Gold standard is coming

[Roland]

Is gold the most important element?
If your talking on elements then think again, you can balance the economy on many things, gold is not that important at this precise time, gold is history, innovation holds the key, but here we also have property, art, agriculture, many elements, so yes, we have a balance of imports and exports and immigration.

I think trading in immigrants is probably illegal.

[Geoffrey Collier]

Roland: Gold is not the answer, let alone the panacea for global economic problems. It is totally irrelevant to the nature of our economic problems. A store of value isn't the problem, the problem is that economic activity which will be profitable and requiring a massive labour force. At the moment it would need fifty million new jobs to restore full-employment in western Europe. The nature of the economic triangle has changed. The macro economic system, material, and labour has shrunk to a level in which labour has drastically disappeared to a skeletal form in all dominant economic activities. There is no historical precedent for this situation, and we already see that the consequences are destabalising the political structure throughout much of Europe and beyond. The United States and Britain are 'keeping the show on the road' via Q.E. The EU is doing virtually the same thing only more surrepitiously.

Your earlier comments which blamed the Welfare State does not form a factor in this debate which could be identified as a significant determinant. The United States in 1945 was the world's richest nation by far; in addition it was able to impose its will on virtually every western country, and for good measure it was the only nuclear power on earth. Under Reaganomics, thirty years later, (not a Welfare State in sight) the USA apparently had found the answer to its increasingly deteriorating economic problems. Under Reagan the United States became a debtor nation for the first time since 1912. It is now the world's largest debtor nation. In addition, the United States has never been without a national debt since the nation was established in 1783. The story that the USA has been an economically prudent nation is sheer phantasy: when it comes to continuous debt, they are very similar to Britain.

Blaming the Welfare State, being off the gold standard, identifying certain individuals, is too limited a foundation on which to base a general thesis. In the late 1950s', for example, Britain had a larger national debt that we have to-day. That didn't stop Macmillan from insisting that we, 'Had never had it so good'. In many respects that was correct, but it was only a part of the story. If Francois Hollande wins on Sunday, that will be very troubling for Angela Merkel. But don't worry, Britain will be waiting to 'play her part' with a few more 'loans' to the IMF. I remember when QE and IMF loans were anathema to Cameron and Osborne; now they seem fully at ease with that policy.

[Appian]

We have reached a profound point in economic history where the truth is unpalatable to the political class - and that truth is that the scale and magnitude of the problem is larger than their ability to respond - and it terrifies them.

Hugh Hendry.

[Roland]

Godffrey

As you seem to be our resident expert on modern economics, how would you end the credit crunch/global depression?

[Geoffrey Collier]

Godffrey

As you seem to be our resident expert on modern economics, how would you end the credit crunch/global depression?

Roland: You can start by removing any solution in which the gold standard plays a part; that is about as relevant to the problem as believing four-leaf clover could hold a solution. In the 18th, and early 19thC, agriculture was the dominant part of both the economy and employment structure.
For working-class girls domestic service was their 'station in life' until WW1. To-day, less than one percent of the working population is employed in agriculture can produce enough food to make us virtually self-sufficent. The only possible exception would be hard-grain. We are required, however, to import much produce due to EU quotas. The taxpayer pays the dominant landowners millions every year to be custodians of our rural heritage. However, even if we left the EU, agriculture would only be a minor employer. Industry doesn't employ many in manufacturing, and much of that is in the pharmaceutical and defence sector. Even people like Dyson, Clarks's shoes have gravitated to the low-labour cost countries. You may be aware that 98, of our FTSE 100 companies operate from tax-havens. Essentially, what is the requirement for manufacturing founded on mass-production? The economic concomitant is a source from which mass-purchasing power casn be obtained. That is the solution; and the sources of production cannot supply sufficient employment to make it possible. Thatcher believed that the service industries could provide that employment, but technology allows that kind of employment to be out-sourced to India and many other locations. Respectable middle-class employment is now as much subject to the global market as any other. Once upon a time, the employemnt figures were based on full-time employment. Now the 'fall in unemployment' is made possible because most of the new employment is part-time. A million youngsters on the dole, while the older population is extending their working-life due to a failure of many pension providers. Employers were once given special tax consideration due to the fact that they provided the jobs which provided a tax-source for government, were an export earners, and provided the nations purchasing power. Now government provide much of the nations purchasing power through pensions, unemployment benefits, and other allowances. The more these are reduced, the nation's aggregate purchaing power reduces. Lower company profits give less scope for taxation, and a reduction is their existing work-force can be anticipated.

Ending the credit-crunch can produce more difficulties unless it is done carefully. Nations like Germany and China, which want annual trade surpluses, can only be accommodated providng nations like Britain, and particularly the USA, are prepared to tolerate deficits. Should the USA decide to play the China/German game, world trade would crash to-morrow. China has little experience of policies founded on the quid pro-quo. In that respect, they are still in the infants class. Germany has her much repeated fear of inflation as an explanation. That resulted from Germany trying to pay Versailles imposed reparations in 1919. The reparaions would have been less damaging to Germany, than hyper-inflation to avoid payments. Not that I agreed with reparations, incidentally.

Providing that we can remain solvent as a nation, via certain manufacturing, and (especially) financial services much of the new employment will in the early years be provided by infrastructural projects: roads, rails, canals (for water conduits), sewerage systems, converting existing buildings into residential accommodation, heritage projects, and much else. This would be possible, and accepting that increased automation bodes ill for the traditional sources of employment to have much of a future.

I used to know an individual who was a senior manager in the insurance business: a mathematician and actuary. He told me quite emphatically that the elderly would become major employers; gardeners, domestic help, house painters, disability-aid manufacturing. etc, etc, Sheer nonsense; the elderly are still providing for their own progeny, and in many instances grandchildren as well.

The purchasing power be provided from numerous sources. Highly paid jobs, some will be quite well paid part-time jobs, some will be low paid full-time jobs. Self-employment from a wide range of activities, will provide a living for many. However, many will have to be provided with purchasing power as they are now, from the state. Read the Geddes Report, of 1922, and the May Report of 1931 if you want to know how depressions can be made worse by government 'economies'. And, never forget, the inter-war depression was less complex than the one which we now have. That one at least had precedents; this one does not.

[Tim the plumber]

At the moment it would need fifty million new jobs to restore full-employment in western Europe. The nature of the economic triangle has changed. The macro economic system, material, and labour has shrunk to a level in which labour has drastically disappeared to a skeletal form in all dominant economic activities. There is no historical precedent for this situation, and we already see that the consequences are destabalising the political structure throughout much of Europe and beyond. The United States and Britain are 'keeping the show on the road' via Q.E. The EU is doing virtually the same thing only more surrepitiously.

Pre-industrial economies had a lot of un-employment. When the industrialisation of Britian happened it was often at the expense of job losses in India etc. Since we got agriculture even vaguely sorted out several thousand years ago there has generally been more labour than needed.

Full employment is a symptom of rapid economic/wealth change. This has to be driven by tecnological inovation. Let's hope we can find some.

[Roland]

Roland: You can start by removing any solution in which the gold standard plays a part; that is about as relevant to the problem as believing four-leaf clover could hold a solution. In the 18th, and early 19thC, agriculture was the dominant part of both the economy and employment structure.
For working-class girls domestic service was their 'station in life' until WW1. To-day, less than one percent of the working population is employed in agriculture can produce enough food to make us virtually self-sufficent. The only possible exception would be hard-grain. We are required, however, to import much produce due to EU quotas. The taxpayer pays the dominant landowners millions every year to be custodians of our rural heritage. However, even if we left the EU, agriculture would only be a minor employer. Industry doesn't employ many in manufacturing, and much of that is in the pharmaceutical and defence sector. Even people like Dyson, Clarks's shoes have gravitated to the low-labour cost countries. You may be aware that 98, of our FTSE 100 companies operate from tax-havens. Essentially, what is the requirement for manufacturing founded on mass-production? The economic concomitant is a source from which mass-purchasing power casn be obtained. That is the solution; and the sources of production cannot supply sufficient employment to make it possible. Thatcher believed that the service industries could provide that employment, but technology allows that kind of employment to be out-sourced to India and many other locations. Respectable middle-class employment is now as much subject to the global market as any other. Once upon a time, the employemnt figures were based on full-time employment. Now the 'fall in unemployment' is made possible because most of the new employment is part-time. A million youngsters on the dole, while the older population is extending their working-life due to a failure of many pension providers. Employers were once given special tax consideration due to the fact that they provided the jobs which provided a tax-source for government, were an export earners, and provided the nations purchasing power. Now government provide much of the nations purchasing power through pensions, unemployment benefits, and other allowances. The more these are reduced, the nation's aggregate purchaing power reduces. Lower company profits give less scope for taxation, and a reduction is their existing work-force can be anticipated.

Ending the credit-crunch can produce more difficulties unless it is done carefully. Nations like Germany and China, which want annual trade surpluses, can only be accommodated providng nations like Britain, and particularly the USA, are prepared to tolerate deficits. Should the USA decide to play the China/German game, world trade would crash to-morrow. China has little experience of policies founded on the quid pro-quo. In that respect, they are still in the infants class. Germany has her much repeated fear of inflation as an explanation. That resulted from Germany trying to pay Versailles imposed reparations in 1919. The reparaions would have been less damaging to Germany, than hyper-inflation to avoid payments. Not that I agreed with reparations, incidentally.

Providing that we can remain solvent as a nation, via certain manufacturing, and (especially) financial services much of the new employment will in the early years be provided by infrastructural projects: roads, rails, canals (for water conduits), sewerage systems, converting existing buildings into residential accommodation, heritage projects, and much else. This would be possible, and accepting that increased automation bodes ill for the traditional sources of employment to have much of a future.

I used to know an individual who was a senior manager in the insurance business: a mathematician and actuary. He told me quite emphatically that the elderly would become major employers; gardeners, domestic help, house painters, disability-aid manufacturing. etc, etc, Sheer nonsense; the elderly are still providing for their own progeny, and in many instances grandchildren as well.

The purchasing power be provided from numerous sources. Highly paid jobs, some will be quite well paid part-time jobs, some will be low paid full-time jobs. Self-employment from a wide range of activities, will provide a living for many. However, many will have to be provided with purchasing power as they are now, from the state. Read the Geddes Report, of 1922, and the May Report of 1931 if you want to know how depressions can be made worse by government 'economies'. And, never forget, the inter-war depression was less complex than the one which we now have. That one at least had precedents; this one does not.

I thought you might have been able to come up with at least one thought provoking comment.

[lorraine]

Geoffrey, what you say is interesting, maybe your friend was right in some respect with the older community, maybe if we worked together to make sure that older relatives can stay in their homes and live with other companions to build their self confidence, then that may help towards the economic system.
Although you have been careful not to mention mass immigration which has had a huge impact on the economy, you can only have huge mass immigration if the country needs employment, which is certainly not the case, in many countries.
Yes, we have been told that people are living longer, however, if they live longer they usually have a better life, I'm working with someone in his eighties, he is quicker than most people I know, yes, everyone is different, but what I will say, we did not need mass immigration because people are living longer, so ineffectively, we have created an overpopulated system why?, we could have easily worked another system, that every country would have wondered at.
Mass immigration has to stop, yes visiting, great, who does not want to visit, yes jobs, who does not want a job, but the movement of people.
Before we go any further, I work with Polish people, they are great, home from home, they work hard like we do, we laugh, and joke, it works, but mass immigration does not.
Going back to manufacturing, yes we can make it work, it doesn't need to be heavy industrial, some does, but not in the quantity that we are used to, computors and computor programming is in the imagination of every child that can make computors come to the fore, we need to be moving forward in this direction.
Agriculture, come on Geoffrey, the US could be world leaders if the system they used changed, they were the World leaders, and they could be once again, they have the ability to bring organic or natural foods right off the richter scale if they changed their stance.
I enjoyed your threads Geoffrey, however I do think we have a way to go to look at what is happening and what could happen to make this world a greater place for everyone.

[Geoffrey Collier]

Geoffrey, what you say is interesting, maybe your friend was right in some respect with the older community, maybe if we worked together to make sure that older relatives can stay in their homes and live with other companions to build their self confidence, then that may help towards the economic system.
Although you have been careful not to mention mass immigration which has had a huge impact on the economy, you can only have huge mass immigration if the country needs employment, which is certainly not the case, in many countries.
Yes, we have been told that people are living longer, however, if they live longer they usually have a better life, I'm working with someone in his eighties, he is quicker than most people I know, yes, everyone is different, but what I will say, we did not need mass immigration because people are living longer, so ineffectively, we have created an overpopulated system why?, we could have easily worked another system, that every country would have wondered at.
Mass immigration has to stop, yes visiting, great, who does not want to visit, yes jobs, who does not want a job, but the movement of people.
Before we go any further, I work with Polish people, they are great, home from home, they work hard like we do, we laugh, and joke, it works, but mass immigration does not.
Going back to manufacturing, yes we can make it work, it doesn't need to be heavy industrial, some does, but not in the quantity that we are used to, computors and computor programming is in the imagination of every child that can make computors come to the fore, we need to be moving forward in this direction.
Agriculture, come on Geoffrey, the US could be world leaders if the system they used changed, they were the World leaders, and they could be once again, they have the ability to bring organic or natural foods right off the richter scale if they changed their stance.
I enjoyed your threads Geoffrey, however I do think we have a way to go to look at what is happening and what could happen to make this world a greater place for everyone.

Lorraine: Thank you very much for your contribution. May I identify one or two important points? Manufacturing can be made to work, and it can be profitable. However, it cannot be a mass-labour activity. It is this which separates the old industrial societies from the new ones. Industries in our society must be founded on an economic activities which are capital and not labour intensive. Britain can certainly be economically viable, but the sources of that wealth, will not at the same time be the dominant employers of labour. That doesn't mean that the labour they require won't be significant, but it will only be a relatively small part of the total labour force. As I have asked before, what economic activity can be identified, which will be both profitable and require a large labour force? Certainly not any of the traditional manufacturing ones ones, or for that matter the distributive, or agricultural ones.

Despite opinions to the contrary, the middle and lower-middle class have been the recipients of employment made possible because of profit made in other activities. That has been the case for nearly two hundred years. The 1835, Municipal Act provided employment for those groups identified. This was extended with the passing of the the first Public Health Act in 1848. The 1870, Education Act resulted in a plethora of middle class employment (teachers). Traditionally the dominant areas of m/class employment have been publicly created posts made possible with profits created elsewhere. The conservative m/class have never had a problem accepting this arrangement; the idea that 'your' job must be made from the profits which directly result from your immediate endeavours is very much a w/class concept. Although that idea was well inculcated into them. I am saying that employment in the future will often be separate from the immediate sources of profit creation. I am not in possession of any evidence which invalidates that prediction. You seem to be suggesting that the traditional class division of employment financing will continue. Not a hope.

The pension fund deficits, plus the other factors which I identified, will preclude the elderly being significant employers of labour. The current elderly will remain significant purchasers of services and consumer goods.

I am not saying anything derogatory about the Americans. The point which I was making is that they have sacrificed their car industry and machine
equipment capacity to accommodate imports from nations which insist on accumulating large surpluses. Should the U.S. stop that accommodation of those imports without something approaching reciprocity, that could either result in significant changes or a world slump if no agreement was reached. Did an isolationist America assist world trade between the two wars?

Concerning immigration, that subject must be drained of all emotionalism. It would have been virtually impossible to dismantle a world-wide empire
without migration being a factor in that process. In the event, several European empires were dismantled simultaneously; and the situations in France, Belgium, Holland, Italy, and elsewhere, reflect their former areas of colonisation. In the case of Britain, the Commonwealth still contains
important mineral areas, and has a political role as well. The passive acceptance of EU citizenship by the British goverment was most unwise, and we should extricate ourselves from that mess. The changing of immigration laws are justified, but the process will have to be more circumspect than many believe.


I hope that I have managed to elucide one or two points more clearly. The global economic situation could be significantly improved, but any ideas that it first requires the arrangement of the ancien regime is totally misguided. You may remember that re-imposing the gold standard in 1925, was not only econimically disasterous, but it also had adverse military consequences for us in the Far East.

[BCG Jason]

Geoffrey,

You certainly argue eloquently and articulately on a number of points and I find myself in reluctant agreement with some of your remarks above such as the point about tolerating the non-productive middle classes and parents not being in a position to compensate for a failing economy. Perhaps our ruling elites in 1835 knew what was coming and so prevented the upheaval here in Britain that caused such problems in Europe in 1848. Yet they seem clueless in looking ahead, of course I could be wrong and am just misreading the situation.

I can see for example, we are trying to turn Britain into a tourist zone yet with our climate that seems very short-sighted as I spoke to one of our colleagues at work that has been on one of these 'climb in the trees weekend break' somewhere in the North of England, did you get wet I asked?
He did and admitted that certainly detracted from the enjoyment.
Now assuming this is all part of the plan to soak up excess labour who is going to pay to see or do these things?

Is the climate going to change or are other places not going to be available? What does that mean either the pound is worthless or Europe is destroyed by something - political anarchy or worse.
The other thing is the wind turbines, more plans to build more creating 1,000s of jobs yet it is still debatable whether they are economically viable.

I too am sceptical on whether a gold standard would work, gold only has a value based on a limited supply and if some places rapidly increase output how would that impact your currency. Obvioulsly we will always need to import certain things and this is where international trade comes in with concepts like comparative advantage in simple terms and I believe with some limited protectionist policies, employment could be improved. Yet there does not appear to be the political will to do this and this suggests there might be a lot of political unrest until this is resolved.

Meanwhile both retail and housing are in trouble:

shopping malls in danger of admin

http://www.guardian.co.uk/business/2...-stop-building

I agree that war might happen and could change this situation although severely hope that is not the only way.
Another thought is our government might be waiting until November to see what will changes the US election might bring?