With reports in the press that the current UK Chancellor, Philip Hammond, is planning to keep increasing the UK state’s black hole of debt for another eight years, ten years beyond the initial plan, Godfrey Bloom recently spoke on this subject to Duncan Barkes, on BBC Radio London.
In the interview, Mr Bloom outlined a straightforward plan to wipe away the UK state’s deficit spending immediately, given sufficient political backbone from the Chancellor.
If you would like to listen to the interview, please click on the audio link below:
I agree completely with the proposals for spending cuts – if anything, I would go further. The state could probably be shrunk to about 25% of its current size. This will become one of the major issues once Brexit actuated, along with immigration and the future of the BBC.
However, I disagree with Bloom on four points he makes:
(i). He believes that reducing deficit (i.e. credit-based) public spending is a good thing in and of itself.
(ii). He argues that running government is financially akin to running a household.
(iii). He asserts that business people are better equipped to run the government than people without any conspicuous commercial experience.
(iv). He argues for a tax policy based on the Laffer Curve theory.
Taking each in turn:
(i). Putting aside arguments for or against state contraction, deficit spending is not in and of itself a bad thing. In fact, it could be seen as a very positive thing in that it maintains the country’s credit rating, which would plummet or dissolve in the event that we ceased to borrow and spend. Probably the best approach is not to pay off the deficit and debt altogether, but rather to borrow a small amount and maintain a manageable public debt.
(ii). Fiscal policy operates according to special economic realities. It’s not at all like running a household. A government can (and probably should) borrow and when it does so, the debt is normally owed by the government to itself. There is a possibility of inflating the currency as a result, but again, inflation is not necessarily a bad thing in and of itself, provided it does not become hyperinflation. But even if we have the worst case scenario – hyperinflation and collapse of the financial system – so what? The system just starts again, if necessary with a new currency. That’s what happened in Germany during the 1930s. That’s the advantage of fiscal and economic structures based on fiat money. It’s a strange system, I know, but that’s how it works.
(iii). Business people can make for unpleasant rulers, just like any other category of person. They may have greater phronēsis, but they are not a class of Socratics. They can be just as keen to expand the state and deeper interference in people’s lives. The real answer is that we need to do away with politicians altogether (at least, in the sense that we currently understand the word ‘politician’) and start running our own lives.
(iv). The Laffer Curve theory is factual, and its practical application is obvious, but it’s just a rationalisation for shifting the deckchairs about on the Titanic. Why not just abolish these taxes altogether and replace them with a single Land Value Tax?
There’s some rather strange thinking in here about deficit spending. Having debt just for the sake of having a credit rating is ridiculous. More importantly, a country capable and willing to pay its debts will have a higher, not lower credit rating. (This does not even take into account that repaying the existing debt will probably take decades so of course will there be a credit rating – but rating agencies will assign one to a country even if there wasn’t a debt to pay.) But in order to genuinely pay down debt one has to stop having a deficit – a deficit meaning that a government has to take on even more debt.
Ultimately, in the long term, running a government is like running a household. A government can (but shouldn’t) borrow. But the debt is not magically owed to the government itself – if that was the case the government could simply pay itself in a nice accounting operation that would make the debt disappear once and for all. Government owes money to people and various organizations.
I find it hard to sympathise with advancing hyperinflation as an acceptable scenario. There may be a catastrophe, but hey, we’ll just start again after losing everything. It’s a strange system but that’s how it works?
You haven’t corrected comprehended what I was saying. This, unfortunately, seems to be common on the internet and is one of the reasons that – frankly – I prefer it if people don’t bother replying to my posts. It spares unpleasant/poisonous exchanges with people. Rarely do I encounter a poster who has actually read and comprehended what I have said prior to commenting on what I have said, so I just comment on here for my own purposes, to help my own understanding of things. I don’t want or expect a reply.
But let me reply to what you say:
(i). Having a credit rating on international bond markets is important for countries. I know it’s not important over in Libertarian Fantasy Land™, but back in the real world where plodders like me have to live, it is actually rather important. There are also other reasons for maintaining a deficit and a debt. I do not say that this is a good thing necessarily. I am not an enthusiast for the fiat money system and I do support aggressive fiscal policies (I think I said so in my post). I am simply explaining how the system works and why from a system point-of-view, eradicating the deficit and debt is not a good thing in and of itself, and could even be seen as a bad thing. Certainly, the lazy assumption that people like you make that it is automatically a good thing is dead wrong, and here I am trying to cure you of that laziness.
(ii). An ability for a country to pay its debts does indeed normally lead to a higher credit rating. You’ll have to tell me where I suggested otherwise. The rest of what you say about debt in that first paragraph just tells me what I already know and more or less amounts to stating the obvious for the benefit of retards.
(iii). Running a government is emphatically NOT like running a household. I have explained why. It is not ‘magic’ that the debt is simultaneously owed by and to the government itself. That is literally how the system works.
(iv). I have NOT advanced hyperinflation as an acceptable scenario. I have not said it is acceptable. I have simply stated that if it happens, it happens, and the system homeostatically recovers and the mechanism for this is in-built. This has happened before – many times in many countries – so it should not be a shock if it happens again. It is indeed a strange system, but that is how it works.
Like most high IQ libertarians, you have a textbook-based understanding of the way the world works, in which everything is linear and eminently logical. Alas, the real world isn’t quite like that. The real world is….rather complicated!
No doubt I can now expect a bog-standard libertarian reply, in which I am told that I am “dumb”, as my explanation of how the financial system works does not accord with naive libertarian fantasies.
A well-balanced reply – Ignorance and arrogance in equal measure.
You will be sure to tell me this if and when we meet in person..?? Somehow I doubt it. The arrogance is completely yours – you breach the rules of debate by not providing a substantive reply and instead insulting me.
I am not being arrogant. I have taken the time to specifically reply to each point put to me. An arrogant person would not do that.
I am also not being ignorant. I am manifestly knowledgeable on the subject – though I certainly don’t claim to be an expert or know everything – and I am simply explaining how the fiat monetary system works. You can disagree, and you can even take the time to show me why you disagree, but disagreement between individuals is not evidence of ignorance on the part of the people involved. That said, I believe the comments here do suggest ignorance about how the financial system works. That is not because the rudiments are not known. ‘Ignorance’ is not ‘not knowing’, rather, ignorance is the unwillingness to know. You are trapped in an ideological mindset and refuse to listen.
Perhaps you and your colleague above would benefit from remedial instruction in the following areas:
how to conduct a debate/argument;
basic logic; and,
May I express the hope not to receive a reply from you, Mr Norman, and to never hear from you again? Or will you come back to me with some witty quip, showcasing your childishness and immaturity still more?
You got the only I reply that I consider was merited. ‘Manifestly knowledgeable’ on the subject! Manifestly full of the brown stuff more like. You clearly haven’t got a clue how the fraudulent money ‘system’ works. Ignorance and arrogance sums you up perfectly.
As for your ‘remedial instruction’, I’d rather take singing lessons off Des O’Connor. Oh yes, I’d love to meet you in person and acquaint you with a few facts a bit more forcefully. If I did, I can assure you, your cocky arrogance would soon disappear.
I don’t care whether or not you reply, but if you do you will receive more of the same. I won’t waste my time giving you ‘remedial instruction’ on the subject of money creation. For one thing, you’re not worth the effort and, secondly, your clear arrogance has rendered you incapable of accepting anything that conflicts with your cocksure delusions.
This is like conversing with a stroppy teenager – do you have a point?
The fact that you use the phrase “fraudulent money system” – a loaded term – is a very good indicator of which of us has the “cocksure” delusions.
Typical of a conspiracy theorist is that you jump to the conclusion that in describing the system, I am endorsing it. I haven’t given fiat money a ringing endorsement. I’ve just explained my understanding of how it works, and why it’s a good idea for governments within the fiat system to maintain a debt and deficit. My explanation is rather an improvement on the notion that you can run a country like a Yorkshire housewife runs a household. We do need something a bit more realistic and sophisticated than that – assuming of course the aim is understanding, rather than just propaganda.
I still don’t understand why you bothered commenting if, by your own admission, you have nothing to say. You are, in effect, telling us that you have nothing to say but you’ll say it anyway, which is completely nonsensical.
Honestly, just what is the point of this..??? If, as you claim, I’m not worth your time, then why give me your time..?? It’s the very definition of a contradiction in terms.
Please grow up. Please – and I am being serious here – see a doctor or speak to somebody you trust. I gave the same advice to John Pate. You are mentally disturbed. You are trapped in an ideological mindset. You’re a victim of brainwashing.
But don’t take you’re problems out on me. I will NOT tolerate it! Either grow up and sort your head out, or go and bother somebody else.
“Please grow up. Please – and I am being serious here – see a doctor or speak to somebody you trust. I gave the same advice to John Pate. You are mentally disturbed. You are trapped in an ideological mindset. You’re a victim of brainwashing.”
Oh, the irony!!!
@Philip Norman don’t be too hard on him – he’s entered a battle of wits unarmed. You can’t fix stupid.