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Any (post 2008) Economists in the house? - Inflation.

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jcassidy

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While we're here lets dispel some economic myths.

1) Central Banks do not control the money supply. 97% of money is created by banks. Banks control the money supply.
You were doing so well up to this point.
This is a common misunderstanding of how fractional banking works, which is like this;

All banks are required to keep a certain amount of money on reserve, so there's cash in the till when people come looking for it. A portion of this must be held on reserve with the country's central bank.
When the central bank wants to create money, it simply adjusts this reserve - it invents money out of nothing.

Say Johns Very Honest Bank (or JVHB, as Wall Street calls it!) has £1,000 on reserve with the Bank of England. Now say the BoE wants to encourage spending. They adjust JVHB's reserve so suddenly, we have £1,100 on reserve. Free money! Fantastic! Let's spend it!

Let's say JVHB has to keep a round 10% of it's cash on reserve. That means, of this £100 the BoH has kindly given me, I can spend £90.

So I loan £90 to Jacobs Socialist Combine (JSC). I have an IOU from Jacob saying he owes me £90, and I give him £90 in cash.
Now, this is where it get's complicated.
I have £10 cash, and £90 IOU from Jacob. So my books show £100.
Jacob has £90 in cash. So now there's £190 in cash in circulation - but we only created £100!!!

Say Jacob, having betrayed his socialist principles in pursuit of profit, is also a bank - he loans money out. He has to keep 10%, so he loans £81 to Davids Chiselmakers Cooperative, who actually makes things.

Now there is £100 + £90 + £81 of money in the economy, but the BoE only created £100.
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2) Government 'debt' isn't debt. Its private sector savings at the central bank. Do the math. If you can print money, why would you borrow it?
Governments printing money is universally held to be a very bad idea. Weimar Germany, Zimbabwe, Venezuela. Etc. Etc. Etc. Show me an example where that worked. The ECB is not legally allowed to give money to governments and it's programmes of buying govt debt off secondary markets is on very shakey legal ground, the longer these programmes go on, the likelier that the militantly pro-austerity Germans will win their case.

4) There's no such thing as 'tax payers money'. All taxes are destroyed on receipt. If you can print an unlimited amount of money, why would you need someone else's money?
What? As above, Governments (modern ones anyway) can't just print money.

To control inflation. So, what can you not do with money you remove from the economy in order to control inflation?
This is where money is destroyed.
Let's say the ECB buys €100 of bond from JVHB for a week. It creates the money to buy the bond from thin air by adjusting the reserve of JVHB by €100.

When JVHB buy the bond back, plus a bit of interest, the interest is paid to the government as profit, and the capital is simply deleted by reducing the reserve of JVHB by€100.

Spend it. You can't spend it.

Technically, all money is created as an IOU. So when one pound is created it is created as a one pound 'liability' of the state and a one pound private 'asset'.

When that pound is returned to the state, the liability is extinguished. Poof! Gone. No money.
Not quite correct, the IOU is with the Central Bank, not the national government.

Hope this helps.
 

Spectric

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Hinkley point C is madness - a French built nuclear power station with Chinese finance.….not much “taking back control”
and don't forget we are contracted in to pay a very high price per unit, £92 per megawatt hour plus inflation that was set before renewables drove the price right down to around £42 per megawatt hour as well as providing site security at our cost and as far as I am aware we are also liable for decomisioning and storing the waste for the next several hundred years. French economy should do ok, it is costing £23 billion plus it's carbon footprint to date is going to take many years before they get anywhere near neutral, they have been moving thousands of workers onto site for years in fleets of buses not to mention all that concrete which although bad for the climate must be good for the economy.
 

RobinBHM

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and don't forget we are contracted in to pay a very high price per unit, £92 per megawatt hour plus inflation that was set before renewables drove the price right down to around £42 per megawatt hour as well as providing site security at our cost and as far as I am aware we are also liable for decomisioning and storing the waste for the next several hundred years. French economy should do ok, it is costing £23 billion plus it's carbon footprint to date is going to take many years before they get anywhere near neutral, they have been moving thousands of workers onto site for years in fleets of buses not to mention all that concrete which although bad for the climate must be good for the economy.
I was on holiday in Somerset a couple of years ago….and drove home through Bridgewater -A few of those Hinckley double decker buses went past me.
 

Jameshow

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and don't forget we are contracted in to pay a very high price per unit, £92 per megawatt hour plus inflation that was set before renewables drove the price right down to around £42 per megawatt hour as well as providing site security at our cost and as far as I am aware we are also liable for decomisioning and storing the waste for the next several hundred years. French economy should do ok, it is costing £23 billion plus it's carbon footprint to date is going to take many years before they get anywhere near neutral, they have been moving thousands of workers onto site for years in fleets of buses not to mention all that concrete which although bad for the climate must be good for the economy.
Sadly we don't have the gumption to build it. Too busy asset stripping our own construction firms and under quoting for maintaince jobs.

My dad's old firm foster wheeler gone to the wall due to buy outs.

Cheers James
 

Jacob

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Making generic statements about the merits or otherwise of privatisation based on circumstances today is a nonsense. The bulk of privatisatons took place 30-40 years ago, since when governments of both shades have had the opportunity to make changes.
Changes still needed
....
I do not believe the option to renationalise generally makes any sense - .....
This is not "generally" proposed. Only "particularly" as necessary
More effective regulation would be far better, achieve critical national interest goal, be far, far less disruptive, and preserve the impetus the profit motive delivers to progress and efficiency.
Wishful thinking.
The profit motive may lead to progress and efficiency, or it may lead to exploitation and greed with massive handouts to shareholders and management, or mere asset stripping and closure.
It also leads to low wages and insecurity - placing a burden on the workers themselves and other parts of the economy. One thing it certainly does do is resist forward looking planning and investment, in favour of short termism and profit now.
In the end the state picks up the tab for the failings. It is not safe to leave essential utilities and services in the hands of speculators and gamblers, as history has showed over and over again
 
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doctor Bob

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The great thing about forum debates is how you can see people’s attitudes change through debate, for example Jacob used to be a very left wing socialist, yet through 2 decades of internet debate and reasoning he has become a very left wing socialist. This my friends is what internet debating can achieve over time.

Anyway no time for this, need to arrange my bog roll collection in year dates.
 

Jacob

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The great thing about forum debates is how you can see people’s attitudes change through debate, for example Jacob used to be a very left wing socialist, yet through 2 decades of internet debate and reasoning he has become a very left wing socialist. This my friends is what internet debating can achieve over time.
Wrong. If anything I've moved much further to the left, having been forced to look at things more closely. :unsure:
Perhaps it's inevitable and affects a lot of people the same way, to a little extent even yourself Bobby?
One thing which stands out is that the right tend to come across more and more like marginalised head bangers! :ROFLMAO:
 

doctor Bob

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Wrong. If anything I've moved much further to the left, having been forced to look at things more closely. :unsure:
Perhaps it's inevitable and affects a lot of people the same way, to a little extent even yourself Bobby?
One thing which stands out is that the right tend to come across more and more like marginalised head bangers! :ROFLMAO:
Still your pleasant self Jacob, good morning to you.
 

Jameshow

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The great thing about forum debates is how you can see people’s attitudes change through debate, for example Jacob used to be a very left wing socialist, yet through 2 decades of internet debate and reasoning he has become a very left wing socialist. This my friends is what internet debating can achieve over time.

Anyway no time for this, need to arrange my bog roll collection in year dates.
Don't forget to turn the bath taps off, petrol all over the floor is no good for the finish.......
 

Spectric

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The problems are the ones we create or allow to be created, really great at causing a problem just not so good at solving. It is blatantly obvious how far we are into devolution and the world of utter stupidity when you cannot make a statement like " a woman has a cervix" which is no different than saying liquid nitrogen is very cold or an elephant has a trunk, all are statements of fact and ones beyond our ability to change. So how will the economy fair in this type of enviroment, one where we start to not accept reality and move into the world of fantasy, one where you just dismiss the obvious!

Then do we really have a fuel shortage or is it the creation of media hype, had there been no panic buying then our local garage would not have ran out, they sold a weeks delivery in a day! But getting extra ones to boost their profits whilst everyone tries to outstrip supply and many not realising there is a legal limit on how much fuel they can carry in containers.
 

clogs

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Vamos, Crete, GREECE.......
no rush for Petrol/Diesel here, bog rolls and plaster board as well as cement is in good supply.....
Plenty of sunshine as well...
must take the dogs to the beach again (with poo bags) tomorrow....hahaha....

what was one of the basic sayings in "The A team"....u suckers...lol......

dont sit on ur buttocks and do nothing and voting labour wont help as they are totally useless.....
they pretend to help the workers etc but they really feed the problem whilst filling their pockets along with all the social scroungers n migrants.........
Give me a lab gov that did any real good since or during the reign of the pipe smoking silly person willson........

How a bit of forward planning.....oh, dont make me laugh.....
all they can think about is the next election....and troughing it again....

IF politions want to be trusted, how about full disclosure of monies and assets....they should have nothing to hide, Blair and Cameron make good examples...
that should whittle a few down....

as it happens if I'm gonna be ripped of by the government I prefer the "T" team to the hidden privileged, privatley schooled Putin lovin commies in the L team......

just glad I'm out of it.....just so u know, all the self employed engineers, printers, plumbers I knew all sold up and left the UK....that's pretty much everyone I did business with...
I wonder why......?????
 

Felipe

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Oops - should have replied to this earlier - sorry.

Free markets are far more efficient, because they include innovation, and creative destruction. Monopolies of whatever flavour stifle innovation on purpose in order to continue as they are. Rather the point of a monopoly, in fact - fear of competition. A government monopoly will never admit to being wrong, and will wrongheadedly grind on for no reason, while the hangers on fleece the system and profit mightily. Jacob's comment on the Afghanistan war is a fine example of monopoly behaviour - hardly cutting edge and innovative to blow up goatherders for the umpty third time, just because.
have you studied in depth how China plans and organize its economy? They show a very intelligent planned economy that has no free market, but state filter to what lives and what dies, plus it was designed to exploit international capitalism.
 

Jacob

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have you studied in depth how China plans and organize its economy? They show a very intelligent planned economy that has no free market, but state filter to what lives and what dies, plus it was designed to exploit international capitalism.
"Scholars have proposed a number of theories to explain China's successful transition from a planned to a socialist market economy."
The future is beginning to look Chinese. They are moving rapidly ahead on sustainable energy and on other fronts.
Nothing is perfect but the last thing they want is free market nonsense as per Hayek et al, let alone drivelling berks like Johnson and Farage
 

Spectric

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The future is beginning to look Chinese.
It is certainly one of the most common words you find in most places, it is on everything around the house. Imagine how different the world would be now if China had not gone into that period of closed to the world, the future is asian if not just chinese. How long now before we have the chinese equivalent to the cuban crisis, if we arm Australia then they can do the same to any asian country.
 

Felipe

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It is certainly one of the most common words you find in most places, it is on everything around the house. Imagine how different the world would be now if China had not gone into that period of closed to the world, the future is asian if not just chinese. How long now before we have the chinese equivalent to the cuban crisis, if we arm Australia then they can do the same to any asian country.
I cannot not think of Blade Runner whenever I read that or think about China expansion.
but countries are shifting to defend their industrial parks, that will reshape multinational capitalism.
 

AlanY

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...
Then do we really have a fuel shortage or is it the creation of media hype, had there been no panic buying then our local garage would not have ran out, they sold a weeks delivery in a day! But getting extra ones to boost their profits whilst everyone tries to outstrip supply and many not realising there is a legal limit on how much fuel they can carry in containers.
Nah, the shortage is one created by PR men who understand human nature. Drop a hint that 'some' filling stations have been closed due to a shortage of drivers, get the MSM to run the story and...Bingo! you have caused an already insecure public to go into panic mode. Filling stations will close because the 'shortage' will drive up prices, so better to hold on to your existing stock for a few days and sell it at a 20% premium than let it go now. The whole thing is a bad joke. Worst of it is that the artificially inflated prices will stay with us long after the 'shortage' expires. For example, back when oil prices hit $120 per barrel, diesel prices hit £1.30 per litre, up fro something like 80p per litre. Today, with oil prices at $78 per barrel I have seen diesel prices at £1.48 at some filling stations near Chichester. The absolute laugh of it, though, is that pricing is considered to be a primary tool for managing demand and this plays a big part in the government's 'green' strategy. Yet it does not stop people filling up their tank! The rich get richer...
 
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