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The ultimate doom and gloom scenario.

tomstickland
Posts: 19,538 Forumite

Is it possible for the whole economy to topple over?
What if loads of people lose thier jobs, tax income falls right down, welfare state costs increase, along with all the money borrowed over the last few years.
Could it become totally unworkable, and we end up loss of public services, people scavening for food, and anarchy etc?
How could the govt try to stave this off? Would it be more borrowing or can they magic up non existant money by printing it?
What if loads of people lose thier jobs, tax income falls right down, welfare state costs increase, along with all the money borrowed over the last few years.
Could it become totally unworkable, and we end up loss of public services, people scavening for food, and anarchy etc?
How could the govt try to stave this off? Would it be more borrowing or can they magic up non existant money by printing it?
Happy chappy
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Comments
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No. We are not in zimbabwe.0
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tomstickland wrote: »Is it possible for the whole economy to topple over?
It would just find a new level .0 -
Why not?
What will happen as tax income falls and spending requirements rise?
What if this happens at the same time as multilple strikes causing loss of public services, people don't get paid etc etc. Didn't some things like this happen in Russia in the last decade?Happy chappy0 -
If you look around it is pretty obvious we are a developed country ..Most of what we do is administration .We would just reduce the level of services we provide to ourselves .
Less spending on Schools ,Hospitals ,Police Armed forces before you know it were not bankrupt ..we just have high crime and poor education0 -
What relevance does being developed have?
There's a lot of unwritten assumption in your thoughts. I think you assume that I have an agenda here. I don't, other than pondering how an economic system works and what the limits of it are before it goes unstable, or has any other mathematical states.Happy chappy0 -
In simple terms a developed society has the same problems with value as a person does .
If I have no computer in my home ..Then purchase one .The added opportunity this provides is pretty big .Should I wish to upgrade my machine or buy another ....The added value is not so great .
The same with a country .If I rebuild a hospital rather than build a new one ,there is a lot less society perceives to gain .
A good book on the vagaries of economic activity is this
http://www.amazon.co.uk/Origin-Wealth-Evolution-Complexity-Economics/dp/0712676619
The origin of wealth .0 -
If you look around it is pretty obvious we are a developed country ..Most of what we do is administration .We would just reduce the level of services we provide to ourselves .
Less spending on Schools ,Hospitals ,Police Armed forces before you know it were not bankrupt ..we just have high crime and poor education
... yeah, but what would actually change?--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
To go on with my (probably) poor analogy .we would go back to being a home that shared a computer ,rather than having the luxury to have a personal machine .
We are talking about a reduction in (To a certain extent )Luxuries as opposed to actual hardship .0 -
The government will just borrow a little more. UK public debt is not actually too bad (despite all the hysteria in some newspapers and on this board). UK public debt hovers a little over 40% of GDP, which compares very favourably with many other major economies (Japan sits at almost 200% !!). For more information see:
http://www.statistics.gov.uk/cci/nugget.asp?id=206
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt0 -
In simple terms a developed society has the same problems with value as a person does .
If I have no computer in my home ..Then purchase one .The added opportunity this provides is pretty big .Should I wish to upgrade my machine or buy another ....The added value is not so great .
The same with a country .If I rebuild a hospital rather than build a new one ,there is a lot less society perceives to gain .
A good book on the vagaries of economic activity is this
http://www.amazon.co.uk/Origin-Wealth-Evolution-Complexity-Economics/dp/0712676619
The origin of wealth .
For example, if I created an island with a set number of inhabitants and gave them a certain amount of money to exchange for goods, what would happen?
Initially they'd use the money as tokens of a nominal value. They'd exchange these tokens to facilitate their daily life.
Now imagine that one of these inhabitants grows a new crop that is more valuable than other crops, and gradually accrues more tokens. In this closed system this then means that the other inhabitants have less tokens per head. So in this simple model the wealthy cause others to be poorer.
If we now create a government, and they tax economic activity. Some of this is used to pay their own employees and some of it is used to support those unable to work.
From first principles it's not 100% yet what the various things that happen are. Money that's given to those who need support, as long as it's not accumulated, it works it way back into the general system to pay for goods.
Anyway, I'd love to create some basic models like this to just question what the basic implications of various things are.Happy chappy0
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