Corbynomics: A Dystopia

setmefree2

Generali wrote: »

It's pretty poor to write him off as 'just a toff'.

He deals with being a toff really well. He just says "you don't have to be be disabled to have empathy with disabled people, do you?"

setmefree2

Generali wrote: »

Imagine saying that you shouldn't vote for someone because of their skin colour or country of descent. Dismissing Zac because of his parents' wealth is exactly the same.

Or saying that people won't vote for Khan because he's a muslim.

CLAPTON

setmefree2 wrote: »

Are you serious?

Printing money would (obviously cause inflation). Traditional QE is supposed to be rewound and can be rewound at any time. Under the 2009-12 QE programme, the bonds have not been cancelled and the BoE retains the option of selling them into the market.

Printing money for people's QE can never be rewound. The money creation is permanent. And once the inflation genie is out of the bottle a whole new nightmare will unfold.


http://www.ft.com/cms/s/0/c1060fb0-41b4-11e5-b98b-87c7270955cf.html#axzz3r5iPscgG

the question is serious and the answer isn't 'of course not'

I've no idea why you say that the money supply can't contract in the future.

setmefree2

CLAPTON wrote: »

I've no idea why you say that the money supply can't contract in the future.

How do you propose getting all that excess money chasing too few goods back once you've generated too much inflation?

The thing with traditional QE is it can be unwound at any time. People's QE - not possible.

MFW_ASAP

Graham_Devon wrote: »

Not necessarily.

Todays price may be cheap. Tommorows price of importing may be expensive.

If were mining our own, the trade price doesn't effect our internal use. (Though there may be other ways of using the coal if exporting will create a higher revenue).

Secondly, mining coal creates jobs and therefore tax revenue and therefore reduces expenditure on welfare.

This argument on holds water if there is only one career option for people - to mine coal or to sit on benefits. I often wonder if you're using some type of portal device to speak to us from the 19th century.

setmefree2

CLAPTON wrote: »

the question is serious and the answer isn't 'of course not'

Furthermore

There’s a number of problems with this idea central to Corbynomics, this Peoples’ Quantitative Easing. It’s illegal for a start, being simply monetisation of fiscal policy. It won’t work as planned simply because any independent central bank would alter other monetary policy so as to accommodate the change. It’s not possible to remove central bank independence because that is again illegal under EU law.

http://www.adamsmith.org/blog/economics/the-real-problem-with-corbynomics-and-peoples-qe/

I like this bit

by eliminating the Government’s budget constraint, frees politicians from the restraints of reality. But the escapism is only ever temporary. If enough money was printed, inflation would make a comeback.

Sums up Labour right there.

setmefree2

Murphy’s answer to this idea that simple monetisation of fiscal policy would increase inflation is to insist that we are all missing the importance of taxation. Yes, true, increasing the money supply would, ceteris paribus, increase inflation. But government could then reduce aggregate demand by increasing taxation. So, there, you see, it all works!
At which point we wonder why the use of the magic money tree in the first place. The end result will be that, to erase the effect upon inflation of the increase in money, taxes will rise. That is, there’s no difference here between PQE and the more traditional tax the heck out of the population and get to spend it all on lovely things.
We also have another worry. Which is that we all know that politicians like spending our money like those drunken sailors on shore leave. But the insistence that there’s at least some, occasional, relationship between how much they gouge out of us and how much they spend does produce some limit on their profligacy. Remove that limit and let them print whatever they like and, then ask them to raise taxes to stop the resultant inflation. Well, who does believe that inflation will be a sufficient reason for them to raise taxes sufficiently? It’s not exactly what has happened anywhere else government has resorted to the magic money tree, is it?

http://www.adamsmith.org/blog/economics/the-real-problem-with-corbynomics-and-peoples-qe/

setmefree2

As Robert Peston put it in his BBC blog, “the lore of central banks – which, rightly or wrongly is almost universally accepted by investors – says that central banks should only look at whether there is too much or too little money in the economy… and not at narrower questions, such as whether there are enough roads or houses being built in Britain”. If markets believe the BoE is no longer exercising judicious restraint in its creation of new money, and is instead the de-facto vehicle for funding politically popular projects, sterling would weaken and inflation rise.

Even if we are not talking about Weimar Germany, there is little doubt that investors would conclude that the risk of investing in sterling and the UK had grown.

The cost of finance would rise along with inflation, with the perverse result that Corbyn’s aim of boosting infrastructure investment would be harder to achieve. As Peston concludes, the people’s QE only makes sense if you disregard significant macro-risks and believe that a state investment bank would make viable investments overlooked by the private sector.

As ex-BoE economist Tony Yates puts it, less temperately: “Any attempt to hijack the printing presses for general deficit financing… will wreck monetary policy”. That’s because “the next time the government fancies winning an election by promising grand public works schemes, it will be expected that the BoE will print money to finance that” – leading to an inflationary spiral. “Corbyn’s QE is the first step along the road to undermining the social usefulness of money.”

setmefree2

CLAPTON wrote: »

the question is serious and the answer isn't 'of course not'

So the answer really is "of course not"

Because
• Corbyn’s idea is illegal under EU law, because it risks runaway inflation, debauching the currency, and crashing the economy.
• If the government wants to spend more on infrastructure, it can do so by issuing debt in the normal way. QE is not necessary.
• “QE for the people” is just populist sloganising, built on false premises about the nature, purpose and impact of “ordinary” QE.

Moby

setmefree2 wrote: »

And he keeps flip flopping over Heathrow expansion. He's not to be trusted on anythig much - he just says what he thinks voters want to hear. He's totally lacking in integrity - whereas Zach has bucket loads.

We'll see but London is naturally Labour and Khan is a good candidate with a 'good story' about his background. Whereas Zac is a privileged toff, born with the Goldsmith millions to grease his way into politics. That's what we tell people on the doorstep;)