The minskys – austerity in the uk senseless and cruel ~ mike norman economics power definition physics electricity


The U.K. Telegraph says the U.K. government is now running a budget surplus. If that is true, then the U.K. is not growing (as the IMF falsely claims), but is suffering from a severe recession. The U.K. government is sucking more money out of the economy than the government is putting into the economy. All moneys sucked out of the economy are destroyed upon receipt. No budget surplus money is “saved," or deposited into a “pool” somewhere. The £3.8bn sucked out of the economy in 2017 is gone.

The U.K. government is intentionally crushing the masses so that rich people can feel richer. Under a brutal regime of austerity, Brexit does not matter, nor does immigration. All that matters is that everyone in the middle and lower classes is downwardly mobile. All that matters is that the NHS is being starved of money so that it can be fully privatized.

LIES!!!!!! The UK government has no “debt burden,” since the UK government can create infinite pounds sterling out of thin air. On the other hand, if the UK Telegraph is referring to private debt (such as mortgages and student loans) then austerity makes this debt worse than ever. The more the UK government uses austerity to suck money out of the economy, the more the government forces average Britons to seek high-interest loans from bankers. This reduces average Britons to debt slaves. This is deliberate.

(Oligarchs want you to focus on the trivial PUBLIC debt, or national debt, so that you submit to catastrophic PRIVATE debt such as student loans. "Quit whining about your student loan debt! You should be grateful that we don’t make you pay on the national debt!")

“Deficits / surpluses should be adjusted so as to keep the economy at capacity ideally. Most years a deficit is needed. But given too much confidence by households and businesses or "irrational exuberance" as Greenspan called it, a surplus is needed.” ~ Ralph Musgrave

A surplus is never needed. If inflation starts to be a problem, it is best handled via monetary policy (i.e. interest rates), not fiscal policy. Nobody likes having their taxes raised or their benefits cut. Deficits may or may not cause inflation, but surpluses always cause recessions.

The UK has a recession in some areas of its economy, and inflation in others. In terms of unemployment and depressed wages, the UK is in a recession because of austerity (which has produced the budget surplus). However in terms of housing prices, the UK has rampant price inflation. These two factors have created an endlessly expanding sea of homeless people that average Britons spit on (until they too join the homeless).

Some part of the Clinton surpluses were not so crazy – savings rates became negative, households used their houses as ATMs, irrational exuberance, etc. But monetary policy doesn’t always do what you seem to think. Often enough, raising interest rates will increase, not decrease inflation. In some cases it would be useless. Usually better to cool off mortgage lending and the like, all the stuff the Fed used to do but not any more. Mainstream crackpot theories probably preclude them from even understanding what should be done.

During wartime, like WWII it is safe to say that aside from keeping interest rates down, monetary policy is useless, and fiscal policy – like tax hikes is not only necessary, but not even sufficient. Price controls and many other gimmicks were needed.

As Matt notes, surplus or deficit is an effect, not a cause; the cause is the fiscal policy settings. If people suddenly start spending like there is no tomorrow, tax receipts go up and might cause a surplus. The important thing is to have a good automatic stabilization plan like a JG that will generally lead to big deficits when you go through the wild spending –> big tax take –> crash/ dampened animal spirits –> unemployment cycle.

CALGACUS WROTE: “During wartime, like WWII it is safe to say that aside from keeping interest rates down, monetary policy is useless, and fiscal policy – like tax hikes is not only necessary, but not even sufficient. Price controls and many other gimmicks were needed.”

Total war is a special case. The government creates massive amounts of money for the war effort, while rationing consumer goods for the war effort. As a result, everyone has a job, but has fewer things they can spend their money on. This creates the threat of price inflation.

To offset this inflation, the government must get money out of the economy via fiscal means. During WW II, for example, the U.S. government introduced the federal withholding tax. Since nobody likes to pay taxes, the U.S. government also encouraged everyone to buy “war bonds.” The government told everyone that the taxes and war bonds were needed to “fund the war.” In reality the taxes and war bonds were used to control inflation by getting money out of the economy. Money to fund the war was created out of thin air. (So much for the “gold standard” gimmick.) If the federal government had created a federal surplus during the war, the USA would have lost the war.