Stimulating Ourselves (With Money)

[Guy]

I had an idea.

I'm going to try to present this in a very simple manner, meaning it may appear very vague as well as short so please keep that in mind.

The economies of the world have hit rock, bottom it seems. The UK government, as well as others, have come up with yet another scheme to try and bring back a growth in the market. £65 million (now £165 million in total) will land in the Bank of England's hands for them to lend to the public in order to re-establish the trust and security that was lost at the beginning of this economic downfall. However, giving money to the banks seems somewhat odd as we, the public, are being hounded by the government to spend more whilst VAT prices have risen, longer hours and less pay will become more common, unemployment increases and the prices of goods rise through all sectors of the market.

What if, however, the money that would be lent to the banks ended up in a stack on the table (metaphorical champaign-socialism here, people): we divide the money equally amongst the populace and allow them to spend it freely?

[Maidel]

No, because any meaningful amount of money given directly to the people would simply create rampant uncontrolled inflation. You quoted 65million, I think it's supposed to be 65billion, but I might be wrong. If it is in fact 65 million then that simply means 1 pound each, which wouldn't go far... If its 65 billion then that's £1000 each, which will either be invested, shoved in a savings account or remain unclaimed.
I think the basis of it is that giving the money to the banks they will then have the money to lend to small businesses. In turn they will then use this to earn more money. So they are giving 65 billion un the hope businesses can use it to make 100billion and get the country going again. If it was given to individuals then it would never be worth more than 65 billion.

[Justice and Mercy]

No, because any meaningful amount of money given directly to the people would simply create rampant uncontrolled inflation.

What's happening is causing inflation. It's a strange misconception that inflation is a vague process caused by an increased cause supply. But it's not vague, it happens by a very specific process.

This is just inflation in another direction. The idea here is to get money to small businesses. They're, in essence, taking the purchasing power away from already established businesses and handing it to newcomers.

What that lending represents is whatever capital is bought by the new debtor. With more money chasing the same capital, the price of that capital will rise. Consumer prices will rise, and whatever industries are invested in will probably become oversaturated.

It's amazing that in the 21st century economists are still looking for free money schemes.

You can't create purchasing power out of thin air, you can only transfer it.

[Rex Germanius]

Didn't the Americans do this?

[Prosaic Visitant]

Guy, this thread topic was done already, only a few months ago.

Anyway, the Aus' goverment tried this in 2009, I recall it gave the retail sector a little boost; but every second and third person seemed to save it or pay debts with the handout, plus the fact it was a one-of $950, the overall effect on the economy was small, unemployment rates still fluctuates between 5-8% and it also didn't help the inflation concerns that form the ever-present demon hovering over us.

Australia's economy is doing better than than any other Western nation, but that's because our banks weren't in risk of failing, we had and still have the luxury of being Asia's mining quarry and other minor things, like being in surplus before the GFC.

QUOTE=Rex Germanius;10502644]Didn't the Americans do this?[/QUOTE]
Not to my knowledge.

[Denny Crane!]

Guy, this thread topic was done already, only a few months ago.

Anyway, the Aus' goverment tried this in 2009, I recall it gave the retail sector a little boost; but every second and third person seemed to save it or pay debts with the handout, plus the fact it was a one-of $950, the overall effect on the economy was small, unemployment rates still fluctuates between 5-8% and it also didn't help the inflation concerns that form the ever-present demon hovering over us.

Australia's economy is doing better than than any other Western nation, but that's because our banks weren't in risk of failing, we had and still have the luxury of being Asia's mining quarry and other minor things, like being in surplus before the GFC.

QUOTE=Rex Germanius;10502644]Didn't the Americans do this?

Not to my knowledge.[/QUOTE]

I'll say exactly what I said in my thread, if we are going to hand billions to the banks as we clearly are then it should be done through the ordinary taxpayer so it recapitalises banks through giving the public something to reduce their debt with.

Win-Win but the government(s) don't care to help ordinary tax payers instead it goes straight to the banks balance sheet where they hoard it again.

[Prosaic Visitant]

Not to my knowledge.

I'll say exactly what I said in my thread, if we are going to hand billions to the banks as we clearly are then it should be done through the ordinary taxpayer so it recapitalises banks through giving the public something to reduce their debt with.

Win-Win but the government(s) don't care to help ordinary tax payers instead it goes straight to the banks balance sheet where they hoard it again.[/QUOTE]

I'm not opposed to the idea of handing out money to civilians, but it isn't the economic silver bullet I think some people are looking for. It does seem more logical than rewarding banks, I can see.

You'd think governments engage in this sort of 'bailout' rather than focusing on the banks; after all, if handing out cash doesn't win votes, I don't know what will.

[Phier]

Didn't the Americans do this?

Those were tax refunds, so it was money people already made that the government confiscated.

[Border Patrol]

Rock bottom? Slight growth isn't anywhere near as bad as negative growth. Sorry to burst your bubble, but the sky isn't falling.

[Exarch]

stimulating ourselves...with money?
:wub: with money?


oh, wait... i get it now.

ahem, well, in that case, you're pretty much doing what the labor gov. did back in 09. they gave us all a grand each to spend and it was ok i suppose.
but we're still in deficit though and unemployments still bad but not as bad as say europe or america, and that's coming from the only first world country that's escaped the recession

[hellheaven1987]

Give worthless paper note to us is waste of my time; I demand free gold distribution!!!

Fail to give gold I can accept weapons too.

[Exarch]

Give worthless paper note to us is waste of my time; I demand free gold distribution!!!

Fail to give gold I can accept weapons too.

guns, gold and weapons. universal currencies.

anyhoo, i dont see the point of the USG giving out money if they're just going to devalue it anyway.

[hellheaven1987]

anyhoo, i dont see the point of the USG giving out money if they're just going to devalue it anyway.

I always wonder why not just put some gold on the paper note to make it... worth the price.

[Exarch]

I always wonder why not just put some gold on the paper note to make it... worth the price.

at this rate and at the rate gold's price is going, you're going to need a wheelbarrow for a bar of gold.

plus currencies that used to make their coins out of precious metals tended to encourage ppl to 'slice' the ends of the coins (just a little bit), and gather up the shavings and melt down the gold. something like a primitive theft program that only takes a quarter of a cent from your bank and deposits it elsewhere.

[Denny Crane!]

Thread and topic already covered by yours truly here:

http://www.twcenter.net/forums/showthread.php?t=481752

[Denny Crane!]

Oh I know absolutely it is not even a good panacea but I look at things from my own personal point of view and £2000 given to me by the government would leave me totally debt free and in a rather good position for the future (considering I am employed still) and apart from my mortgage I would be considerably happier and the banks would get the full lump sum with retail picking up a bit extra from my disposable income increase.

I wonder how many people are in a similar position? It is no silver bullet but what a few months it would be where the nation felt a lot happier and finances of individuals were a bit healthier, it would really turn things around and quite frankly the god damned government was doing it anyway.

It actually depresses me, I feel like my government is doing a big handout and I stood in the wrong line.

[Menelik_I]

I had an idea.

I'm going to try to present this in a very simple manner, meaning it may appear very vague as well as short so please keep that in mind.

The economies of the world have hit rock, bottom it seems. The UK government, as well as others, have come up with yet another scheme to try and bring back a growth in the market. £65 million (now £165 million in total) will land in the Bank of England's hands for them to lend to the public in order to re-establish the trust and security that was lost at the beginning of this economic downfall. However, giving money to the banks seems somewhat odd as we, the public, are being hounded by the government to spend more whilst VAT prices have risen, longer hours and less pay will become more common, unemployment increases and the prices of goods rise through all sectors of the market.

What if, however, the money that would be lent to the banks ended up in a stack on the table (metaphorical champaign-socialism here, people): we divide the money equally amongst the populace and allow them to spend it freely?

The problem with you plan and the Bank of England plan is that they aren't much different : both plans relies on giving someone fleshly printed notes to stimulate the economy.

Both plan fail because the increase of bank notes in circulation doesn't match a physical increase of wealth, either services, physical wealth or whatever people value.

Hence the money would ultimately just inflate some sector of the economy, based on the principle of least resistance and raise prices because more notes would be chasing equal amount of goods.

If the money increase both production and consumption, at the same time, it will lead to a shortage of resources and a crash down the road.

The best way to stimulate ourselves is to have more wealth creation, which we could get by taking out road block to economic activity.

[Denny Crane!]

The problem with you plan and the Bank of England plan is that they aren't much different : both plans relies on giving someone fleshly printed notes to stimulate the economy.

Both plan fail because the increase of bank notes in circulation doesn't match a physical increase of wealth, either services, physical wealth or whatever people value.

Hence the money would ultimately just inflate some sector of the economy, based on the principle of least resistance and raise prices because more notes would be chasing equal amount of goods.

If the money increase both production and consumption, at the same time, it will lead to a shortage of resources and a crash down the road.

The best way to stimulate ourselves is to have more wealth creation, which we could get by taking out road block to economic activity.

Once again though if that fake money is going to be handed out it could be done in such a way that reduces the debt burden of the populace instead of just going to sit on banks balance sheets. It won't cause an increase in wealth but it does somewhat help the distribution of it even if it has other negative effects on the economy.

Bear in mind the money is being handed out anyway, so the only thing we are discussing is direction of the flow of it.

[Menelik_I]

Once again though if that fake money is going to be handed out it could be done in such a way that reduces the debt burden of the populace instead of just going to sit on banks balance sheets. It won't cause an increase in wealth but it does somewhat help the distribution of it even if it has other negative effects on the economy.

Bear in mind the money is being handed out anyway, so the only thing we are discussing is direction of the flow of it.

growth the economy, it will not. But screw the debtors it shall.

So in the practical level we are talking here, money handed out anyway, it don't think that 2000£ per person is going to make a dent on the £55,884 average household debt.

In theory the money could be a boost to low icome, low debt people. Question is whether they can invest this at a meaningful rate or blow it.

[Denny Crane!]

growth the economy, it will not. But screw the debtors it shall.

So in the practical level we are talking here, money handed out anyway, it don't think that 2000£ per person is going to make a dent on the £55,884 average household debt.

In theory the money could be a boost to low icome, low debt people. Question is whether they can invest this at a meaningful rate or blow it.

.
A quick glance at these figure will show that you are in no way alone in having debt issues...

By the end of January 2010 personal debt in the UK had risen to around £1,463 billion.

The average debt per household in the UK, not including mortgages, currently stands at around £8,939. If you include unsecured loans this increases more than 100% to almost £18,263.

Average debt including mortgages is just under £58,040 per household.


That figure I've highlighted is the most pressing debt and some people will really be struggling with it. Giving them 25% of it pretty much is a lifeline that allows them to slow down the accumulation of interest and actually get the damn thing paid off. 25% of my urgent debt is about £600 and if someone handed it to me I'd be a hell of a lot better off and would accelerate the rate at which I could pay it off.