US & UK are poor societies with some very rich people.

GrannyGravy13

I am all for a safety net for those who are unable to work for whatever reason. I think that is what all societies should provide.

Just fed up with the continuous threads, berating the rich and blaming them for all the worlds ills.

Yes. Unable, truly unable to work, for any reason - there should be a safety net.

Peoples choices matter as well. I'm not inclined to support our children's poor choices. We tell them to choose wisely.

Mollygo "Your divine right to reign has me puzzled. Do you think that if there was no RF, they would immediately give up all their sources of income, land etc. and that money would immediately flow to the poorest in the land?
Or would it be, as we all do that they hang on to what they’ve got in order to run their homes, (Giving up second or even third homes to support the poor would be a touchy subject on GN.) Or to support those they employ? (Giving up having a cleaner -another touchy point.) The poverty and the need for food banks is appalling and it affects some members of my family. I don’t have a solution"

I have no solution either, but I don't believe removing incentive to work hard and own (say) a second or third home is the answer. If a second home is given up how does that impact the poor? If a cleaner is not paid good wage for a job well done, how is that a good thing for the cleaner?

Barmeyoldbat

Yes Maisie I will have a read but I always understood it as Monica stated, that’s what my dad taught me.

Thanks.

Yes Maisie I will have a read but I always understood it as Monica stated, that’s what my dad taught me.

Barmeyoldbat

Well said MOnica, I have always found your posts to be sensible and informative.

You might find the Bank of England Quarterly Bulletin even more sensible and informative...

Oh, dammit. I pressed 'send' instead of 'preview'.

That very poorly formatted post is solely extracts from the BoE quarterly bulletin that I keep begging people to read. It explains the concept of 'fiat money', shows that 'money' has no physical reality, and that money can be created at will by the government via the BoE and commercial banks. It says nothing about new notes being backed by government stocks.

Perhaps you'd like to read it for yourself

www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/quarterly-bulletin-2014-q1.pdf

Although there are advantages to using fiat money for the economy as a whole, these may not be realised unless individuals decide they want to use it in exchange. And, if banknotes are not directly convertible into a real good of some kind, what makes them universally acceptable in exchange? One answer is that the trusted medium of exchange just emerges over time as a result of a social or historical convention

The bonds purchased by the BoE for QE are held by the BoE which is owned by the government (though nominally independent). So do you think that the BoE actually pays itself interest on those bonds? Double entry bookeeping demands that it shows interest payments on them them, but, come on, do you believe that it actually happens?

These bonds make up a substantial portion of government so called 'debt'. About a third. 'Debt' that is never going to be repaid, or need to be repaid.

^Money in the modern economy is just a special form
of IOU, or in the language of economic accounts, a financial
asset.^

^Money is a social institution that provides a solution to
the problem of a lack of trust.(5) It is useful in exchange
because it is a special kind of IOU: in particular, money in
the modern economy is an IOU that everyone in the
economy trusts. Because everyone trusts in money, they
are happy to accept it in exchange for goods and services —
it can become universally acceptable as the medium of
exchange^

^Since 1931, Bank of England money has been fiat money.
Fiat or ‘paper’ money is money that is not convertible to
any other asset (such as gold or other commodities).^

Because fiat money is accepted by everyone in the economy as the medium of exchange, although the Bank of England is in debt to the holder of its money, that debt can only be repaid in more fiat money. The Bank of England promises to honour its debt by exchanging banknotes, including those no longer in use, for others of the same value forever. For example, even after its withdrawal on 30 April 2014, the £50 note featuring
^Sir John Houblon will still be swapped by the Bank for the
newer £50 note, which features Matthew Boulton and
James Watt.^

Why do people use it?

Fiat money offers advantages over linking money to gold when it comes to managing the economy. With fiat money, changes in the demand for money by the public can be matched by changes in the amount of money available to them. When the amount of money is linked to a commodity, such as gold, this places a limit on how much money there can be, since there is a limit to how much gold can be mined. And that limit is often not appropriate for the smooth functioning of the economy

Well said MOnica, I have always found your posts to be sensible and informative.

Maizie All government new money is backed by government bonds on which interest is paid and will be until they are redeemed at sometime in the future they are repaid. However, it has to be done carefully and with planning and doing so effects our currency exchange rate, especially with the dollar.

If just printing money willy nilly could get us out of trouble then we would have the answer to all the worlds ills. There would be no poverty in Africa, each country would just wind up its printing plant and start running off currency notes. No more DEC appeals, like the current one to help flood devastated Pakistan. Imran Khan would just have air freighted in a couple of tonnes of security paper and would be printing the money needed to pay for the aid he needed.

At one point we were on the Gold Standard, we could not print more notes than we had gold stashed in the bank.. When we came off the Gold Standard, all new notes had to be backed by Government stocks.

As said before, you get owt for nowt. Every new note that runs off the presses has to be backed by something.

Since everyone is flapping their academic qualifications around. My first degree was in economics and I worked as a business economist through nearly all my working life.

The fact that spending precedes tax receipts does not mean that they don’t fund it. The spending is predicated on anticipated receipts.

Nanna yes We and other western countries are rich and having lived in both 3rd and rich countries I am perfectly able to compare life between the two. The main reason for coming here is they are people living under brutal regimes, you have no rights whatsoever, men are forced into the army to act against there own, striking women from thee factories, rounded up and taken by lorries back to the factories to work, very young children working on the salt fields, often naked,. People know it’s not perfect in our countries, the weather for starters but as I was told we have human rights, no talk of you have money and other riches. Just human rights. So Nanna I could go on but I would suggest that it is you that has lead a sheltered and narrow life, certainly not me

I still maintain that the UK is a rich country. That is one of the reasons people want to live there. Some must have led very sheltered lives if they think they can even compare it with so called 3rd world countries. Actually, I find that quite offensive. Some of you don't know what you've got.

Germanshepherdsmum

I did A level economics actually. I understand more than you obviously think. However I want to hear what Maizie has to say, thank you,

In that case, you should know perfectly well that taxation doesn't fund government spending and that spending precedes any taxation.

Both my children did economics A level and I still have their textbooks and the process is explained quite clearly in the sections on macro-economics. As they both went on to university and studied economics as part of their degrees, this message was reinforced.

P.S Mr Maizie has a degree in economics and he has no idea about the source of government money...

Germanshepherdsmum

I did A level economics actually. I understand more than you obviously think. However I want to hear what Maizie has to say, thank you,

Given the time you'll have to wait you might just as well read the academic paper I linked to.

M0nica

Since the inflation would be caused by the government that decided to print lots of money on the delusion it would buy it out of trouble, it seems that the conditions mentioned in your link would apply.
There are differences in details and emphases, but the basic story of outside coercion, losing a war/civil war, internal corruption, incompetent/bad economic education/bad policies on banking/currency, elite minorities clinging to power, foreign denominated debt, collapse in real production etc. are the same in Weimar and Venezuela as in Zimbabwe. As always, the “printing” is the result, not the cause.

And so it would be in the UK. The phrase bad economic education/bad policies on banking/currency, is up their with all the other causes

I repeat. Over the past decade and a half governments have 'printed' some £400billion+ of new money.

Commercial banks do it every day when they make a loan (source, the BoE quarterly bulletin I linked to which everyone is determined not to read)

Do we have hyperinflation?

Cherrypicking one of multiple causes of hyperinflation doesn't have quite the 'gotcha' effect you seem to think it has.

And one cause the author seems to have missed is failure to tax.

I did A level economics actually. I understand more than you obviously think. However I want to hear what Maizie has to say, thank you,

Germanshepherdsmum

Still waiting for a simple explanation as to how taxation doesn’t fund expenditure Maisie. A very simple explanation of your own, not a link. I’m very puzzled about where all the income from various taxes goes, if none of it funds expenditure.

Try doing GCSE Economics! It's basic stuff and you might even understand.

Cue a flood of angry outbursts …

Norah Some of the wealthy people that you quoted have a lot of expertise at their disposal to help them hold onto their assets. The following is a link to an article written following the death of the 6th Duke of Westminster back in 2016. Most of the Grosvenor family assets are held in a number of trusts.
The personal assets of the 6th duke (£600 million) were inherited by his wife and so exempt from taxation although her children will have to pay tax when they inherit, unless yet another trust is formed. If that happened there would be tax to pay but not as much as would be payable under the normal IHT rules

www.theguardian.com/business/2017/nov/07/duke-of-westminster-offshore-firms-wealth-paradise-papers

Not holding my breath …

Still waiting for a simple explanation as to how taxation doesn’t fund expenditure Maisie. A very simple explanation of your own, not a link. I’m very puzzled about where all the income from various taxes goes, if none of it funds expenditure.

Since the inflation would be caused by the government that decided to print lots of money on the delusion it would buy it out of trouble, it seems that the conditions mentioned in your link would apply.
There are differences in details and emphases, but the basic story of outside coercion, losing a war/civil war, internal corruption, incompetent/bad economic education/bad policies on banking/currency, elite minorities clinging to power, foreign denominated debt, collapse in real production etc. are the same in Weimar and Venezuela as in Zimbabwe. As always, the “printing” is the result, not the cause.

And so it would be in the UK. The phrase bad economic education/bad policies on banking/currency, is up their with all the other causes

A last link for you, Monica

clintballinger.com/2021/01/12/the-myth-of-hyperinflation/

GDP/GNP Maizie, which ever you prefer, both defined as follows
Gross domestic product (GDP) is the value of the finished domestic goods and services produced within a nation's borders.
Gross national product (GNP) is the value of all finished goods and services owned by a country's citizens, whether or not those goods are produced in that country.