The case for deflation

[mjdgreg]

Despite it saying the opposite - if you dont believe the Daily Telegraph who do you believe!

Keep digging. We'll keep laughing.

My house is my home too, hence me not wishing to 'cash in' on it until I retire. When I have the fullest intention of moving.

So you are planning to 'cash in', despite saying in the very next sentence:

I dont believe in people using property purely to make money

pmsl.

it overinflates the economy to an unsustainable level, forces young people out of the home market - and was the primary cause of the economic diaster we are in now, but I am sure your Polish tenants are happy you are scamming them.

My Polish tenants are very happy with the arrangement. They don't want to buy so renting makes perfect sense for them. I do encourage the ones that plan on staying here to eventually buy their own home. Now is not the time though because prices are going to fall a lot further. When they do, I'll be around to snap up some more to help put a roof over some more Polish tenant's heads.

[bobjimwilly]

In which case, and taking into account the fragility of the wider economy, only a madman would suggest raising interest rates...

No, I am perfectly sane. I bet your mate is glad you've backed him up. Read my previous post. We need to raise interest rates to kill off all those half-dead companies and put overstretched home-owners out of their misery now and not in the future. Also it's not fair that savers should carry on getting piss poor rates just to bail out others that think no further than tomorrow and borrow and spend every penny they can.

I think you should put yourself up for election at the next local election Mick. You could form the right wing of The Monster Raving Looney Party, and make your comedic remedies to economic problems public so everyone could have a laugh at you, not just people on here

[mjdgreg]

Yes the unemployed graduates are doing fine round here. I have had several working for me and managed to build up their skills for them to move into paid positions. In fact we have been quite lucky in that we have been so successful in growing in the past couple of years we created a new post for one of them - and will be creating another in March.

Would it not be possible to create two posts in March? Go on. Do the decent thing. Think of the younger generation for a change. I packed in working for 'the man' at fifty to create an opening for a youngster. But then again, I'm all heart.

[mjdgreg]

I think you should put yourself up for election at the next local election mjdgreg. You could form the right wing of The Monster Raving Looney Party, and make your comedic remedies to economic problems public so everyone could have a laugh at you, not just people on here

You sound like a leftie borrower and spender to me. Just once in a while it would be nice if people like you stopped to think about what you have done. You have ruined the economy and you have made life very difficult for people who rely on their savings in retirement. No doubt that thought has never even crossed your mind.

I would only ever put myself up for election if it was to become the benevolent dictator of the UK. If ever an opportunity did arise, I'm sure I would win. I'd soon get things sorted out.

[BillyStubbsTears]

In which case, and taking into account the fragility of the wider economy, only a madman would suggest raising interest rates...

No, I am perfectly sane. I bet your mate is glad you've backed him up. Read my previous post. We need to raise interest rates to kill off all those half-dead companies and put overstretched home-owners out of their misery now and not in the future. Also it's not fair that savers should carry on getting piss poor rates just to bail out others that think no further than tomorrow and borrow and spend every penny they can.

Got you sussed Mick. You are a member of the Liquidationist School of recessions. You believe that recessions have "work" to do in cutting the inefficient slack from the system.

That is a classic example of what I was saying when I said that the world has wilfully forgotten Keynes's lessons. He was having that argument with Hayek back in 1931. It was the predominance of the Liquidationist School that led to the horrific deflation in Germany under Heinrich Bruning's Chancellorship in the early 30s. That absolutely crippled their economy and put millions out of work. Unemployment in Germany increased from ~1.5 million in 1928 to ~8 million in 1932. Millions were in abject poverty and this catastrophic policy paved the way for you-know-who.

Go and Google it...

And while you're Googling, think about why Keynes presented an alternative and why the Liquidationist School kept schtum for decades after the 1930s.

But you're being consistent. Since you believe in killing off undesirable members of society, I guess you would welcome a deflationary collapse and the rise of mad Dictator to save us all.

So aye. Let's raise interest rates, have deflation, put 8 million on the dole and have democracy collapse in all-out street-fighting, leading to the rise of a mad eugenicist dictator. Sounds like a plan.

EDIT: But of course I forgot. You don't believe that we can draw lessons from history do you Mick? Except when you do.

[mjdgreg]

EVIDENCE mjdgreg. It's what you need to draw robust conclusions. Opinions are like arseholes. We've all got one and most of them are full of shit. That's why I ignore opinions that don't offer detailed supporting evidence.

If all I gave was an opinion it would run something like this:

'I think deflation is on the way.'

That would be it. There wouldn't be much more to say. Now if you check out this thread and my other threads and posts, in my opinion, you will find I've said a lot more than this and backed it up. Go figure.

[BillyStubbsTears]

Mick, Mick, Mick

You STILL, after all these requests, you STILL haven't told us WHAT it was that you read between July and October that changed your mind. You have shown us what you NOW think. But you haven't shown us what it is about that information was that you weren't aware of in July when you were absolutely adamant that inflation was the threat.  So, what was that "astonishing evidence" that you found. Surely you can't have forgotten. You yourself said it was "astonishing".

Is it really, honestly so hard to understand? Back in July you believed X. From October onwards you believe Y, where Y is the antithesis of X. You have found something "astonishing" along the way that has changed your mind. What was it?

[mjdgreg]

Got you sussed mjdgreg. You are a member of the Liquidationist School of recessions. You believe that recessions have "work" to do in cutting the inefficient slack from the system.

That is a classic example of what I was saying when I said that the world has wilfully forgotten Keynes's lessons. He was having that argument with Hayek back in 1931. It was the predominance of the Liquidationist School that led to the horrific deflation in Germany under Heinrich Bruning's Chancellorship in the early 30s. That absolutely crippled their economy and put millions out of work. Unemployment in Germany increased from ~1.5 million in 1928 to ~8 million in 1932. Millions were in abject poverty and this catastrophic policy paved the way for you-know-who.

No need to Google anything. I think you'll find I know my history much better than you. We need to look much closer to home as to why Hitler came to power. The reason was because the victors in World War One imposed far too harsh reparations on Germany. This led to social and economic melt-down and the rest is history as they say.

[BillyStubbsTears]

There we go. Mick proves to us that he knows the square root of f*** all about history as well.

As one-dimensional as a straight line on a diet.

Yes, the war reparations were an act of monumental stupidity. (By the way, go and read "The Economic Consequences of the Peace" written by a crank in 1919 for a prediction of the horrors that the reparations were likely to result in...)

The point is that by 1927-28, Germany, though economically troubled, was living with reparations, with an economy chugging along reasonably well, and unemployment no higher than anywhere else in the western world. What turned grumbling and discontent about reparations into outright revolt and love for Hitler was the crass stupidity of Bruning, keeping Germany on the Gold Standard, deflating the economy and quadrupling unemployment.

Your argument is that Hitler's rise was inevitable given Versaille. In that case, why was it that 8 years after Versaille, the NSDAP won only 2% of the vote for the Reichstag?

From 1928 onwards, Germany (with Bruning as a major driver) instituted a deflationary policy of wage cuts and tax increases to finance reparations. That wasn't a given. They could have gone for a reflationary growth policy. The result was that unemployment started to rise. By 1930, unemployment had doubled and the NSDAP got 19% of the vote. Then Bruning took over as Chancellor and REALLY let rip with deflationary policies. By late 1932, unemployment was four times what it had been in 27-28, and the following year, the NSDAP were the biggest party in the Reichstag.

It wasn't inevitable. Until insane deflation made it inevitable.

THAT is why Keynes's offered an alternative. Because the threat of deflation let rip is utterly horrific, beyond your wildest nightmares (or perhaps, dreams in your case Mick).

[mjdgreg]

So at last we agree on something. Reparations were the root cause of Hitler gaining power. No need for a load of old waffle to further make the point.

[mjdgreg]

Now then. Lets see if anyone can come up with the answer. Billy believes in borrowing and spending. He says that I believe in austerity. As it happens I don't, but lets just say for the sake of argument that this is what the debate is all about.

Can anyone come up with another more practical solution. I know I can, but I would like to throw it open to all the great and not so great leftie minds on this forum to see if any of you know what the other alternative is. I'm waiting.

[BillyStubbsTears]

Mick

I know a bloke who ran up 12 points on his licence and got pull in front of the beak. His defence was that it wasn't his fault he was speeding. Gottlieb Daimler and Karl Benz were to blame for inventing the internal combustion engine.

[The L J Monk]

Can anyone come up with another more practical solution.

24/7 Parliament?
Pay the unemployed to drive ambulances?
Free thermals for the elderly?
Free tea bags?
Maternity leave for people with puppies?
Obese Olympics?
Free apples?
Free coffins?
Do away with computers?

[mjdgreg]

Not a very good response so far. I'll wait a bit longer.

[BillyStubbsTears]

f**king hell lads. He's found some astonishing evidence.

[mjdgreg]

So aye. Let's raise interest rates, have deflation, put 8 million on the dole and have democracy collapse in all-out street-fighting, leading to the rise of a mad eugenicist dictator. Sounds like a plan.

I'm sorry but I totally disagree with you. You've gone way too far this time.

[BillyStubbsTears]

But Mick. You WANT deflation. You WANT eugenics. You've said so yourself. Why not take your balls in your hands and see your ideas through to their logical conclusion?

[mjdgreg]

But mjdgreg. You WANT deflation. You WANT eugenics. You've said so yourself.

Wrong and wrong again. I leave myself wide open for you to produce the EVIDENCE to back up your claim, safe in the knowledge that you will be unable to.

Claiming that deflation is on the way is just stating the blindingly obvious. It's not the same as WANTING deflation.

I don't think you know what eugenics is so I'll help you out. Being a scientologist I did think you'd know. Eugenics is the applied science of the bio-social movement which advocates the use of practices aimed at improving the genetic composition of a population, usually a human population. It is a social philosophy which advocates for the improvement of human hereditary traits through the promotion of higher reproduction of more desired people and traits, and the reduction of reproduction of less desired people and traits. So eugenics is not the same as letting terminally ill old people have the option of dying with dignity.

You really must read my posts more carefully. If you don't, you will continue to make erroneous allegations that leave you looking daft.

[BobG]

And to think that the bloody stupid governments in this country actually spent real money (you know, that stuff that's supposed to be inflating - or is it deflating?) attempting to educate this clown. I suppose that's what good about this kind of society. They tried the impossible - even when it cost shed loads of that pesky money stuff.

It's scary though just how ineffective education can be isn't it? No idea at all about how to debate; about how to construct an argument; about how to evidence that argument; about the consequences of plagiarism; even good old fashioned logic doesn't work.

Mick: be warned btw. I am an extremely competent historian. I specialise in 19th and 20th century British and European, the colonial period in the Americas and Carthage. But I also have a fair amount of knowledge in several other areas too. Political and economic history is the focus. Best keep off them subjects then.

BobG

[BillyStubbsTears]

Mick

You say that we should put up interest rates in the current economic situation. That is inviting deflation.

You say "We need to spend less on the very old. They cost an absolute bleeding fortune. Old people should be put out of their misery once their quality of life is very poor."

You are not talking about allowing old people to chiose to die with dignity. You are talking about society deciding that it is economically disadvantageous to keep them alive.

But yes, I used the wrong word. There. Does that make you feel self-important? That isn't eugenics. What you are calling for is compulsory euthanasia. That is equally repugnant you odious cretin.

[mjdgreg]

You say that we should put up interest rates in the current economic situation. That is inviting deflation.

So this is your evidence that I WANT deflation. Very poor effort. Higher interest rates now will improve the lot of savers (many of which are old and struggling to get by) and it will kill off all the half-dead companies that are being a drag on the economy that are eventually going to die anyway.

The housing bubble will be deflated much more quickly instead of dragging out the misery for many overstretched home-owners and give young people half a chance of buying their own home.  I think you'd find my policy would get a lot of our problems out of the way quickly and help prevent deflation not cause it.

You say "We need to spend less on the very old. They cost an absolute bleeding fortune. Old people should be put out of their misery once their quality of life is very poor."

You are not talking about allowing old people to chiose to die with dignity. You are talking about society deciding that it is economically disadvantageous to keep them alive.

But yes, I used the wrong word. There. Does that make you feel self-important? That isn't eugenics. What you are calling for is compulsory euthanasia. That is equally repugnant you odious cretin.

You do really take the biscuit for always twisting my words. I said 'very old' you change this to 'old'.  It is a fact that they do cost an absolute bleeding fortune. Just stating the obvious there. By allowing the VERY old who have a VERY poor quality of life to die that will mean we will spend less on the old. It's a win win situation.

To say that very old people should be kept alive at all costs even if it is against their will and their quality of life is VERY poor is absolutely crazy. You sound like a religious nutter, but then again you are a  a scientologist.  No doubt the drugs companies love people like you as their profits increase at the expense of quality of life for some of the very old.

[BillyStubbsTears]

Mick.

1) As I said. You WANT deflation. You've just said so with your own words. Deflation is neither inevitable nor beneficial. It will NEVER be the latter. We can choose to impose it anyway through increasing interest rates. Which is what you say we should do. So, you are calling for an OPTIONAL choice of policy that will exacerbate deflationary pressures. Play semantics all you want Mick, but in the real world outside your bedroom, that is WANTING to have deflation. If you believe that increasing interest rates in the current situation, leading to mass closure of companies and rapid reduction in house prices would help to avoid deflation, then you are even more f***ing clueless than I gave you credit for. It is pointless discussing this further with you.


2) You said nothing about giving old people the choice to end their lives. You said that they should be put out of their misery. Immediately after saying that it costs a bleeding fortune to keep them alive. Backtrack all you want now, but the meaning of that is perfectly clear. And I quoted you verbatim. You said "OLD people should be put out of their misery."

3) Grow up with that stupid scientology bullshit. You make yourself look even more of a juvenile prick than you need to do.

And yes, you have got under my f***ing skin. We are currently dealing with the slow demise of my wife's grandfather, who has seen more, learned more, done more, cared more and lived more than you will ever do, you arrogant little shit. You want to live in a world where people like him are quietly disposed of. I want to live in a world where they have the care and attention that they have earned through a lifetime of giving. And if that means that my own standard of living is a little reduced, then so be it.

Fortunately, we live in a caring society, where selfish sociopaths like you will always be a tiny, if really f***ing annoying, minority.

[mjdgreg]

I'm very sorry to hear about your wife's grandfather and have no wish to inadvertently cause you any further suffering through my remarks. I promise not to refer to that subject again.

[BillyStubbsTears]

Thank you Mick.

Apologies for my intemperate language. It's a difficult time seeing a fine man fade away. He is a man who pulled himself up by his bootstraps from extreme poverty in rural Italy, was conscripted to fight for Mussolini, almost killed by a Spitfire strafing raid, survived but was taken prisoner, returned to start a family and build a life, won international prizes for poetry, survived what was supposed to be a terminal illness in his 70s, lost his only son 10 years ago, and until a few weeks ago, was still riding his bike every day at the age of 92, waving and shouting greetings to his neighbours.  He never bore a grudge against any person (other than Mussolini) and saw nothing but optimism for the future, having lived through hardships that we cannot imagine.

He's an example to all of us and the world will be a far poorer place when he has left it. I'm afraid I lost it when I saw you suggesting that people like him are a burden on us all.

[The L J Monk]

I see today's borrowing figures suggest the private sector is struggling to do its bit. Corporation Tax receipts lower than expected, meaning government borrowing is up again.

Whatever George's plan to reduce the deficit is, it doesn't seem to be working yet.

[BillyStubbsTears]

Aye. And apparently Osborne's response is going to be more cuts and more tax rises.

That should help get demand going...

As Einstein said, doing the same think over and over again and expecting a different result is a symptom of insanity.

[mjdgreg]

He sounds an amazing man. No need to apologise. Your reaction was perfectly understandable.

[mjdgreg]

To put things in perspective for this months borrowing figures, we've borrowed the equivalent of about £136 for every man woman and child in the UK.

[NorthNorfolkRover]

I cant agree with you Mick. Normal economic forces no longer operate. spain have built too many houses. Prices wont fall as theyve just opened their borders to give a passport to anyone who will buy one. Greece are about to be let off paying any interest on eu debt.no inefficient companies will go to the wall that have a way in to government. In effect we already have a "world government".
 You also dont mention world population. We cant increase the supply of commodities like iron ore etc. The price of a lot of degree educated labour is zero due to over supply as tesco recentley demonstrated. So labour in many areas is irrelevant in pricing decisions {eg cost of building new houses}.

[mjdgreg]

Now then. Lets see if anyone can come up with the answer. Billy believes in borrowing and spending. He says that I believe in austerity. As it happens I don't, but lets just say for the sake of argument that this is what the debate is all about.

Can anyone come up with another more practical solution. I know I can, but I would like to throw it open to all the great and not so great leftie minds on this forum to see if any of you know what the other alternative is. I'm waiting.

I'm still waiting. Time to give you all a clue. The first letter of the word I'm looking for is 'd'.