Baron von Lotsov: From whom did you gain your knowledge of macroeconomics? It is sheer nonsense to claim that Britain has never defaulted in our entire history. Exactly how CB100 can mark it 100% correct is equally baffling. Britain defaulted on her WW1 debts to the United States in 1932, when the Conservatives held 432 seats in a 615 seat House of Commons. That default was disasterous for the United States and was to cause a default by the U.S. by forcing her to leave the gold standard, and pay her gold standard debts in fiat money. You could equally argue that Britain's post-war which were paid after a devaluation, whilst on a fixed exchange-rate, were also technically defaults. We are unlikely to default in the present situation, but an increased money supply would result in debts being re-paid in a debased currency. You are an incurable romantic; little wonder you were not temperamentally suited to complete a degree course.Originally Posted by Baron von Lotsov
Last edited by Geoffrey Collier; 05-02-2012 at 08:30 PM.
Well I did read some books on macroeconomics and I know you can't just lower your repayments by printing money without consequences. It's pretty damn obvious, because if it were possible then all countries in trouble, such as Greece for example, would do just that and the economic system in general would quickly crash. That was my point to SDP, who likes to make up economic fiction. Are you 'temperamentally suited' to understand that? Would you lend someone money if you thought you wouldn't get it back or that you would get it back in a form that buys you less than what you lent in the first place. Perhaps you would if you were paid a fair amount on top to cover the risk of this happening. You can't force people to lend you money unless you are holding a gun to their heads, and in any case that would not be borrowing, that would be theft.
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Baron von Lotsov: You said that we have never defaulted on debt repayment in our history. That is factually wrong. The consequences of printing money can be both good and bad simultaneously. It is bad for pension recipients, while 'good' for pension funds. Greece, like all of the eurozone countries, cannot 'print money' or even overtly employ devices like QE, as can Britain and the USA, because they do not have a lender of last resort.
That is part of their problem. The risks of being a lender are precisely those which you mention; perhaps most repayments are in diminished, or even debased currencies.
in financial markets theres an interest rate known as the LIBOR rate, this is the rate they go by.
Open a CFD and you can instantly access money and only pay 5-10% margin.
ie if you deposit £10,000, you could access upto £200,000 worth of stocks (5% margin), you will be charged a daily interest rate at the LIBOR rate (typically 1-2%/365).
Some CFD providers are 'market makers' ie they dont actually execute the trades at the London Stock Exchange = therefore their interest is for you to lose AND their prices are made by themselves which are merely LINKED to the real market price and not necssarily fixed to it.
What you want is a CFD provider who provides direct market access (DMA) a list can be found on the LSE website.
I recommend IG Markets and stay with a 7-10% margin, you could go down to 5% for massive stocks like RIO otherwise 10% would give you enough leverage to stay safe of daily/weekly movements. You cant lose more than what you put it in (unless your lack basic maths skills), and you dnt really need a guaranteed stop loss.
Thats how you access large amount of cash, quickly, without filling out forms
Yes but you are now worming it into something different to my original objection to SDP's comment, where you very rudely accused me of being 'not temperamentally suited' when there was nothing wrong with my objection and everything wrong with what I was objecting to. It would be nice if you could show some balance here. There is this belief that you can simply play with the monitory policy in such a way that you can create wealth from nowhere. Now that is magic, much like pulling a rabbit out of a hat. If you print more money then the wealth it represents doesn't suddenly change. Your house is still worth the same yesterday as it is today, so money cannot alter the physical world in that way, rather the act of printing more money is that more pieces of paper represent the value of your house or whatever it is. Now I know you are interested in history, but you can't use history for everything. Economics is a mathematica pursuit, so you can see directly what different things are going to do.
Of course certain bad monitory policy can cause the system to jam up so that it stops people from trading, so you can use economics to destroy wealth. We see this in Spain where half the youth are unable to work. Indeed it is getting like that in this country as well. So all you can hope for is an economic policy that is stable and free. Politicians must get their sticky fingers out of it and let the markets do what they want. Arbitrary rules just gum the system up. For example, lets say you wanted to do an economic transaction that helps you and without it something bad might happen that could cause a loss, or perhaps with it you can make some money out of an efficiency saving. If there is some government rule that stops you from doing it then you are poorer as a result. That’s what we have at the moment with the EU. We have too many stupid rules gumming up the works. None of this bailout business is going to make the blindest bit of difference to any recovery. Well actually it is more likely to lose more money if anything and end up in the pockets of Goldman Sachs or similar.
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Baron von Lotsov: You claimed that Britain has never defaulted on debt repayments in our entire history: that statement is wrong in fact, and I even identified from memory some examples to support my rebuttal. You then, having made a false statement, used it to compare us favourably with Greece and Portugal. By the most generous of routes, I explained that your error was due to your romantic view of the past. Was that being rude?
Monetary policy is the method by which some control over the national economy can be asserted, by the setting of interest rates and levers to the control the money supply. Due to the nature of a global economy, monetary policy has become much more difficult to formulate. Do you not remember when Milton Friedman convinced Margaret Thatcher that monetarism was the route for economic liberalism and political stability? Enoch Powell accepted Friedman's theories very enthusiastically, and added a few further ones of his own to the debate. If you tightly control the money supply, Powell argued, trade union bosses can be told that only the money which exists can be used to satisfy their demands. Paradise was now just an election away. Sheer fiction; one of the first acts of Thatcher as P.M. was to abolish exchange controls. Money could now be taken in and out of the country at will. Perhaps more importantly, money could circumvent British banks by borrowing from foreign ones. The control of the economy by monetary policy was seen to be an utter fiction. Monetarism, which was to be the saviour, was in reality the latest political mirage with which to beguile an innocent electorate. Almost instantly the very word 'monetarism' was to disappeared from the political vocabulary.
A consideration worth reflecting upon, is the fact that for about forty years following 1945, the Western economies existed collectively as a discrete
economic unit. Trading embargoes with communist countries allowed the 'democracies' to construct an economic system to their own needs. It worked well; there were difficulties but those could be resolved quite successfully. Two characteristics were important: built-in obsolescence to perpetuate the system, and credit to faciliate consumerism. When the communist system collapsed, the West instantly was to become very vunerable. China, and the entire Pacific-rim, was to be the manufacturing centre, selling their good to us, at a time when the entire western world was up to its eyes in debt, and for good measure, with an ageing population. Low bank rates, which were the constant demand of the business community, are now at a historic low, and personal pension funds may as well be thrown in the dustbin as a consequence. I fear, B v L, that you do not recognise that there has been a geographical and structural change in the nature of the global economy. It is this which has to be addressed and solved. The problem is much more profound than 'silly rules' and politicians with 'sticky fingers': what employment is to be created for the multitude
when the major economic activities need little labour? If, as you say, economics is a 'mathematical pursuit', what is the answer? I think you will find that economics has more to do with keeping political prejudices up-to-date.
Well as far as I can see when you make a mistake you don't acknowledge it, so why should Baron?
Example: your posting 15 on the subject "British National Debt reaches a trillion pounds" ...
I pointed out to you several times that your statement was factually incorrect and yet you made no attempt to acknowledge your mistake. You just seemed to bluster around it and talk about something else. So how about you admitting to your error now?
CB100: Presumably you continue to endorse BvL's claim that we have never defaulted on a foreign debt? I find it hard to believe that you have a sound knowledge of economics, at what you call a professional level. What I said was that the national debt of £312,Bn(until the global financial crisis erupted) was manageable. That is factually true. When were you a convert to Keynesian economic orthodoxy, incidentally? Let us compare the situation under Thatcher 1979-1990. She inherited a national debt of £86.88 Bn billion, in 1978, When she ceased to be prime minister in 1990, the N.D. had risien to £152.2 Bn. She had sold much of the national assets, public utilities and nationalised industries, that was used to keep the PSBR artificially low. We had two problems happening simultaneously; (1) collateral for the national debt was being diminished while, (2) an artificial boom was being created by keeping the PSBR, low through the sales of state assets, while the N.D. was continuously rising. That revenue of was immediately spent. Let us look at the national debt as a percentage of GDP, during the Thatcher years.
1979, 43.61% of GDP.
1980, 42.11%
1981, 44.40%
1982, 44.55%
1983, 43.13%
1984, 43.59%
1985, 43.45%
1986, 41.81%
1987, 39.14%
1988, 34,98%
1989, 29,30%
1990, 26.61%
Thatcher sold everything that see could get her hands on, while many commodity prices, particularly oil, had plunged considerably since the early 1970s'. She was also the first prime minister be benefit from substantial North Sea oil revenues. We saw the demise of Britain as a significant manufacturing country, while the substantial services industries were contracting. Prior to leaving office Mrs T. had also agreed our joining of the ERM, as the prelude to being in the eurozone. The national debt continued to rise under Thatcher as it did under Major. Your argument seems to be that increasing unemployment further, and a lesser purchasing power within the economy would have been beneficial. The problem, if not created under Thatcher, was certainly exacerbated by her: asset stripping, and employment in the service industries was clearly to be of short duration. I see that it has been decided to award the ticket-printing contract for the 2012, Olympic Games to a company in Arkansas, USA.
These matters are complex, and I endeavour to answer them as factually and honestly as I can. Now you answer the question which is fundamental to the west: what economic activity will lend itself to mass employment which will be directly profit producing?
No I don't endorse them. You are quite correct in your earlier comments.
When I said BvL was 100% correct I didn't spot his comment in the middle of his paragraph about the UK never having defaulted. I was focussing on the main thrust of his comments about QE and the UK's current low 10 year bond rates. On that he was was 100% correct. On the never defaulting point, obviously he wasn't as we both know what happened 80 odd years ago.
Happy?
Ok so are you now willing to acknowledge your error in suggesting previously that under Gordon Brown the national debt was coming down up to 2008?These matters are complex, and I endeavour to answer them as factually and honestly as I can.
Surely you know the national debt was going up from 2002 onwards??
We have discussed this previously and I have given my thoughts on the way the UK can have higher overall employment. I don't have time to repeat it now. Sorry.Now you answer the question which is fundamental to the west: what economic activity will lend itself to mass employment which will be directly profit producing?
Regarding Britain never defaulting, I read that in the financial pages of the Telegraph, so if I'm wrong then they are too. I just had a little poke around to find out more about this and it turns out that: -
So it is not actually a technical default.Many Britons felt that the US loans should be considered as part of its contribution to the World War I effort.
"The Americans lent Britain a lot. Britain resented making payments," says historian Dr Patricia Clavin, of Oxford University.
And although Britain was unable to pay its debts, it was also owed the whacking sum of £2.3bn.
OUTSTANDING WWI LOANS
Britain owed to US in 1934: £866m
Adjusted by RPI to 2006: £40bn
Other nations owed Britain: £2.3bn
Adjusted by RPI to 2006: £104bn
These loans remain in limbo. The UK Government's position is this: "Neither the debt owed to the United States by the UK nor the larger debts owed by other countries to the UK have been serviced since 1934, nor have they been written off."
BBC NEWS | UK | Magazine | What's a little debt between friends?
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