Another Benefit of Brexit?

Fleurpepper

Katie59

If you can’t see that borrowing or printing money has devalued Sterling there is no point arguing.
As public spending has increased as % of GDP over the last 50yrs sterling has devalued in proportion

In 1970 UK debt was around 50% of GDP £1 = $2.6
Now UK Debt is around 100% of GDP £1 = $1.2

That’s what happens when you borrow more.

This exchange rate also applies to anything we import- chemicals, medicines, raw materials, etc, etc, etc. So all those things now cost much more.

That’s the problem we are importing so much of what we need instead of using home produced resources and production, the so called service economy has not brought prosperity.

Katie59

If you can’t see that borrowing or printing money has devalued Sterling there is no point arguing.
As public spending has increased as % of GDP over the last 50yrs sterling has devalued in proportion

In 1970 UK debt was around 50% of GDP £1 = $2.6
Now UK Debt is around 100% of GDP £1 = $1.2

That’s what happens when you borrow more.

This exchange rate also applies to anything we import- chemicals, medicines, raw materials, etc, etc, etc. So all those things now cost much more.

Yes but the goods for the public sector to buy won't be available in quantity unless there is sufficient investment in the private sector and many goods bought in the UK come from China where taxation during manufacturing stages goes to their Treasury, not ours.

MaizieD

^Do you? I wonder why you think that.^

Because you keep on dismissing the idea that state spending through money creation has any economic benefit.

MaizieD I can see your point about state spending with an economic benefit. Do you think in order to reduce inflation, we need to return to a Fiat system?
Also if Theresa May and others were able to print £900 billion, why stop at this figure? What is limiting the amount that is printed?
Why is anyone having to work is another thought.
With apologies…..

If you can’t see that borrowing or printing money has devalued Sterling there is no point arguing.
As public spending has increased as % of GDP over the last 50yrs sterling has devalued in proportion

In 1970 UK debt was around 50% of GDP £1 = $2.6
Now UK Debt is around 100% of GDP £1 = $1.2

That’s what happens when you borrow more.

Do you? I wonder why you think that.

Because you keep on dismissing the idea that state spending through money creation has any economic benefit.

If public sector wages aren't increased,*Grantnow*, their spending power declines and over all consumer spending goes down. Please, please tell me how we are going to attract private investment if businesses don't see enough money in the economy to offer them any profit?

And of course because the public servants are spending, they help grow the economy, which in turn generates more revenue.

Grantanow

I agree the government needs to invest in public services and in infrastructure to get the economy going as Roosevelt did before WW2 (and that is not the same as giving wage increases) but we also need to attract inward investment into the private sector to boost productivity and therefore profit in order to generate more taxation. Public services don't generate tax on the whole. It's not either/or. Leaving the EU seriously damaged our trade and Truss damaged our financial probity with investors. Ford are going to ditch 1 in 5 jobs and AstraZenica are building their state of the art factory in Ireland. A more nuanced approach to company taxation is needed. For an factual account of Brexit's effect on trade see this academic article

theconversation.com/the-decision-to-ditch-the-uks-department-for-international-trade-is-testament-to-the-failure-of-brexit-199483?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554&utm_content=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554+CID_661987bc955f36ae2708c374f299cbef&utm_source=campaign_monitor_uk&utm_term=The%20decision%20to%20ditch%20the%20UKs%20Department%20for%20International%20Trade%20is%20testament%20to%20the%20failure%20of%20Brexit

Public services generate loads of tax!

The people who work for them pay income tax and VAT when buying goods which have been taxed at many stages of the manufacturing process. Not only that, but public services buy in goods which have been produced by the private sector, which have been taxed.

MaizieD

DaisyAnne

Grantanow

I agree the government needs to invest in public services and in infrastructure to get the economy going as Roosevelt did before WW2 (and that is not the same as giving wage increases) but we also need to attract inward investment into the private sector to boost productivity and therefore profit in order to generate more taxation. Public services don't generate tax on the whole. It's not either/or. Leaving the EU seriously damaged our trade and Truss damaged our financial probity with investors. Ford are going to ditch 1 in 5 jobs and AstraZenica are building their state of the art factory in Ireland. A more nuanced approach to company taxation is needed. For an factual account of Brexit's effect on trade see this academic article

theconversation.com/the-decision-to-ditch-the-uks-department-for-international-trade-is-testament-to-the-failure-of-brexit-199483?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554&utm_content=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554+CID_661987bc955f36ae2708c374f299cbef&utm_source=campaign_monitor_uk&utm_term=The%20decision%20to%20ditch%20the%20UKs%20Department%20for%20International%20Trade%20is%20testament%20to%20the%20failure%20of%20Brexit

We need a two-pronged approach. Until someone gives me a simple principle that shows why this isn't true, then in my opinion, what lands in your pocket should be taxed the same for earned as well as unearned income.

Taxation for businesses, both large and small, may need a complete overhaul and a new start. It won't happen. So we will end up taking ancient get-outs for the very wealthy with us.

I found what Paul Drexler had to say, on 'The World at One' today, interesting. It was around 13:08 minutes in. He seemed to agree with the interviewer that "as well as leaving the EU, foreign investors don't want to invest here because of the political machinations of the last few years have significantly changed the atmosphere, such that foreign investors simply don't want to get involved".

I can believe that may well be true.

He also went on to talk a little about education and skills, unsurprisingly.

I would not disagree with your conclusions there, DaisyAnne. I just think that ignoring a vital sector of our economy and the power of state investment only gives half of the story.

Do you? I wonder why you think that.

MaizieD

*Simply printing or electronically creating more and more only devalues the currency.*

OK.

Has £900billion of QE devalued sterling?

Bear in mind that sterling dropped considerably after the Brexit vote and the BoE immediately injected £60billion of QE into the economy in order to stabilise the pound...

As far as I am aware - and unlike you, I am not an economist - when QE was used, the Bank of England rapidly increased reserves by purchasing government debt from private financial institutions. This action held the currency stable. We still need to match outgoings with the economy, that solid amount we are making (GDP). However, I would say our currency is judged, additionally, on our direction of travel and the perceived competence of our government. Therefore, investment, done on a basis acceptable to those supporting our currency, also adds value. But what do I know? This is a view, just my opinion, after all.

I have no wish to tell others they must agree with me nor, as Murphy does, that “the left and Labour really do need to adopt the core ideas of modern monetary theory … This debate is now at the heart of what it is to be on the left”. But the fact that he says this concerns me. And it will continue to be of concern when I vote. Just how many Murphy Apostles will we vote into power? Hopefully, very few in the first Parliament and then we can reassess how much power the far-left has when we come to a second term.

MaizieD

*Simply printing or electronically creating more and more only devalues the currency.*

OK.

Has £900billion of QE devalued sterling?

Bear in mind that sterling dropped considerably after the Brexit vote and the BoE immediately injected £60billion of QE into the economy in order to stabilise the pound...

P.S Inflation is just another way to express devaluation.

If it costs £1 to buy x amount of goods in a given year and a year later it costs £1.20 to buy the same amount of goods the pound has lost 20% of its value.

DaisyAnne

Grantanow

I agree the government needs to invest in public services and in infrastructure to get the economy going as Roosevelt did before WW2 (and that is not the same as giving wage increases) but we also need to attract inward investment into the private sector to boost productivity and therefore profit in order to generate more taxation. Public services don't generate tax on the whole. It's not either/or. Leaving the EU seriously damaged our trade and Truss damaged our financial probity with investors. Ford are going to ditch 1 in 5 jobs and AstraZenica are building their state of the art factory in Ireland. A more nuanced approach to company taxation is needed. For an factual account of Brexit's effect on trade see this academic article

theconversation.com/the-decision-to-ditch-the-uks-department-for-international-trade-is-testament-to-the-failure-of-brexit-199483?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554&utm_content=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554+CID_661987bc955f36ae2708c374f299cbef&utm_source=campaign_monitor_uk&utm_term=The%20decision%20to%20ditch%20the%20UKs%20Department%20for%20International%20Trade%20is%20testament%20to%20the%20failure%20of%20Brexit

We need a two-pronged approach. Until someone gives me a simple principle that shows why this isn't true, then in my opinion, what lands in your pocket should be taxed the same for earned as well as unearned income.

Taxation for businesses, both large and small, may need a complete overhaul and a new start. It won't happen. So we will end up taking ancient get-outs for the very wealthy with us.

I found what Paul Drexler had to say, on 'The World at One' today, interesting. It was around 13:08 minutes in. He seemed to agree with the interviewer that "as well as leaving the EU, foreign investors don't want to invest here because of the political machinations of the last few years have significantly changed the atmosphere, such that foreign investors simply don't want to get involved".

I can believe that may well be true.

He also went on to talk a little about education and skills, unsurprisingly.

I would not disagree with your conclusions there, DaisyAnne. I just think that ignoring a vital sector of our economy and the power of state investment only gives half of the story.

Katie59

In the 1930s Roosevelt invested I public infrastructure with the aim of increasing manufacturing output, that is very different to UK public spending currently.

The UK would do very well to follow his example. We have plenty of infrastructure which could do with investment and new Green industries which would benefit, too.

However, the purpose of Roosevelt's New Deal was to to revive the US economy by keeping money circulating within it by giving the population opportunities to earn and to spend.

Without a sound consumer base of money to spend beyond the bare necessities there is no incentive for businesses to invest. The money they look to for their future profits, their incentive to invest, is not going to materialise out of thin air; though it seems plain that people believe it will.

In the meantime, the only source of new money in the economy is state investment. I'm very tired of pointing out that public services source all their goods and services from the private sector (so cutting public spending injures the private sector by depriving it of sales) and that the wages of public sector employees are spent into the domestic economy, thus supporting the thousands of small businesses which depend on their purchases.

I am also tired of pointing out that all this economic activity increases the tax take to the government because there is very little economic activity which is not taxed in one way or another.

Perhaps instead of trotting out platitudes and believing that only private investment will save the economy a bit of in depth research is required. And the application of some logical thought.

Grantanow

I agree the government needs to invest in public services and in infrastructure to get the economy going as Roosevelt did before WW2 (and that is not the same as giving wage increases) but we also need to attract inward investment into the private sector to boost productivity and therefore profit in order to generate more taxation. Public services don't generate tax on the whole. It's not either/or. Leaving the EU seriously damaged our trade and Truss damaged our financial probity with investors. Ford are going to ditch 1 in 5 jobs and AstraZenica are building their state of the art factory in Ireland. A more nuanced approach to company taxation is needed. For an factual account of Brexit's effect on trade see this academic article

theconversation.com/the-decision-to-ditch-the-uks-department-for-international-trade-is-testament-to-the-failure-of-brexit-199483?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554&utm_content=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554+CID_661987bc955f36ae2708c374f299cbef&utm_source=campaign_monitor_uk&utm_term=The%20decision%20to%20ditch%20the%20UKs%20Department%20for%20International%20Trade%20is%20testament%20to%20the%20failure%20of%20Brexit

We need a two-pronged approach. Until someone gives me a simple principle that shows why this isn't true, then in my opinion, what lands in your pocket should be taxed the same for earned as well as unearned income.

Taxation for businesses, both large and small, may need a complete overhaul and a new start. It won't happen. So we will end up taking ancient get-outs for the very wealthy with us.

I found what Paul Drexler had to say, on 'The World at One' today, interesting. It was around 13:08 minutes in. He seemed to agree with the interviewer that "as well as leaving the EU, foreign investors don't want to invest here because of the political machinations of the last few years have significantly changed the atmosphere, such that foreign investors simply don't want to get involved".

I can believe that may well be true.

He also went on to talk a little about education and skills, unsurprisingly.

Simply printing or electronically creating more and more only devalues the currency.

OK.

Has £900billion of QE devalued sterling?

Bear in mind that sterling dropped considerably after the Brexit vote and the BoE immediately injected £60billion of QE into the economy in order to stabilise the pound...

MaizieD

A fact and a question, DaisyAnne

Fact, the UK government has, since the global Financial Crisis of 2008, has created some £900billion of new money through Quantitative Easing. Have a look at the chart of historic inflation rates in the UK on this link:

www.rateinflation.com/inflation-rate/uk-historical-inflation-rate/

Did the injection of £900billion of created money over 13 years cause inflation?

Inflation has soared in the past year. Why was that?

I wonder if you could clarify how this relates to my post, Maisie?

In the 1930s Roosevelt invested I public infrastructure with the aim of increasing manufacturing output, that is very different to UK public spending currently.

MaizieD

Ever heard of Maynard Keynes, DaisyAnne?

Yes, I have Maizie.

I agree the government needs to invest in public services and in infrastructure to get the economy going as Roosevelt did before WW2 (and that is not the same as giving wage increases) but we also need to attract inward investment into the private sector to boost productivity and therefore profit in order to generate more taxation. Public services don't generate tax on the whole. It's not either/or. Leaving the EU seriously damaged our trade and Truss damaged our financial probity with investors. Ford are going to ditch 1 in 5 jobs and AstraZenica are building their state of the art factory in Ireland. A more nuanced approach to company taxation is needed. For an factual account of Brexit's effect on trade see this academic article

theconversation.com/the-decision-to-ditch-the-uks-department-for-international-trade-is-testament-to-the-failure-of-brexit-199483?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554&utm_content=Latest%20from%20The%20Conversation%20for%20February%2014%202023%20-%202543025554+CID_661987bc955f36ae2708c374f299cbef&utm_source=campaign_monitor_uk&utm_term=The%20decision%20to%20ditch%20the%20UKs%20Department%20for%20International%20Trade%20is%20testament%20to%20the%20failure%20of%20Brexit

Keynes does not seem to have done the UK much good in the last 50 yrs as industrial production has declined and social spending increased. The theory that spending precedes taxation is fine as long as the money comes back as taxation fairly quickly.
The major costs of living are housing cost and food neither carry direct taxation, rented housing does produce tax return on the landlords income, owner occupation does not, investment in residential building is very large in recent years yet other than builders profit produces very little.

A fact and a question, DaisyAnne

Fact, the UK government has, since the global Financial Crisis of 2008, has created some £900billion of new money through Quantitative Easing. Have a look at the chart of historic inflation rates in the UK on this link:

www.rateinflation.com/inflation-rate/uk-historical-inflation-rate/

Did the injection of £900billion of created money over 13 years cause inflation?

Inflation has soared in the past year. Why was that?

Ever heard of Maynard Keynes, DaisyAnne?

You've got it back to front, Grantnow. The only way we are going to improve our economy is by government investment in public services. They are a significant engine for growth, through their use of private enterprises to supply all the goods and services they need and through the buying power of the people they employ. State investment will grow our tax take. No-one else is going to invest in the UK; if the government doesn't we're completely b*ggered.

You seem to have an absolute belief that you are right Maizie. One of very few "not out of step" crowd.

What will the international markets do if we do not show we are balancing our economy? Why would you not understand that you cannot fund new investments without a source of finance to do it? Simply printing or electronically creating more and more only devalues the currency. Your suggestions will send shudders of fear through those who believe they cannot trust the far left with the economy.

I read what you say, knowing I want the current extreme government out but worrying that it will be replaced by an equally mad extreme from the left. Thankfully, Starmer seems to want no truck with the messianic messages. That allows me to feel we could trust him for a term. The second term is more doubtful as the extremes have a tendency to try and get hold of their parties once the moderates get them on an even keel.

Why do you think you can tell people that "this is so, you are wrong" all the time. What economic recognition have you received that says you are a trustworthy, reliable source of information on this subject?

Or have I simply misunderstood everything you are saying?

Grantanow

See www.theguardian.com/politics/2023/feb/11/revealed-secret-cross-party-summit-held-to-confront-failings-of-brexit?CMP=Share_AndroidApp_Other

At last someone is using their brain and hopefully without all the 'f*ck business', blaming the French, blaming the EU for decisions our Ministers voted for at Council, etc., associated with Johnson and the rest of the backwoodsmen. It will take years to dig the UK out of the economic hole. The economic growth we once had under Blair has to be regained so we have enough taxation income to support the public services we need. Flag waving won't pay for that.

Thank you for the link Grantanow.