The case for deflation

[The L J Monk]

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

Do away with computers?

[mjdgreg]

So far we have got 2 solutions. 'Spend', 'austerity' and my proposal 'd......'.

[wilts rover]

Dig a big hole and bury the b****y lot of them?

[Glyn_Wigley]

So far we have got 2 solutions. 'Spend', 'austerity' and my proposal 'd......'.

Drivel.

[mjdgreg]

Drivel.

lol.

[mjdgreg]

More deflation evidence:

http://www.bbc.co.uk/news/business-20442666

[wilts rover]

More deflation evidence:

http://www.bbc.co.uk/news/business-20442666

That's not a case for deflation - its a case for raising wages to get the economy going! That may be the average wage, but it is distorted by the massive top end executive pay

http://www.ft.com/cms/s/0/9c8376e8-7f24-11e0-b239-00144feabdc0.html#axzz2CzBpC7oH
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/9c8376e8-7f24-11e0-b239-00144feabdc0.html#ixzz2CzCuxDtZ
 
The gap between top executive pay in the private sector and that of the general public is widening rapidly and is “out of control,” according to a report from the High Pay Commission.
 
Top pay is spiralling towards relative levels not seen since the Victorian era, the commission, which is funded by the Joseph Rowntree Charitable Trust, said.

So should you decide to go on a campaign to raise wages for lower paid workers, I am behind you all the way comrade.

[Glyn_Wigley]

More deflation evidence:

http://www.bbc.co.uk/news/business-20442666

Is it buggery.

[BillyStubbsTears]

Glyn
Good guess but I think he said it began with "d"

[BobG]

Duggery then.

BobG

[The L J Monk]

[mjdgreg]

That's not a case for deflation - its a case for raising wages to get the economy going! That may be the average wage, but it is distorted by the massive top end executive pay

Never said it was. If you take top end executive pay out of the equation wages are still going down. It's just another piece of evidence that is staring us in the face that strengthens my case. So far I've shown that demographics, falling house prices  and falling wages are pointing the way to deflation. I'll produce more evidence over the coming weeks but so far I think I'm winning the argument hands down. 

[bobjimwilly]

 

[mjdgreg]

Time for another clue. I'm going to give you the second letter of the word I'm looking for, 'e'. De......

[The L J Monk]

Time for another clue. I'm going to give you the second letter of the word I'm looking for, 'e'. De......

As popular as Debenhams is Mick, I think it's going to take more than a Boxing Day sale to get us out of this mess.

[mjdgreg]

As popular as Debenhams is mjdgreg, I think it's going to take more than a Boxing Day sale to get us out of this mess.

lol.

[mjdgreg]

How useless are you lot? Looks like I'm going to have to give you another clue. The third letter of the word I'm looking for is 'f'. Def.....

[Glyn_Wigley]

How useless are you lot?

Where on earth do you get the impression that anybody actually gives a flying one what you've read but not understood elsewhere on the internet?

[BillyStubbsTears]

Defecation? Most of your theories originate that way Micky boy.

[mjdgreg]

I must say I'm very disappointed with you all. I think I'm going to have to find another forum where the posters are more clued up.

[Viking Don]

Why?

It's not d-e-f...

Economic growth is not sustainable, even a child knows that. Swings and roundabouts unless/until we get a world economy, which is very unlikely. What would deflation cure? It's only money.

[Glyn_Wigley]

I must say I'm very disappointed with you all. I think I'm going to have to find another forum where the posters are more clued up.

Bye!

[mjdgreg]

Right you useless lot, this is the last clue. The fourth letter is 'a'. Defa.... if you still don't get it then there is no hope for you.

[mjdgreg]

Why?

It's not d-e-f...

Economic growth is not sustainable, even a child knows that. Swings and roundabouts unless/until we get a world economy, which is very unlikely. What would deflation cure? It's only money.

I agree that economic growth is not sustainable. Thanks to Lloyd George who started the welfare state on 1/1/1909 we are now drowning in debt we will never be able to repay. Little did he know that he had created a monster that a century later would destroy the British economy.

I don't think deflation would cure anything. I just think it is now inevitable.

[wilts rover]

Yes if only he had not had to do such a half-hearted job and done away with the house of Lords and imposed a proper income tax as he had wanted to then we would be in a much better state now.

I saw an interview on tv this morning before heading back south in my submarine where the interviewee was saying that a one-off tax of 20% on the richest 10% in the country would raise over £800 billion.

By raising a massive £800bn, this tax would be enough to pay off the entire government deficit more than four times over - or it could be used to clear most of the national debt. A reduction in the national debt would dramatically cut the government’s huge debt interest payments, which amount to nearly £50bn a year. This vast sum of money would be better spent on schools, hospitals, pensions and job creation.
http://www.newstatesman.com/blogs/economics/2012/09/20-wealth-tax-mega-rich-would-raise-800bn

I am sure Lloyd George would approve - I also think he would agree that nothing in life is inevitable.

[BillyStubbsTears]

Lord preserve us Mick, now you want default? The nightmare scenario of all nightmare scenarios. Where the currency loses 50% of its value overnight (but rich folk with clever accountants buy houses abroad so they are not affected, but poor folk lose most). Where the banks stop operating and the cash machines close down. Where industry and commerce stop because credit has ceased.

Mick. I will tell you this much. This country will not even consider default. Not in the next 100 years. We didn't after WWII when our Govt debt was three times higher than it is today. Instead we went on 30 years of pretty much unbroken growth.

You are making yourself look dafter than usual by even raising the possibility. It is what countries do when they have absolutely no alternative whatsoever. When they cannot borrow money to service their debts because the bond markets refuse to lend at realistic rates. It is the equivalent of being on the 100th floor of the World Trade Centre on 9/11 and deciding that, on balance, jumping is preferable to dealing with the flames.

At the moment, we are so far from the bond markets collapsing on us that even discussing default is farcical. It is the equivalent of seeing a waste paper bin catch fire in the toilets on the 100th floor of the World Trade Centre, and deciding to jump out the window.

What's your response to getting your Council Tax bill Mick? Burn your house down?

[mjdgreg]

Hallelujah! Someone has finally worked it out. You've no idea how close I came to leaving this forum due to all of your ineptitude. By the way that is a brilliant crystal ball you've got Gypsy Rose Stubbs.

I'm afraid our economy is in such a bad mess that the only way out is default. You can argue all you want but Labour have ensured that the economy is totally screwed and this is the only solution. After World War 1, the Weimar Republic’s total debt equalled 913% of its economy. We all know what happened next (or at least I hope we do). Today the UK's total debt equals 900% of the economy when you add in our financial sector debt, government debt, personal debt and corporate debts. Say no more.

Austerity or stimulus will only delay the inevitable. There is no way we can ever repay our debt (which is still rising exponentially). To think we can is fantasy-land and it won't be too much longer before the penny drops with our lenders.

Default won't be easy but it is inevitable, so we may as well get on with it and get it over and done with. This is the best way out and makes those that deserve to suffer the most pay the price - careless lenders. Why should they get away with their irresponsibility? Then we have to learn the lesson and cut back dramatically the welfare state and start to live within our means.

It's time for the clued up amongst us to prepare now. For example, there won't be a state pension in 10 years time. The prudent amongst us will get rid of any debts as soon as possible before interest rates rise and will invest in gold. Don't say you haven't been warned.
 

[BillyStubbsTears]

The crowning pinnacle of your bullshit Mick.

If this argument were correct then you could sweep up. The bond markets must have it wrong. They are falling over themselves to pour money into the UK. Just as they are into those other massively indebted monetarily sovereign countries, USA, Japan, Canada.

So. You're a professional gambler. Bet against them. You'll make a fortune.

[mjdgreg]

The crowning pinnacle of your bullshit mjdgreg.

If this argument were correct then you could sweep up. The bond markets must have it wrong. They are falling over themselves to pour money into the UK. Just as they are into those other massively indebted monetarily sovereign countries, USA, Japan, Canada.

So. You're a professional gambler. Bet against them. You'll make a fortune.

You really are naive to think the bond markets are always going to give us low rates. What goes down will eventually go up. The penny will eventually drop with them and when it does there will be total devastation to our economy. Of this I am certain.

Why on earth do you think they will continue to lend us money at low rates when they realise that we don't have a cat in hell's chance of ever paying it back? They're not completely stupid you know.

You'll be pleased to know that I am already heavily invested in gold and have  placed some considerable bets with IG Index (a spread betting company). Due to my foresight I will actually benefit from what's coming and I am only trying to give others the benefit of my excellent advice.

You are supposed to be a business man. Have you ever heard of contingency planning? What would your plan be if bond rates did actually rise? You need to work it out now and not wait until it happens. If you haven't got one or can't be bothered to come up with one then you will deserve all you get especially after reading my warning.

[BillyStubbsTears]

Mick

You need to understand WHY the bond markets are giving us (and Japan, and USA and Canada etc, etc) low rates. It's very, very simple economic theory.

For monetarily sovereign countries, one thing alone governs bond rates: expectations of future interest rates. That's it. That is why we had a borrowing crisis in 1976 - not because we had an unsustainable debt (we didn't) but because the markets were spooked by our inflation and consequently hiked our borrowing rates.

UK, Japan, USA, Canada etc have low bond rates because the markets expect prolonged low inflation. They expect prolonged low inflation because they expect prolonged poor economic performance.

Now: you yourself Mick have (recently) been saying that we will not have inflation any time soon and we will have poor economic performance for years.

Here's a tester for you: find ANY example of a monetarily sovereign country that has faced default by bond market vigillantes in the absence of high domestic inflation. A single one will do.

Same old waste of time Mick. You grope your way to putting "2" and "2" on one side of the equation, but you end up with 58,432 on the other side. Total inability to follow a logical trail of thought to its proper conclusion. Week after week.