The Uk Government balancing it's financial books.

I think, MaizieD, that we shall have to agree to differ about the effects of money creation. I usually agree with most of what you say on other matters.

Indeed it was Dinahmo. It needed a cash injection. The money went to the company, not to a seller on the market. Not a utility company by the way.

MaizieD

A reminder that it was Keynesianism that drove the UK's recovery (and the introduction of the NHS) after WW2. If we'd been guided by the current 'neoliberal ruling theory' I doubt if it would have happened so easily.

Exactly. You have put it more succinctly than me.

Germanshepherdsmum

The company in which I have shares is a household name PLC Dinahmo, not a family company. I purchased when it was making a new share issue.

More or less my point. It was issuing new shares for it's own benefit.

A reminder that it was Keynesianism that drove the UK's recovery (and the introduction of the NHS) after WW2. If we'd been guided by the current 'neoliberal ruling theory' I doubt if it would have happened so easily.

Having just reread my above post it seems to me that if the people fully understood the part that wars play in a country's economy we would stop all wars. Sadly, that is not going to happen.

fancythat

MaizieD As Dinahmo's figures show, states can manage perfectly well when running deficits.

I would like to return to this.

And this that I said
*Italy and Greece - well known countries for running into huge financial difficulties.
US - its national debt is now nearly the same percentage to GDP as it was in the 2nd world war years. Anyone fancy having the same national debt as the US? No, I thought not.*

That is the danger of debt.
Governments are not immune.
And QE does not always help either. Else no country would run into financial trouble.

Which ever way anything is sliced and diced, debt can lead to danger. Sometimes.

Countries and local authorities[I read that about 8 more besides Birmingham, are in financail difficulties], and households and individuals, are not immune.

After the end of the Napoleonic Wars the UK's debt ratio was 200% GDP. As I mentioned above it was around 30% at the beginning of the 20thC.

You ask who would like to live with the same national debt as the US. After the end of WW2, in 1946 it was 106%. The UK's at the end ofWW2 was around 200%.

Both countries recovered from that high level to much more manageable figures and did so during earlier centuries.

The US and UK govts during the last 3 centuries were immune to debt. Despite 3 centuries with very expensive wars the UK and the USA have survived and are amongst the richest in the world.

Local authorities are a different case - they have suffered from the lack of govt contributions, especially during the last 13 years of Tory austerity. Covid and the Ukraine war has played a part in this too, but we are now over the covid period. In an ideal world, the Ukraine war end and that would result in a reduction of spending on armaments and other aid. Monies that could be diverted to investment in the country's economy.

Countries and local authorities[I read that about 8 more besides Birmingham, are in financail difficulties], and households and individuals, are not immune.

Local authorities are in financial difficulties because of tory austerity which has cut their budgets to the bone while they are still expected to finance their statutory duties. They do need to raise money via taxation, they are an example of where taxation does fund spending because they can't create any money of their own.

Their plight is the result of small state ideology and the mistaken belief that a national budget is like a household budge; that it has to 'save' money by cutting services. All it did was make many people much poorer and reduce the money circulating in the economy. Without money circulating the economy cannot grow. There is indeed a 'magic money tree' but there sure as hell is no 'magic growth tree'.

The company in which I have shares is a household name PLC Dinahmo, not a family company. I purchased when it was making a new share issue.

In my working life I have known two individuals who made a large income from share dealing. One was a retired partner in a top 3 accountancy firm and his hobby was to invest.
Consequently he spent several hours each day on research.

My OH had an uncle, a retired civil servant, who made a considerable amount of money from investment in shares (in the low £millions). Mind you, he left his financial affairs in a nightmare state for the relative who had to sort it out on his demise. He'd never paid tax on anything apart from his pension 😱 He also lived in what amounted to a slum...

MaizieD

How about Japan, fancythat? Is Japan a financial basket case?

Singapore? That's what some Brexiters wanted us to be like - Singapore-on-Thames... 🤔

I remember in the run up to the 2010 election the Tories were banking on about the country's debt and I don't recall debt being a feature of earlier elections. In 2020 most political commentators, in response, talked about the debts of other counties such as the US and Japan which were much higher than the UK's.

I think that the Tories had become much better at spreading misinformation than the LP and are increasingly so now.

fancythat

But you didnt say I said it, so maybe you didnt mean me.

I was, perhaps, being defensive. I've had that trope thrown at me so many times

Germanshepherdsmum

If the shares were not purchased when issued would the company exist? We have had this argument before and I have told you that my shares were purchased direct from the company, not on the market.

That is correct but there are millions of people who trade in shares but who have little or noting to do with the company whose shares they own. These are pure investments to make money or gains for themselves.

There are many examples of companies that have done well - such as the Pimlico Plumber - who have sold out to other, larger companies whose shares are traded on stock exchanges the world over.

The flotation of the utility companies was not an investment such as you describe. The companies existed. The govt at that time wanted some money and sold the shares cheaply, ostensibly to individuals to encourage share ownership. The majority of the individual purchasers did not hold on to the shares for very long but sold them at a good profit to various institutions.

I suspect that the shares that you own were purchased from either family companies or were new newly floated and have done sufficiently for you to keep them. (I'm not expecting a response to this statement - I am merely surmising and not after the facts)

In my working life I have known two individuals who made a large income from share dealing. One was a retired partner in a top 3 accountancy firm and his hobby was to invest.
Consequently he spent several hours each day on research.

The other is a former investment banker who retired at a young age and spends his time investing.

Both earned far more from their trades than I did/do from my practice.

MaizieD As Dinahmo's figures show, states can manage perfectly well when running deficits.

I would like to return to this.

And this that I said
*Italy and Greece - well known countries for running into huge financial difficulties.
US - its national debt is now nearly the same percentage to GDP as it was in the 2nd world war years. Anyone fancy having the same national debt as the US? No, I thought not.*

That is the danger of debt.
Governments are not immune.
And QE does not always help either. Else no country would run into financial trouble.

Which ever way anything is sliced and diced, debt can lead to danger. Sometimes.

Countries and local authorities[I read that about 8 more besides Birmingham, are in financail difficulties], and households and individuals, are not immune.

fancythat

*Over the past century of governments, the Conservatives achieved slightly higher mean growth per quarter (0.62% vs 0.56%), Labour achieved a slightly higher median (0.62% versus 0.58%)*

It doesnt look much difference, but it is about a 10% difference, if I read the figures correctly. That is quite a difference.

I havent seen median used as the best guage of "average" except in a school setting.

And the link seems to disregard this quarter and that quarter, and exclude global factors.

But like any statistics, anybody, including myself, can cherry pick.

However, I do take on board, about Labour economic performance, that perception and reality can be different sometimes.

I picked out one piece at random fancythat, but there are many other comparisons using different calculation methods online, with the conclusion that there’s no evidence that overall Labour perform more poorly than the Tories economically. It’s down to our own value systems which economic management we prefer, I favour a system with a strong public service support system rather than small state myself.

But you didnt say I said it, so maybe you didnt mean me.

'Printing money leads to hyperinflation' isn't a truism.

That is not what I said.
I said, "It can lead to inflation, but not always. "

Totally agree with your last paragraph.

That was in reply to Casdon.

Over the past century of governments, the Conservatives achieved slightly higher mean growth per quarter (0.62% vs 0.56%), Labour achieved a slightly higher median (0.62% versus 0.58%)

It doesnt look much difference, but it is about a 10% difference, if I read the figures correctly. That is quite a difference.

I havent seen median used as the best guage of "average" except in a school setting.

And the link seems to disregard this quarter and that quarter, and exclude global factors.

But like any statistics, anybody, including myself, can cherry pick.

However, I do take on board, about Labour economic performance, that perception and reality can be different sometimes.

Depends how the QE is used, it seems to me.

Well, there you have it, fancythat. It's not the actual money creation that is the problem, it is the way it is used and the economy is managed. The tories used it to bung lots of very lucrative contracts to their friends and donors during the covid crisis.

If you actually read serious analysis by economists and historians of the flag bearers for hyperinflation you will see that there were very specific sociopolitical situations in those countries, which don't apply to every money creating country.

'Printing money leads to hyperinflation' isn't a truism.

incidentally, you can knock all the euro using countries off Dinahmo's list because they are controlled by the European Central Bank and have limited ability to control their own money supply, borrowing etc. They are more like UK local authorities who have to live with the budget they're given by the central government and have limited opportunities to fund their spending by taxation.

That's why, if we were to rejoin the EU we should never join the euro and so give up our monetary sovereignty.

fancythat

Casdon
Given there’s no evidence that the economy has performed worse historically overall under Labour governments

Is that true?
I dont have anything to back it up,
But the perception by many is that Labour are the [over]spend Party.

Yes, it’s true. There is a lot of information online, here is one from an unbiased source.
theconversation.com/labour-are-much-better-at-running-the-economy-than-voters-think-new-research-162368

There is nothing pure about QE
I do know [some] about creating money.

It can lead to inflation, but not always. Depends how the QE is used, it seems to me.

I can now see that if people do not view the national economy like a household economy, and view it more like the cookie jar, why people behave as they do towards how they want a government to behave.

Printing money has limited use.
It can backfire hugely.

Technically very little money is 'printed' these days. It's created by key strokes on a computer. It's use, far from being limited, is common and extensive. Commercial banks 'create' money every time they make a loan.

The Bank of England has been creating money for decades. That is how the supply of money in the UK expands to serve the needs of its ever increasing population; if it didn't increase the supply of money the amount available to each citizen would get smaller and smaller as the population grows.

The BoE creates the money to buy bonds when it undertakes Quantitative Easing. Without QE to bail out the banks after the global financial crisis a very large portion of the population would have found themselves with empty bank accounts. Without QE during the covid crisis there would have been no money for the furlough scheme, for purchasing supplies of PPE (at vastly inflated prices) for running the Test & Trace operation, for the vaccine rollout and for help for businesses and some of the self employed.

QE has cost us nothing. As I explained earlier, it is a purely nominal debt. Nor has it caused inflation.

Viewing a national economy like a household economy is absurd.

If you know of households which can create their own money you'd better inform the police. Counterfeiting is a crime...

I defintiely think of it as like a household budget. Agreed not a business.

Printing money has limited use.
It can backfire hugely.

Perhaps this is all why people look at the economy in different ways.
If it isnt looked on as having to at least loosely balance, and people think, well just print some more money, it can indeed be looked on as, well why not spend spend spend.
And as Labour are deemed to be more spend than the tories, well in that case vote Labour. Happy days! Downpour of money. Money on trees.