How are we affording all this welfare?

[413x]

A country's debt is all about it's taxes it receives as revenue and its resources available to repay it like gold reserves and oil. The country sells bonds to banks etc with a guaranteed interest rate payable over a set period of time to fund the economy but it has a ceiling, it can borrow it's way out of trouble to a certain extent but then like a pyramid scheme it will eventually all crash down. This is when they get desperate, raise interest rates to make us attractive again to investors and finally crash the economy. 1967 and Black Wednesday are examples.


This covid thing is different though as it affects the whole world so I think a lot of leeway will be allowed. When it's all over though one things for sure, tax and interest rate rises will hit us hard.

Interest rate rises will devestate a whole swathe of the population. Imagine all the people who've bought houses with hefty mortgages who can't survive much of a rate hike. Generally quite a productive part of society

But if it has to happen it has to happen.

End of the day, costs up, income down.. Can't ride that forever and its way we are heading currently.

 

[R.P.L]

Well that's the problem with making money artificially cheap - ultimately something has to give. Either you watch the currency become worthless or you unwind the loose policy, causing all the bubbles you've created to burst.

 

[Trusty]

The magic money tree, obviously.

doh...of course. I forgot the last 40 years had been really good for national debt

 

[StriderX]

What has the debt done exactly? I mean in measurable consequences as most economists don't think much of it after 2008, I'm liable to side with them.

 

[GIBURROWS]

In the UK we could start by scrapping the HS2. Corporation tax is at 19% so why did Google pay 2%, Facebook 1.75% & Amazon 0.6%
The NHS has 2 billion in assets ready to sell which could make 26,000 homes.
Scrap the house of Lords.
Drop MP's expenses altogether and put them on the average wage of their constituency.

 

[StriderX]

I'm not sure how making being an MP worse is going to make them any more likely to care... all that will happen is that the richest people are the ones willing to put themselves up as candidates and it doesn't stop the rampant 'jobs for friends' that exists even now with supposedly 'high' wages.

Really no need to put up more barriers for people who already have to deal with the cost of living in two constituencies of unequal distance, one of which is London. Then there's the cost of office and assistants as MP's can't really be expected to do everything themselves, though this is obviously an area of abuse.

Just making it so that they earn the average salary of their constituency would mean the MP for Kensington and Chelsea would earn £160k while the MP for Blaenau Gwent would earn only £20k... what is this meant to do exactly?

If I were a resident of Blaenau Gwent the last thing i'd want to do is become an MP on that salary with the same responsibilities as someone earning 8 times more. Sure one could criticise it as not being about the money, but how exactly is someone meant to survive on 20K a year when they need to be in London for a lot of it? I'm all for closing all the loopholes and ending the incessant abuse of position that politicians in either house (especially the Lords...) seem to seek out all too often for their personal gain, but I really don't see the point in making it more of a playground than it already is for public school boys with large inheritances/connections.

 

[Robert]

I don't understand your point really, whats wrong with being tax efficient? are you not? Do you want to comment on the fact that the top 1% contribute 33% to the tax burden? to be in the top 1% in this country, you have to earning over 150k pa (i think)

Paying their fair share? or scroungers that are sucking the blood out of the people?

question, the top 1% contribute to 33% of the tax burden - does that make it the appropriate amount based on their income? I guess a few headline examples - Google, Apple, Amazon....

in addition, in many of these cases it’s a race to the bottom for quality of life, employee rights and so forth generated by this so called productivity.

 

[R.P.L]

What has the debt done exactly? I mean in measurable consequences as most economists don't think much of it after 2008, I'm liable to side with them.

The problem is that unlike what some people think, debt (including government bonds) does need to be paid back. If we're borrowing beyond our means, either we default on the bonds (very unlikely) or we print money. Printing money doesn't seem to do anything but create asset bubbles, so the upshot will be investors in markets where the money tends to end up (property, stocks) getting rich and poor people getting screwed and priced out of things like property, AKA greater wealth inequality. Obviously we're already seeing this to an extent, and the longer people act as if we can print our way out of trouble, the deeper hole we'll find ourselves in.

 

[StriderX]

Who said we weren't paying it back, i'm pretty sure we are? That said, Japan has borrowed around 250% it's GDP, where are the debt collectors at if it's such a pressing matter?

Either way, if printing money means the poor getting screwed while hustlers can benefit from it? I guess it's a done deal then.

 

[HACO]

The problem is that unlike what some people think, debt (including government bonds) does need to be paid back. If we're borrowing beyond our means, either we default on the bonds (very unlikely) or we print money. Printing money doesn't seem to do anything but create asset bubbles, so the upshot will be investors in markets where the money tends to end up (property, stocks) getting rich and poor people getting screwed and priced out of things like property, AKA greater wealth inequality. Obviously we're already seeing this to an extent, and the longer people act as if we can print our way out of trouble, the deeper hole we'll find ourselves in.

Borrowing at zero interest seems like a no-brainer. They do need to be paid back, but these are super long term bonds, and eventually we'll pay a lot less for them because of inflation. At times we have borrowed a lot more than we do now, and we've managed to pay it back or grow at a faster rate to keep the Debt/GDP ratio low.

What's a little more concerning for me is that we're now borrowing mostly from Bank of England. So the treasury is basically printing money to lend to the government, rather than borrowing from the market.

 

[ianh]

That's not true you have to be very physically fit so not everyone can do it and the targets are set insanely high and the wages average because there is a surplus of workers to choose from because we've had unlimited immigration. If ever there is a time where a company like Amazon are struggling to fill warehouse jobs then wages will go up rather sharpish and targets won't be so unrealistic. The market forces have been that companies treat employees badly because they will have no difficulty replacing them.

More and more it's replacing them with Robots. In Jan 2020 there were 200,000 robots already in use in Amazon warehouses and that number is rising rapidly - https://roboticsandautomationnews.c...00000-robots-working-in-its-warehouses/28840/

Which means less unskilled jobs available for the same amount of human workers, so more competition for unskilled jobs, which means worse wages/benefits etc in an ever decreasing circle. On the other hand this slow swap to automation requires a large increase in Skilled workers who need to design and fix the robots in the short term, until the robots themselves start to be able to do those jobs too and then, yet again, the decreasing circle continues with these skilled jobs.

Long story short, and this won't happen quickly but take decades, robots will replace people as "workers", so we'll need something for humans to do if they can't get a job and earn money that way so, as much as a UBI makes zero sense financially right now, in 50-100-200 years time it'll be a necessity, if we haven't been wiped out by WW3, bugs, aliens etc by then

 

[Pipe & Slippers]

Who said we weren't paying it back, i'm pretty sure we are? That said, Japan has borrowed around 250% it's GDP, where are the debt collectors at if it's such a pressing matter?

Japan is a special case. An extremely high proportion of the debt is owed to Japanese individuals

 

[Lartyconshayo]

The problem is that unlike what some people think, debt (including government bonds) does need to be paid back. If we're borrowing beyond our means, either we default on the bonds (very unlikely) or we print money. Printing money doesn't seem to do anything but create asset bubbles, so the upshot will be investors in markets where the money tends to end up (property, stocks) getting rich and poor people getting screwed and priced out of things like property, AKA greater wealth inequality. Obviously we're already seeing this to an extent, and the longer people act as if we can print our way out of trouble, the deeper hole we'll find ourselves in.

But we can print our way out of trouble - you've already identified the problem in this post. Where the money is going. It needs to be put into a green New deal / jobs guarantee there will be almost no inflation risk until everyone has a job. That's what the government should be aiming for. Unfortunately as you've stated the rich only care about short term gain at the expense of society. The reality of climate change and automation are going to hit and there will be lots of civil unrest. But you know let's all worship Jeff Bezo's making 30 billion during the pandemic or whatever.

https://www.taxresearch.org.uk/Blog...ve-any-chance-of-recovering-from-this-crisis/

https://www.taxresearch.org.uk/Blog/2020/07/29/51902/

 

[Eurofighter]

Who do they actually give the money to that gets printed, is it all spent on paying off government debt or at least given to the government?

 

[HACO]

Who do they actually give the money to that gets printed, is it all spent on paying off government debt or at least given to the government?

Yes. The government borrows from the treasury. The treasury also sometimes buys bonds from the market.

 

[Eurofighter]

Yes. The government borrows from the treasury. The treasury also sometimes buys bonds from the market.

They should give it to me I feel

 

[Minusorange]

Who do they actually give the money to that gets printed, is it all spent on paying off government debt or at least given to the government?

This guy explains part of the system pretty well, I presume it's the same for all countries with money printers and central banks/reserves

 

[Trusty]

question, the top 1% contribute to 33% of the tax burden - does that make it the appropriate amount based on their income? I guess a few headline examples - Google, Apple, Amazon....

in addition, in many of these cases it’s a race to the bottom for quality of life, employee rights and so forth generated by this so called productivity.

We we're talking about corporation tax, we were talking about income tax.

You won't me disagreeing that corps should pay the proper amount of tax, instead of funnelling it through different locations to pay very minimal

 

[Trusty]

What has the debt done exactly? I mean in measurable consequences as most economists don't think much of it after 2008, I'm liable to side with them.

Russell Napier did a good interview recently, worth reading it

https://themarket.ch/interview/russell-napier-central-banks-have-become-irrelevant-ld.2323

 

[Outcast440]

The same people who do them now? Everybody seems to agree we cant afford to pay people £20 per hour to do these crap jobs so nothing would change in that respect.

I meant who will do them full time - because if you don't need to then you won't do it. Probably Part time hours plus UBI will be enough for most people. Then, who will take up the slack?