Reform/Farage - economic policies don’t add up.

ronib

Wwm2 well it is never too late to discuss the basics. The silence is deafening….,

That's odd, ronib, because I've been trying to discuss the 'basics' for the past 4 years or more, but once people have flung 'hyperinflation' at me the lack of interest is overwhelming.

However, it is said that science advances one funeral at a time. It is evident from many reactions that economic understanding advances in much the same way...

MaizieD well all credit to you / no sarcasm intended! Yes hyperinflation is an interesting concept too.
But are the politicians even discussing anything remotely economic’?

No, they are not, ronib. They are keeping to the myth perpetrated by Thatcher that a national budget is just like a household budget, a myth believed by probably about 90% of the electorate, if not more.
She also said that there was no such thing as government money, just taxpayers money, another complete untruth also believed by 90+% of the electorate.

It is a convenient myth for governments to encourage because they can raise taxes at will, claim poverty when they don't want to spend money and manipulate narratives about the economy.

It's especially handy at general election times when parties can accuse each other of being profligate with the country's money and worry people about how much tax they might have to pay if their opponents come to power.

In a way, I think people are very reluctant to let go of the idea that their taxes fund all government spending, because it gives a feeling of 'agency', of contributing to the country's wellbeing.

But, on the other hand, look at the 'poverty' threads and see how much the apparently 'non contributing' poor are hated and despised...

I think that the belief in the myths skews people's judgements when it comes to deciding who to vote for. Instead of looking at policies and evaluating how they will benefit the country, they are quarreling about taxation and scared of the country 'overspending'.

Tell me, Maizie, would there be large scale government spending without the knowledge that taxes or outside investment weren’t known to be coming down the line?

MaizieD I can assure you that the last thing I am thinking about is

I think that the belief in the myths skews people's judgements when it comes to deciding who to vote for. Instead of looking at policies and evaluating how they will benefit the country, they are quarreling about taxation and scared of the country 'overspending'.

and I am not sure other people are either. The state of the NHS, housing and education seem to occupy people's minds far more than taxation, because, quite simply no one believes any of the parties when they talk about taxation.

MaizieD so much misinformation around. At the moment I am sideswiped to discover that a very good friend has been assessed as ineligible for any financial assistance towards her care! Apparently her pension is too high even though savings have plummeted well below the figures given on various websites. I didn’t know that the county council could decide that £232 a week is a sufficient amount to cover living expenses once £500 approximately a week is deducted for care. How stupid am I? Sorry for the rant…..

It worked for the tories in 2010, MOnica. But then, that was more 'normal' times. Nothing was as broken then as it is now after 5 years of corruption and incompetence.

I’m not too concerned about the Tory plans for Taxation because they are highly unlikely to form the next government, Labour has not yet convinced anyone that the tax changes they
propose are going to fund the extra spending. Not only that their targets of building homes and recruiting doctors and nurses are way more than has ever been achieved.

We wont know for sure until the first budget

Taxation doesn't fund spending, David. Taxation follows spending.

You are exemplifying what I said earlier about concern about taxation taking precedence over considering which policies would be best for the country.

Keynes is often quoted as saying 'Whatever we can do we can afford'. Who would like to gainsay the judgement of one of the most eminent of 20th century economists?

It was Keynesian economics that rebuilt the UK economy after WW2.

MaizieD

Taxation doesn't fund spending, David. Taxation follows spending.

You are exemplifying what I said earlier about concern about taxation taking precedence over considering which policies would be best for the country.

Keynes is often quoted as saying 'Whatever we can do we can afford'. Who would like to gainsay the judgement of one of the most eminent of 20th century economists?

It was Keynesian economics that rebuilt the UK economy after WW2.

Yes.

Germanshepherdsmum

Tell me, Maizie, would there be large scale government spending without the knowledge that taxes or outside investment weren’t known to be coming down the line?

GSM, When the government spends with a view to maintaining and improving public services it releases new money into the economy. This money is created by the Bank of England to pay the government's 'bills'. Without taxation there would very soon be too much money around which would lead to inflation and hyperinflation (failure to tax adequately was one of the causes of the Weimar hyperinflation) The government taxes to destroy excess money.

Most of the money it spends into the economy returns by way of taxation as it circulates and causes economic activity. The only money that doesn't return via taxation is that which is saved or spent abroad. Because the government rarely gets all of its money back there will always be a gap, the deficit, between the amount spent and the amount reclaimed.

A deficit is not a great problem because the money it represents is inactive,it isn't spent, so it cannot be contributing to inflation. Even so, it could well be spent further into the future; when it is, it is subject to taxation.

Private investment is known to follow government spending when investors know that there is money enough in the domestic economy to make their investment profitable. UK hasn't been attracting much private investment in the past few years, according to the Financial Times. Which doesn't surprise me.

Exactly - without taxation there would be too much money around which would lead to inflation …. So taxation will follow spending, or shall we say there will be no spending without the knowledge that taxation, and/or investment, is assured?

Yesterday evening I heard a Tory spokesman stating that the LP had always borrowed more and increased the National Debt. Sadly I didn't make a note of whom and which progamme.

However, the LP was founded in 1900 out of the work done by unions and other socialist movements in the late 19th C.

As you almost all now know (or should do because it's been written about on here extensively) the National Debt goes back to the late 17thC when a group of merchants and bankers got together to from what eventually became the Bank of England in 1694. The reason for this is William 111 wanted funds to fight a war with France.

My question to you who don't accept this is - the LP didn't exist during the period from 1693 to 1900 - who borrowed the money needed to fight the various wars that took place during the 18th and 19th centuries?

Germanshepherdsmum

Exactly - without taxation there would be too much money around which would lead to inflation …. So taxation will follow spending, or shall we say there will be no spending without the knowledge that taxation, and/or investment, is assured?

There is a world of difference between taxation destroying money which has already been issued and taxation funding spending.

I follow Dr Roger Gewolb. He set up The Campaign for Fair Finance.
This morning he accused the Bank of England of group think
and shear incompetence. He named several in the bank, who shouldn’t be in the job, including Andrew Bailey.

www.campaignforfairfinance.org/about-ccf/

A video of him explaining what’s wrong with our financial set up.

www.google.com/search?q=Dr+Roger+Gewold+%2B+what+is+wrong+with+the+bank+of+england&ie=UTF-8&oe=UTF-8&hl=en-gb&client=safari#fpstate=ive&vld=cid:d38c5c90,vid:0n8d8eFS1iE,st:0

How do I find his critique of the BoE, Petra?. Do you have a link?

Oh, your link appears to be incomplete

Whitewavemark2

A lot of the language is straight out of the Trump playbook.

Perhaps Steve Bannon had a hand in it, they are besties after all.

Agreed, he has taken the “Make America Great Again” concept and applied it to the UK, they are both snake oil salesmen. I just don’t know how anybody could contemplate voting for Reform, I attempted to do the maths for how much tax revenue would be lost by raising the tax threshold to £20,000 pa and my calculator wouldn’t cope with it, that’s just one of the pie in the Sky proposals.

Jane43 £91 billion saved in government waste according to Reform.
MaizieD link works for me. So why are mortgage rates not going down? Presumably not as we shall know today.

ronib

Jane43 £91 billion saved in government waste according to Reform.
MaizieD link works for me. So why are mortgage rates not going down? Presumably not as we shall know today.

Where has all this 'government waste' come from when the tories have spent the last 14 years cutting funding to the public sector, calling it 'efficiency savings'?

Do you seriously believe what Reform is saying?

Do you seriously want to have any sort of debate about the UK economy? Because if you do, I suggest that you start looking at what economists are saying, not populist party 'contracts'.

Whitewavemark2

MaizieD

Taxation doesn't fund spending, David. Taxation follows spending.

You are exemplifying what I said earlier about concern about taxation taking precedence over considering which policies would be best for the country.

Keynes is often quoted as saying 'Whatever we can do we can afford'. Who would like to gainsay the judgement of one of the most eminent of 20th century economists?

It was Keynesian economics that rebuilt the UK economy after WW2.

Yes.

Yes that correct but taxation funds part of it the rest is funded from borrowing or QE.
Post WW2 the economy was expanding manufacturing for export, lifestyles in the 1950s and 60s were vastly different and manufacturing barely exists today.
Successive governments have overseen an increase of debt and decline in value of sterling for the last 50yrs. I have some hope that investment in growth will be made but I’m not betting on it yet

MaizieD I note you have not addressed the issue of mortgage rates.
However, taken from the contract heading Government Waste -
1. Cut foreign aid- £6billion
2. Cut overpaid consultants’ contracts and overpaid bodies
3. Stop BofE paying interest to commercial banks on QE reserves - £30 to 40 billion
So presumably Labour and Conservatives not backing this approach?

ronib

MaizieD I note you have not addressed the issue of mortgage rates.
However, taken from the contract heading Government Waste -
1. Cut foreign aid- £6billion
2. Cut overpaid consultants’ contracts and overpaid bodies
3. Stop BofE paying interest to commercial banks on QE reserves - £30 to 40 billion
So presumably Labour and Conservatives not backing this approach?

I've already addressed the Reform 'contract' proposals. They are unevidenced pie in the sky.

The only one that has any validity is the one about the interest being paid on QE reserves.

Yes that correct but taxation funds part of it the rest is funded from borrowing or QE.

Taxation doesn't fund spending. Taxation's primary function is to destroy excess money in the economy.