An alternative to popular faith
Cameron Warns Britons of ‘Decades’ of Austerity
By SARAH LYALL, Published: June 7, 2010
LONDON — Prime Minister David Cameron said Monday that Britain’s financial situation was “even worse than we thought” and that the country would have to make savage spending cuts to bring its swelling deficit under control.
Stern and grim-faced in a speech in Milton Keynes, just north of London, Mr. Cameron said, “How we deal with these things will affect our economy, our society — indeed our whole way of life. The decisions we make will affect every single person in our country,” he said. “And the effects of those decisions will stay with us for years, perhaps decades, to come.”
Dave Prentis, the general secretary of Unison, a union that represents many public service workers, nonetheless told the Press Association news agency that Mr. Cameron’s speech was “a chilling attack on the public sector, public sector workers, the poor, the sick and the vulnerable, and a warning that their way of life will change.”
“Nothing illustrates better the total irresponsibility of the last government’s approach than the fact that they kept ratcheting up unaffordable government spending even when the economy was shrinking,” Cameron said.
As a cautionary tale, he mentioned Greece, where profligate spending led to a huge budget deficit and eventually a downgrading on financial markets.
While Britain’s economic position is stronger than that of Greece, he said, “Greece stands as a warning of what happens to countries that lose their credibility, or whose governments pretend that difficult decisions can be avoided.”
The U.K. was smart not to lose control over their money. They remain monetarily sovereign. Unlike the euro-using nations, the U.K. can create their money at will. But suddenly, they have forgotten why they didn’t switch to the euro.
Now, the debt hawks have the U.K. preparing for “decades of austerity” (aka, decades of poverty), as they falsely compare themselves to Greece. Wake up, U.K. You aren’t like Greece and you don’t need to choose poverty.
Mr. Cameron said, “. . . if you start with a large structural deficit, ramping up spending even further is likely to undermine confidence and investment, not encourage it.” This is as false a statement as it’s possible to make. I challenge Mr. Cameron to explain how government spending, which is the way government adds money to the economy, can reduce investment or economic growth. It simply is total nonsense.
It’s difficult to imagine why an otherwise intelligent people intentionally will subject themselves to decades of misery based on a foolish belief that not only is unproven, but factually has been proven wrong on many levels. While some of the same ignorance exists in the U.S., we only can pray it does not reach the extreme levels of utter stupidity it apparently has reached in the U.K.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity
5 thoughts on “–How the debt hawks will destroy the U.K.”
“explain how government spending, which is the way government adds money to the economy, can reduce investment or economic growth.”
Response – Psychology! When individuals and businesses see the only economic growth (expansion of debt) is generated by government spending as opposed to actual increases in production and spending, it generates a psychological reluctance to spend or expand on one’s own. That is the predicament we are now faced with. The only expansion of any economic basis is with government spending and taking on of new sovereign debt to replace the reductions of corporate and individual debt now occuring. The great majority, nearly all, of debt expansion “growth as you like to call it”, is with governments lending to governments who then lend back to the same governnments.
All of your spouting off about governments ability to print money ad infinitum, without consequences, will never remove the psychological mind set of individuals, business leaders, and government leaders.
What is investing? It simply is a person putting money into something he/she believes will return him more money.
You can invest only when you have money to invest. Think of owning a dollar. What will you do with it? You can spend it or you can invest it (Saving is a form of investing). Those are your only choices.
If you spend it, the money will go to someone else, who will spend it or invest it. The point is clear: The more money that exists, the more will be invested. There is no mechanism for added money to cause reduced investment.
Your concern about psychology has more to do with the type of investment than with the amount of investment, which in any case cannot exceed the amount of money available to invest.
Your description of “debt expansion” would yield no expansion, just the same money sloshing back and forth.
The reality is that government deficit spending creates money, and this money goes into the pockets of people, who spend it or invest it.
Rodger Malcolm Mitchell
You are arguing against your own position. Money is debt. Government printing of money is an expansion of debt. Individuals and businesses and governments are uber burdened with debt. When there are governments, individuals, businesses and banks collapsing or near collapse due to over extentions of debt, there is a debt problem. If money is debt, there is a money problem. The problem being an over expansion of debt, or money. One can’t separate the debt burden of governments from individuals or businesses. Sovereign or not. It is all a part of the big pie. Whether the pie is in the sky or not is irrevalent. In your particular dreams and theories the pie is absolutely in the sky. Just keep printing debt and all will be fine. The debt of AIG was tied to Lehman, Bank of America, JPM and many, many others. The government printing of debt or issuing of debt to other sovereign nations, read China, was replacing debt that had collapsed and could not be repaid. The length and depth of the debt problem is way beyond what the US gov’t and other sovereign nations’ governments can cover. Why??? Because of previous expansions of debt. The total notional debt outstanding in personal, business, government, CDS’s, MBS’s, etc. etc. is estimated in the 600 Trillion ++ dollar range. The possibility of solving the total debt problem relationally is beyond what any rational individual, with an understanding of the current economic situation, could imagine. With the government leadership being tied to the debts with monetary policy precipitating the debt from the beginning of the onset of the separation of the gold standard, there has been no other outcome than what is transpiring today.
The money expansion, debt expansion, has been a lie to give the appearance of well being while all the while lining the pockets of the well positioned elite and money men and women of the world. The widening of the gap between the haves and have nots, has been the result of the expansion of debt. The ultimate goal of the money expansionists is to completely do away with the middle class and have only two classes. The ruling class with the money and the underprivileged with none.
You continually point to no statistics proving an inflationary result from debt (money) expansion. Anyone with a dollar in their pocket who has knowledge of the buying power of that dollar would call you a fool to even express that opinion. I bought a brand new 1971 Ford Mustang Mach I with a Super Cobra Jet 428 engine for $4172 in October of 1970 when I got out of the Navy. A comparable vehicle today will cost in excess of $50,000. I bought my first house in June of 1971 for $10,800. That same house, still standing, sold recently for $227,700. I remember buying a carton of cigarettes shortly after being discharged for $1.85. Today that same brand, I quit years ago, will cost you $48. I bought a loaf of bread for $0.19. Today a loaf of bread will cost you $2.30 and up. The reason you say no one will provide you evidence or documentation of money (debt) expansion causing inflation, is because the people you are asking to provide evidence believe you are living in la,la land.
“One can’t separate the debt burden of governments from individuals or businesses.”
Wrong. This is the fundamental error of debt hawks. They don’t understand the difference between a monetarily sovereign nation and themselves.
They also don’t understand that a growing economy requires a growing supply of money.
Rodger Malcolm Mitchell
Very lame response to a valid argument against your suppositions.
You should stop relying on your BS charts that prove nothing and look at the actual problems confronting the world economy.
“Wrong. This is the fundamental error of debt hawks. They don’t understand the difference between a monetarily sovereign nation and themselves.”
Are you actually trying to make an argument that the sovereign federal govt’s bailing out of GM, AIG, Fannie Mae, Freddie Mac, B of A, etc. etc. is not tied to the same dollar of debt? That the “cash for clunkers” and “first time buyers cash back program” are somehow separated in your books of learning. If this is what you are saying, you need to get ahold of some better books buck-o, cause the one’s you been readin ain’t doin you a dimes worth of good.