Run out of money? Just print some more! “Quantitive easing” is scarcely new, even if now done electronically rather than with ink and paper. In current economic circumstances the obvious economic effect – inflation – is likely to be muted. I have never seen deflation before and few alive in the UK have. Stagflation, yes. Enough quantitive easing and we can eventually get back to stagflation. Meantime, thanks to Tony Blair and Gordon Brown for bringing us a new experience.
But while the inflationary effect is likely to be overwhelmed by deflation, the redistributive effect of quantitive easing will be alive and kicking. By inventing more money, there is an effect – not as simple as it sounds but very real – of reducing the value of existing money, to the detriment of those who have some, and redistributing value to those who get the new money.
This is the Zimbabwe solution, where Mugabe’s regime prints ever more zeros denominated notes, which of course go massively disproportionately to the military and regime members. They have the additional advantages of being able to change them at a hugely advantageous “official” excahnge rate open only to them.
And in Brown’s Zimbabwe solution, who are the equivalent of the regime members, those who benefit from the game at the expense of you and me? Why, exactly the same beneficiaries who have already received over £15,000 from every man, woman and child in the country in various rescue measures and guarantees – the banks!
Yes folks, the 75 billion, and perhaps 150 biilion, of newly invented money is to go to the banks, in return for some pretty worthless bonds, in the hope that somehow the banks will lend it out responsibly to businesses and “Kickstart” the economy. As opposed to pay it out in massive bonuses to themselves, use it to hide their incredible bundles of “toxic debt” and invest it in dubous financial instruments, which is how they have wasted all the huge amounts of taxpayer cash they have been fed so far.
Brown’s blind faith in the baking system which he deregulated and allowed to go rotten, is the modern “trickledown economics”. The government hopes if they pump enough money into the banks, it will trickle out again and do something useful. The main useful thing they hope it will do is reinflate the bubble of our ludicrously inflated property market. In fact that would not be useful at all. If you have been the victim of a pyramid scam, it is not a good idea to try to repair your finances by joining another one.
Brown’s fawning Washington trip attempted to show him leading the World in economic recovery. In fact there are big differences between Brown’s plans – under which 95% of “economic rescue” financing is pumped straight to fatcat bankers – and Obama’s $719 billion rescue package which involves a great deal of direct job creation by old fashioned Keynsian public works. The “pork barrel” elements of tacking on pet projects to get Obama’s bill through Congress was not especially unhelpful in this instance.
It would be far, far better to let the UK banks go bust. Firstly the bastards deserved it. A system where the fatcats take the profits and you and I fund their losses is completely unacceptable. It is worth noting that even in the Royal Bank of Scotland the UK retail banking operation was highly profitable as a stand alone operation, so these elements could be rescued.
It would have cost the government less to give everyone their bank deposits back than it has cost to try to save the rotten corrupt structures.
Instead, a family of four now has a national debt share of £140,000, and increasing by £5,000 a month. Yet the only jobs saved have been those of City – not retail, they were profitable anyway – City bankers, plus their lap dancers and cocaine suppliers. Meanwhile ordinary people are starting to lose their jobs by the drove.
In Dundee, the twelve employees of Prisme Packaging were told this week they were immediately redundant, and there was no cash to pay statutory redundancy payments. Gordon Brown and the Bank of England strangely didn’t offer to print any money for them.
I am not convinced that the banks should have been allowed to go bust but I think that they should have been nationalised quickly & then we should have sacked several layers of management for gross incompetence.
We have heard the government bleat about having to keep these people in place because , in a surreal world , it is said that they know how to run banks but it may be the case that the only certainty in this crisis is that the existing management did not have a bloody clue how to run banks.
the second argument usually runs that they have contracts & would make claims for unfair dismissal. When the government forced the even then still greedy & stupid bastards at Lloyds to buy the badly bust Halifax & the badly bust Bank of Scotland , run by an ex Asda marketing executive (snake oil salesman) , the government realised that this was illegal under competition laws so they rewrote the law & they could do the same to employment law to stop the sacked bankers grabbing more of our money.
I still find the respect accorded to these guys by the government amazing. It seems unlikely that it is possible to wreck several banks just as a result of some ill luck. It seems more likely that a combination of gross misconduct , negligence , criminal negligence & downright fraud must have been involved. Unfortunately the fuzz are too busy spying on Joe Public , beating up anyone who sugggests that the Chinese may occasionally misbehave over Tibet , bullying motorists & sucking up to politicians to do anything about this.
harmonyfuture 1 9 7 9
i.e. Mrs T. Her economic vandalism was put into the shade by Blair’s violence against Islam.
It took thirty years for the first to explode in our faces and it may take thirty years for the second as well.
Wouldn’t it be better for the government to listen to the voices of dissent some time?
“we should have sacked several layers of management for gross incompetence.” – replacing them with…? New layers of incompetants???
The problem is the system old boy.
The people just react to the system placed in front of them – they will spend great deals of time looking for loopholes and new ‘financial instruments'(eeeww) to try and make a quick, frankly dishonest, buck.
Best to give them as few loopholes as poss. Gold silver and staple perishable foods as currency and no interest rates.
There you go. That’s a great start.
🙂
Hi Anas, quite right
If you take the evidence at face value, we were taken to war in Iraq on the basis of information which latterly proved to be wrong, then denied access to the minutes to meetings which may have proved this was known before two countries committed to war. I am only surprised Mr. Mohammed actually got out alive to tell the tale. This whole episode really hasn’t gone according to plan for Tony has it. Maybe whilst we are issuing summons for human rights abuse in Sudan, you know, whilst you have the forms out of the drawer.
A paste of my comments that led me to Mr. Murray,s site. Human Rights, Civil Liberties, economic fraud, AGW, we are bankrupt in more ways than 1. Deceit has become a common currency in the halls of power and it must be stopped. Good, honest people are pilloried for speaking up and we must defend them.
Sorry, I mossad your point about Mr Mohammed, harmonyfuture. I hope you get well paid for your job. Nebachadnezzar got two shoes for his wife. George Bush got one. How about you?
Folks who spotted Craig’s comment about Prisme Packaging in Dundee may be interested to know that the workforce are occupying the factory, to prevent administrators stripping the assets while staturoty redundancy obligations remain unpaid. See http://www.socialistunity.com/?p=3724 “Little people who refused to be little any more”
I couldn’t agree more. If we screwed up as the banks have, we would be expected to face the consequences. Why should they be any different?
Anas, no problem and no apology necessary. I cannot begin to describe my utter utter disgust that we started a war with our fellow men on the basis of deceit from government. This is a very sorry episode for the human race. My shoes used to come from PriceRight but they went bust!
The ministers of Her Majesty’s government are all PriceRight politicians and not one of them is fit to govern. There are many others such as Clare Short who hold onto moral principles.
Without deviating from the thread of devaluing the currency too far, it is the absence of morality in the leaders of New Labour that is wholly responsible for this country’s and the world’s present financial collapse.
About that we have to be very clear, if we are to get out of the hole we find ourselves in.
PriceRight they look as good as the real thing but you find they are made of sub-standard materials, don’t fit and don’t last very long! Best throw them away eh.
Update: Prisme Packaging has been occupied by its workers:
http://www.indymedia.org.uk/en/2009/03/423897.html
Update: Prisme Packaging has been occupied by its workers:
http://www.indymedia.org.uk/en/2009/03/423897.html
“I don’t think it’s a deliberately controlled demolition of everything we take for granted, this would require a level of sophistication, ability, organization, and not least, understanding, that I don’t believe the ruling elite possess.”
Perhaps so. Yet I was telling Americans 3 years ago that their currency and economy was about to be deliberately destroyed. This had to occur due to the long-term plans of the aforementioned ruling elite. We know that state attorneys general were deliberately prevented from protecting their own citizens from predatory lending (http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html)
We also know that vital regulation such as the Glass-Steagal Act was deliberately dismantled. Such acts set the stage perfectly for just the kind of economic implosion we are witnessing.
The final treaty for the economic merger of Canada, North America and Mexico is due to be signed in 2010. Such a merger would only be possible in the midst of a crisis urgently needing a ‘solution’. Such solutions are invariably supplied by the very people who cause the crises.
“Ah, Love! could you and I with Him conspire
To grasp this sorry Scheme of Things entire,
Would not we shatter it to bits–and then
Re-mould it nearer to the Heart’s Desire! ” Omar Khayyam
May 27, 2005
“Far from being idiotic and improvident, Mr Greenspan’s Fed has been a main control box for what is a brilliant global plan, awe inspiring in its breadth, depth and vision, and staggering in its extremely cynical execution. This is surely mankind at his most devious and is corruption of power taken to an ultimate level.”…
http://tinyurl.com/c4pmc7