or destroy money are central banks and Governments, who are really anti banks in that they don't care about profit but only the flow of cash.

    also, if i read the books correctly, the best way of bringing down debt is to decrease the exchange rate which would make exports look more appealing and make imports less so.

    obviously this couldnt work for the uk as we do not produce enough produce and import alot from different countries but the theory is correct
    That is a little garbled and you've got cause and effect mixed. If our exchange rate improves (sterling gets stronger) that is because the central bank has put up interest rates, and so people depositing in sterling will automatically earn more interest (the base rate is higher), so everyone wants to do this and sterling becomes scarce. If sterling is stronger, imports are cheaper (so people selling products in the UK they bought / made abroad make more money) but exports are worse off as they are the opposite.

    However people are in the round borrowing more than they are depositing, and so on average people are paying more than they were when interest rates were lower. This tends to slow the economy down and reduce the total amount of money in circulation (hence the scarcity of sterling above). This means inflation falls. Conversely, if you lower interest rates, inflation increases as everyone is able to afford to borrow more, but sterling weakens as there's more of it out there.

    So if you decrease the base rate, two things happen. Your exchange rate falls (as you said) and debt is inflated away. The two are linked.

    Edited by LeoliansBro at 15:49:40 15-10-2013

    LB, you really are a massive geek.

  • LeoliansBro 15 Oct 2013 15:48:10 41,869 posts
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    By the way, caveat - I have an elderly ACA but that is a lay understanding of the situation and I have no other economics qualifications.

    LB, you really are a massive geek.

  • Grax 15 Oct 2013 15:55:15 1,200 posts
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    I thought the boe had the ability to control the exchange rate by increasing or decreasing the amount of Stirling in the financial market (buy buying or selling government bonds- therefore increasing or decreasing the exchange rate)

    I understand what you have written is the natural way of things, I was under the impression that the BOE are able to artificially play with it.

    Also what I meant with the banks I was talking about commercial banks. Ie a customer puts 1000 in the bank for savings, the bank decides to lend the 800 to another customer who uses said 800 to buy something and the money returns to the bank, the bank then decide to loan out another 640 etc (therefore even though the bank only had 1000 they are able to loan out 4000 (assuming a closed market with only one bank) I can't get my head around where the money eventually comes from to pay out to the customer
  • Grax 15 Oct 2013 15:57:56 1,200 posts
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    I am prob well off as I said have only just started reading about it and it has gone well over my head I think
  • LeoliansBro 15 Oct 2013 16:01:29 41,869 posts
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    BoE can artificially play with it, by dictating the base rate. They also control the amount of sterling in play as you say, but this is more to control inflation rather than the exchange rate, which is a side effect as much as anything (and only really a focus when everything else is going swimmingly).

    And sounds like you're struggling with the concept of loans generally. The money comes from the future earnings potential of the people borrowing. That's the number one reason to take out a loan - you will earn the cash next week but you need it now. Absolutely right the same fiver can be lent and spent several times over, but that isn't a problem if it all unwinds in order as the payments come due.

    LB, you really are a massive geek.

  • Rhythm 15 Oct 2013 16:15:10 2,375 posts
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    Big thread, haven't dove into the whole thing but why haven't we ever tried consumer-led QE in the UK? Instead of generating a bunch of money out of thin air to give to banks on the basis that they'll "promise" to lend more openly, start by dividing it up amongst tax payers in the form of a bond that *has* to be spent - it can't be saved.

    Money enters the market, retail benefits by having people in the shops spending money, they get business growth (or reduced shrinkage), then money makes its way into the banks anyway making their coffers look better meaning they're more confident to lend again. Same net result as "classic" QE but instead of piling the money at the top and hoping it'll trickle down, it's placed at the lowest point of the food chain so it can get consumed by the market and everyone in between benefits too.

    Or is there some reason that wouldn't work?
  • LeoliansBro 15 Oct 2013 16:16:13 41,869 posts
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    Inflation.

    LB, you really are a massive geek.

  • Grax 15 Oct 2013 16:16:18 1,200 posts
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    yeah, i get that bit. My loss of comprehension was when i thought too much of it. Say if there is only 50,000 in circulation. It is divided between 4 banks equally and they have decided to keep 20% back in case of withdrawels.

    That means that the 50,000 has been 'multiplied' through loans, investments etc to 250,000.

    Where do the people get the money to pay back the loans as there is still only 50k in circulation
  • Grax 15 Oct 2013 16:19:26 1,200 posts
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    Rhythm wrote:
    Big thread, haven't dove into the whole thing but why haven't we ever tried consumer-led QE in the UK? Instead of generating a bunch of money out of thin air to give to banks on the basis that they'll "promise" to lend more openly, start by dividing it up amongst tax payers in the form of a bond that *has* to be spent - it can't be saved.

    Money enters the market, retail benefits by having people in the shops spending money, they get business growth (or reduced shrinkage), then money makes its way into the banks anyway making their coffers look better meaning they're more confident to lend again. Same net result as "classic" QE but instead of piling the money at the top and hoping it'll trickle down, it's placed at the lowest point of the food chain so it can get consumed by the market and everyone in between benefits too.

    Or is there some reason that wouldn't work?
    am i right in thinking philips curve and NAIRU (i know its to do with unemployment but lends itself to this
  • LeoliansBro 15 Oct 2013 16:55:39 41,869 posts
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    Grax wrote:
    yeah, i get that bit. My loss of comprehension was when i thought too much of it. Say if there is only 50,000 in circulation. It is divided between 4 banks equally and they have decided to keep 20% back in case of withdrawels.

    That means that the 50,000 has been 'multiplied' through loans, investments etc to 250,000.

    Where do the people get the money to pay back the loans as there is still only 50k in circulation
    OK.

    People A B C D E F G.

    A deposits 50k with the bank.

    Bank lends B 50k.

    B buys a car from C with the 50k.

    C deposits 50k at the bank.

    Bank lends D 50k.

    D buys a holiday (of a fucking lifetime) from E with the 50k.

    E deposits 50k at the bank.

    Bank lends F 50k.

    F buys an antique desk from G with the 50k.

    G deposits 50k at the bank.

    Total loans: 150k (B, D, F all owe 50k).

    As it stands you can't see how this can work? Well for a start, you have to bear in mind that the bank also owes A, C, E and G 50k each, and only has 50k in the safe. So the bank has:

    50 cash
    150k owed to it

    200k owed by the bank to people

    net zero - the bank is merely funnelling money around.

    Equally, you cannot see how the money will be repaid. But you are thinking of this as a closed system, where clearly it isn't. B, D and F are all earning a salary of say 25k annually. If they didn't intend to repay the debt the bank wouldn't have lent them the money. If they 100% couldn't repay the debt they wouldn't have borrowed the money. So the bank looks at their future, concludes they can afford to repay 10k a year, and gives them all five years to repay.

    Problems arise when: B, D or F gets fired. A, C, E and G suddenly want all their money (the Northern Rock problem).

    Edited by LeoliansBro at 16:56:54 15-10-2013

    LB, you really are a massive geek.

  • Grax 15 Oct 2013 17:44:13 1,200 posts
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    Ahhhh kk so the is why I wasn't getting it, pretty much the money isn't there. Which is why if one bank were to collapse they would take the rest down with them ala Lehman bros
  • cheeky_prawnking 15 Oct 2013 17:50:26 3,803 posts
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    Speak to wonga
  • jimbogreen 15 Oct 2013 17:54:32 88 posts
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    cheeky_prawnking wrote:
    Speak to Wonga
    But what if you winga the wonga number?
  • FortysixterUK 15 Oct 2013 18:15:32 382 posts
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    Legalise cannabis, sell and market it in much the same way we do for tobacco products .

    Put "hard drugs" available via prescription from your GP , with a program designed to slowly work people off the addiction.

    Drunks who use up Police time , once arrested , dealt with and released are given the bill for the full cost of the Police time they used. This is taken at source at the rate of 10 percent per month of salary / dole payments.

    Drink drivers are likewise fined with all costs being clawed back.

    Immigration. You are only allowed into the country if you are fully signed up to pay all taxes and of course, have a job to go to. You must have full command of the English language, you can't integrate with a country if you can't communicate.
    Conversely, Illegal immigration is a 24 hour turn around ejection policy once the person is apprehended. Anyone who wants to live/work/ pay taxes in the UK cannot have a criminal record, if they do , admission is not allowed.

    Child benefit only payable for the firstborn of any mother.

    Council housing to be only awarded to a person who has lived in the UK for 25 years or more and is a British or nationalised citizen. If the occupant wants to buy a council house it must be purchased at full market rates minus 20%.

    You must obtain a licence to have a child, which covers parenting skills, means testing and ensures both parents are together in a serious relationship. You must be financially viable to have a child and not rely on the tax payer to pay your way for you.

    It is illegal to have a child under the age of 21. See above.

    You cannot drive until you are 21. This will minimise young driver incidents and the associated costs in policing and governing said people.

    Well ..... I've dug a deep enough hole here....flame away!
  • cheeky_prawnking 15 Oct 2013 18:19:07 3,803 posts
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    Hi Mr Farage
  • Mr_Sleep 15 Oct 2013 18:25:13 16,267 posts
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    FortysixterUK wrote:
    Immigration. You are only allowed into the country if you are fully signed up to pay all taxes and of course, have a job to go to. You must have full command of the English language, you can't integrate with a country if you can't communicate.
    Conversely, Illegal immigration is a 24 hour turn around ejection policy once the person is apprehended. Anyone who wants to live/work/ pay taxes in the UK cannot have a criminal record, if they do , admission is not allowed.
    How does this work in regards of asylum seekers who may very well have a criminal record but have legitimate reasons for escaping their country?


    You must obtain a licence to have a child, which covers parenting skills, means testing and ensures both parents are together in a serious relationship. You must be financially viable to have a child and not rely on the tax payer to pay your way for you.

    O_O erm. What happens if you don't get a licence to have a child?

    You are a factory of sadness.

  • Deleted user 15 October 2013 18:29:19
    FortysixterUK wrote:
    Legalise cannabis, sell and market it in much the same way we do for tobacco products .

    Put "hard drugs" available via prescription from your GP , with a program designed to slowly work people off the addiction.

    Drunks who use up Police time , once arrested , dealt with and released are given the bill for the full cost of the Police time they used. This is taken at source at the rate of 10 percent per month of salary / dole payments.

    Drink drivers are likewise fined with all costs being clawed back.

    Immigration. You are only allowed into the country if you are fully signed up to pay all taxes and of course, have a job to go to. You must have full command of the English language, you can't integrate with a country if you can't communicate.
    Conversely, Illegal immigration is a 24 hour turn around ejection policy once the person is apprehended. Anyone who wants to live/work/ pay taxes in the UK cannot have a criminal record, if they do , admission is not allowed.

    Child benefit only payable for the firstborn of any mother.

    Council housing to be only awarded to a person who has lived in the UK for 25 years or more and is a British or nationalised citizen. If the occupant wants to buy a council house it must be purchased at full market rates minus 20%.

    You must obtain a licence to have a child, which covers parenting skills, means testing and ensures both parents are together in a serious relationship. You must be financially viable to have a child and not rely on the tax payer to pay your way for you.

    It is illegal to have a child under the age of 21. See above.

    You cannot drive until you are 21. This will minimise young driver incidents and the associated costs in policing and governing said people.

    Well ..... I've dug a deep enough hole here....flame away!
    Income from drugs would be next to nothing. The benefits of not having to police it one way but police it another way will save nothing.

    Drunks paying too be imprisoned is stupid and can lead to police arresting people that may well be over the limit but not doing anything wrong. Other than that it'll raiser about 50p a year.

    Immigration is good for the country in general. The amount of illegal immigration that costs money is small.

    Starving babies is a vote winner.

    Population control by the deciding who can have children is also fantastic for votes.

    Driving only after 21 still needs policing.
  • Deleted user 15 October 2013 18:32:02
    Short version: you're a fucking moron.
  • LeoliansBro 15 Oct 2013 18:34:20 41,869 posts
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    Pretty obnoxious and closed minded of you 46er. One wonders how an immigration policy based on speaking good English would lower debt, for example (as opposed to catering to your little England defensiveness).

    LB, you really are a massive geek.

  • Deleted user 22 October 2013 18:01:43
    RedSparrows wrote:
    Vouchers: the best way to make the unemployed feel even more powerless, patronised and pissed upon.
    Yup!
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