Brown warns that economic storm is not over

dopester

Sir_Humphrey wrote: »

Inflation is a lot more complex than your sig would suggest.

I can think of plenty of "non-productuve" private sector jobs. EAs spring to mind straight away.

Increasing inflation would be a good thing if you are suffering from deflation. This is not the 1970s. Stop fighting the last war.

Inflation certainly isn't the simple cure you believe it to be.

We've had the inflation. Labour ran us on the path of ever greater debt-infestation. That enabled the Government to have bumper tax-revenue generating years.

Clapton the other day... worried about public sector cut-backs because that'll also feed into the economy and his private businesses too. Yes it will. What is the alternative? Just keep on spending away, on borrowed money, or with QE?

Sometimes deflation is required. To allow a rebalancing and to shake out those who are overstretched or are in business which can only prosper in boom conditions. It isn't my fault some businesses fail and unemployment rises because we can't always have super boom. It's just a fact. People will lose jobs with deflation. We've had the boom. If you're all spent up after that, then tough luck.

The EAs will have to find other new jobs. Not just inflate away to keep EAs and others like them happy and in money.

I'm ready to buy/lease business premises, retrofit something another business hasn't been able to survive with, and employ, but not at these price levels, in these unsustainable conditions. Allow new entrants in. Shake out those those failing. Allow house prices to come back to within reach of younger sound money, instead of maximum stretch/debt to get something at the low end. This is all part of deflation.

prowla

Spartacus_Mills wrote: »

I see this as Brown being honest ...

Those two words don't belong in the same sentence.

bernard_shaw

Sir_Humphrey wrote: »

Inflation is a lot more complex than your sig would suggest.

I can think of plenty of "non-productuve" private sector jobs. EAs spring to mind straight away.

Increasing inflation would be a good thing if you are suffering from deflation. This is not the 1970s. Stop fighting the last war.

Wage/price spiral inflation is not the same thing as monetary inflation.

Keynesian-style monetary inflation is, without doubt, a sound (emergency) policy if we're attempting to avoid the worst dislocations and discontinuities which might be caused by the worst effects of debt-deflation. But only in the short-run. In the medium- to long-run, that newly created money must be backed by increased value, lest the currency become debased.

The best way to destroy the capitalist system is to debase the currency. As somebody once said.

The question which should be exercising us is this: What will be the source of this future value, this future wealth which we are dissipating so freely at the moment?

Edit.

I nod my agreement to dopester.
Under boom conditions it is possible to get away with many business models which prove to be unsustainable throughout the entirety of the economic cycle. (Bicycle couriers, for instance, tend to appear at peak bubble only - and are then a forgotten phenomenon until the peak of the next economic cycle - every generation re-invents the bicycle courier for itself.)

Recently over-heard joke:
Q: What's the difference between a park bench and a bike courier?
A: A park bench can support a family of four.

The truly enlightening and amazing aspect of this joke is that, until recently, a bike courier could support a family of four.

Conrad

dopester wrote: »

We've had the boom. If you're all spent up after that, then tough luck.

But many an innocent child would lose thier home and stability if we let the market brush away the bad apples. That's too high a price.

I'm with those 60 economists and most national leaders that the way forward is to keep the medicine flowing until the patient gradually recovers, and it time finds the stregnth to pay back the debt.

Sir_Humphrey

bernard_shaw wrote: »

Wage/price spiral inflation is not the same thing as monetary inflation.

Monetary inflation is, without doubt, a good thing if you're fighting monetary deflation. But only in the short-run. In the medium- to long-run, that newly created money must be backed by increased value, lest the currency become debased.

The best way to destroy the capitalist system is to debase the currency. As somebody once said.

The question which should be exercising us is this: What will be the source of this future value, this future wealth which we are dissipating so freely at the moment?

It's better than the alternative (see MY sig)

Conrad

bernard_shaw wrote: »

The question which should be exercising us is this: What will be the source of this future value, this future wealth which we are dissipating so freely at the moment?

The same sources that kept us up in the national rich lists these last few centuries.

I did a thread on great British exports that included everything form James Bond to Elton John. Don't write us off just yet. The naysayers of the 60's and 70's said we were headed for oblivion as the Far eastern tigers took away our business - didn't happen, never does.

kennyboy66_2

dopester wrote: »

Inflation certainly isn't the simple cure you believe it to be.

We've had the inflation. Labour ran us on the path of ever greater debt-infestation. That enabled the Government to have bumper tax-revenue generating years.

Clapton the other day... worried about public sector cut-backs because that'll also feed into the economy and his private businesses too. Yes it will. What is the alternative? Just keep on spending away, on borrowed money, or with QE?

Sometimes deflation is required. To allow a rebalancing and to shake out those who are overstretched or are in business which can only prosper in boom conditions. It isn't my fault some businesses fail and unemployment rises because we can't always have super boom. It's just a fact. People will lose jobs with deflation. We've had the boom. If you're all spent up after that, then tough luck.

The EAs will have to find other new jobs. Not just inflate away to keep EAs and others like them happy and in money.

I'm ready to buy/lease business premises, retrofit something another business hasn't been able to survive with, and employ, but not at these price levels, in these unsustainable conditions. Allow new entrants in. Shake out those those failing. Allow house prices to come back to within reach of younger sound money, instead of maximum stretch/debt to get something at the low end. This is all part of deflation.

Are you in danger of confusing a recession (necessary and does what you say) with a deflationary depression, one of the consequnces last time was to wipe out peoples savings & liquidate banks which went new entrants were not allowed in.

JP45

Lance wrote: »

To me, the difference between Brown and other politicians both past and present is that he actually genuinely believes he has done a good job and will 'save' our nation. The mans ego is astounding!

He's hardly unique in that respect. Plenty of politicians display such delusional qualities, although I'd agree with you in the sense that Brown represents a fairly extreme case.

But such delusional traits, typical of narcissistic personalities, are by no means limited to politicians. Here, for example, is the wonderfully deluded !!!!!! Fuld, reflecting on the collapse of Lehman Brothers:

“based on the information that we had at the time, I believed that these decisions were both prudent and appropriate”.

Or how about Alan Schwartz, former chief executive of Bear Stearns:

“I just simply have not been able to come up with anything, even with the benefit of hindsight, that would have made a difference.”

The problem is that all too often, whether in politics or business, it is the disordered personalities that make it to the top, often with disastrous consequences.
.

IveSeenTheLight

purch wrote: »

If splashing around in very deep and fast running water, just keeping your head above the waves counts as a recovery :eek:

Surely it's better than your head being below the waves and drowning.

ninky_2

Sir_Humphrey wrote: »

Let's put it this way; six months ago our top brass were banging on about "more for less". Now they are talking about "less for less".

I suspect that there will a growth in employment after the election...if you don't mind working for Jobcentre Plus.

the reality is we're probably going to get "less for more".