This unremarkable venue is at the centre of an explosive political scandal with the potential, ultimately, to bankrupt the British Labour Party and derail Ed Miliband’s leadership. For it was here that the now-notorious Falkirk ‘vote-fixing’ dispute was born.
And Clegg was having a go at Paxman for being mean about politicians!
To be fair what else is Clegg going to do with himself these days. He's always going to be toxic so he has to find some busywork to occupy him while he and his ostrich faction of spinners try to remain oblivious to the continual year on year haemorrhaging of the lib dem base and activists. You have to ask yourself if Clegg didn't turn up at the election leader debates would that many voters really care? The lib dems under Clegg are like rabbits in the headlights as the election draws ever closer.
This unremarkable venue is at the centre of an explosive political scandal with the potential, ultimately, to bankrupt the British Labour Party and derail Ed Miliband’s leadership. For it was here that the now-notorious Falkirk ‘vote-fixing’ dispute was born.
Why is it that we have to discuss that empty sack, Millipede? Surely there must be better threads than this?
Why not submit one to Mike? You could write it on how many MP's UKIP will have after the next election. It wouldn't take you long.
My best guess would be 23 MP's. I could be underestimating though, it could be 32. Be afraid; be very afraid. To all genuine UKIPers it doesn't make any difference who eventually wins t the 2015 GE. Labour and Tory are the Tweedledum and Tweedledee of British politics. Lewis Carroll was wise beyond his century.
This unremarkable venue is at the centre of an explosive political scandal with the potential, ultimately, to bankrupt the British Labour Party and derail Ed Miliband’s leadership. For it was here that the now-notorious Falkirk ‘vote-fixing’ dispute was born.
Could they have chosen a meaner photo?
Do you think they're not fans? Maybe they've only got one on file :Innocent Face:.....
"out of touch" is just an empty soundbite though isn't it?
Compared to "we're all in this together", "vote blue go green", "Alarm Clock Britain" or "No more broken promises"?
*chortle*
I can't agree that "all in this together" is an empty soundbite as Cameron has delivered on it:
High earners paying more tax Low earners paying less tax Inequality falling Impact of recession falling more on the wealthy than the poor 1m more jobs/below cost of living pay rises as opposed to 1m fewer jobs and above cost of living price rises - surely this would be what all socialists want, apparantly not.
Osborne destroyed the " all in it together " meme when he cut the top rate of income tax from 50 to 45% . Irrespective of whether it was right or wrong to do so and anything else he has done the message he sent out was clear and wrong .
Higher rate tax payers will be more tax in every one of the five years of the coalition government than in every one of the 13 years of the previous Labour government.
"I got the feeling last night that the Anna Soubry approach was a new strategy from the Tories to deal with what is a big threat."
They decided a few weeks ago at that private country conflab they had - you could tell on here with stuff like the N. Farage thing which i imagine they see as a very jolly jape. It did seem to sputter out a bit but i imagine Soubry is ultra-vulnerable to UKIP switchers?
Anyway UKIP speakers should be more wary of PC based attacks coming from the Tories- especially on the BBC cos of their ability to select hostile audiences if they want to. For obvious reasons Tories making PC based attacks will hurt them more as long as the Kipper people ride with it and don't get taken by surprise.
I don't think you have got that quite right. I recall Soubry from my own student days when she was the only Tory in an NUS executive dominated by the far Left. Even then despite the rising Thatcherite tide in the party she was always a moderate but unlike some of the senior wets of the period was tough at the same time. Dealing with Farage was probably a bit of a cakewalk compared to some of the Trots and others she encountered. Her views expressed the other day are entirely consistent with her beliefs and I suggest probably don't arise from any new tactic devised by the Tory leadership.
Ed's still making the running with his Energy stunt/con/stroke of genius:
EXCLUSIVE: Freezing energy bills would save the taxpayer £100MILLION: Miliband says schools, hospitals and Whitehall would benefit from Labour's gas and electricity crackdown
"out of touch" is just an empty soundbite though isn't it?
Compared to "we're all in this together", "vote blue go green", "Alarm Clock Britain" or "No more broken promises"?
*chortle*
I can't agree that "all in this together" is an empty soundbite as Cameron has delivered on it:
High earners paying more tax Low earners paying less tax Inequality falling Impact of recession falling more on the wealthy than the poor 1m more jobs/below cost of living pay rises as opposed to 1m fewer jobs and above cost of living price rises - surely this would be what all socialists want, apparantly not.
In what universe did that happen, certainly not an honest view of the UK , unless you are being witty
Why is it that we have to discuss that empty sack, Millipede? Surely there must be better threads than this?
Why not submit one to Mike? You could write it on how many MP's UKIP will have after the next election. It wouldn't take you long.
My best guess would be 23 MP's. I could be underestimating though, it could be 32. Be afraid; be very afraid. To all genuine UKIPers it doesn't make any difference who eventually wins t the 2015 GE. Labour and Tory are the Tweedledum and Tweedledee of British politics. Lewis Carroll was wise beyond his century.
I asked you last time you made a prediction if you would bet on it.
Last time I tried a spread bet.
How about this: I'll offer you 5-1, any sum you name (up to £1,000) that UKIP gets less than 23 MPs in the 2015 general election
This unremarkable venue is at the centre of an explosive political scandal with the potential, ultimately, to bankrupt the British Labour Party and derail Ed Miliband’s leadership. For it was here that the now-notorious Falkirk ‘vote-fixing’ dispute was born.
All that 'local colour' yet it somehow didn't occur to the Mail to ask Lamont about little Ed's secret report?
Ed's still making the running with his Energy stunt/con/stroke of genius:
EXCLUSIVE: Freezing energy bills would save the taxpayer £100MILLION: Miliband says schools, hospitals and Whitehall would benefit from Labour's gas and electricity crackdown
"out of touch" is just an empty soundbite though isn't it?
Compared to "we're all in this together", "vote blue go green", "Alarm Clock Britain" or "No more broken promises"?
*chortle*
I can't agree that "all in this together" is an empty soundbite as Cameron has delivered on it:
High earners paying more tax Low earners paying less tax Inequality falling Impact of recession falling more on the wealthy than the poor 1m more jobs/below cost of living pay rises as opposed to 1m fewer jobs and above cost of living price rises - surely this would be what all socialists want, apparantly not.
Osborne destroyed the " all in it together " meme when he cut the top rate of income tax from 50 to 45% . Irrespective of whether it was right or wrong to do so and anything else he has done the message he sent out was clear and wrong .
Higher rate tax payers will be more tax in every one of the five years of the coalition government than in every one of the 13 years of the previous Labour government.
That is perfectly true but as I said it is all in the perception and in the eyes of the vast majority of UK voters it is not what they perceived by Osborne's budget . They saw it as we are not all in it together , there was money to spare to give his and Cameron's mates a tax cut .
That is perfectly true but as I said it is all in the perception and in the eyes of the vast majority of UK voters it is not what they perceived by Osborne's budget . They saw it as we are not all in it together , there was money to spare to give his and Cameron's mates a tax cut .
What is wrong with telling the truth? If it is true, and can be proved to be true it needs to be stressed.
That BT Champions League deal is huge news and a real blow to Sky. It also means that the next PL agreement is going to make clubs even wealthier - and that is great news for club owners who may be looking to sell (Spurs especially).
Why is it that we have to discuss that empty sack, Millipede? Surely there must be better threads than this?
Why not submit one to Mike? You could write it on how many MP's UKIP will have after the next election. It wouldn't take you long.
My best guess would be 23 MP's. I could be underestimating though, it could be 32. Be afraid; be very afraid. To all genuine UKIPers it doesn't make any difference who eventually wins t the 2015 GE. Labour and Tory are the Tweedledum and Tweedledee of British politics. Lewis Carroll was wise beyond his century.
The problem is Mike that under the current electoral system UKIP could get 25% (at the very top or even just above what they are polling in local elections at the moment) in every constituency it stood in and probably would be lucky to get 1 or 2 MPs.
And no one seriously believes UKIP will get close to that level of support. It would be a mmiracle if they matched their current polling in opinion polls whoch is probably around 10-12%
This is not a criticism of UKIP nor a reason not to vote for them. It is just a fact of our electoral system and I am afraid that claims that we will get any where near 20 MPs at the next election are just fanciful. The aim should be to get a couple of MPs next time and show that it can be done then hopefully build on that for 2020.
Please don't take this as an attack on UKIP. Its not. And even though I don't like Farage as leader its not an attack on him either. It is simply being realistic about our election chances at a GE as opposed to local or Euro elections.
To be fair to the Cameroons, a lot of the problems were pre 2005. They were also trying to establish themselves in a boom environment. Perhaps they fell for the bullshit too, but you forget how inexperienced they were and how they were coming off the back of 3 bad defeats for the Tories.
Except we weren't in a 'boom environment' we were in a 'bubble environment' which culminated in household borrowing increasing by £120bn in 2007 alone.
Anyone who spent a few hours looking through the economic stats would have realised this - the stock market had peaked in 1999, industrial production had peaked in 2000, government borrowing was rising inexorably (even with the boost the increasing household borrowing was giving to the economy), the trade deficit had become permantised, unemployment was rising while living standards were falling etc etc.
You would think a shadow Chancellor and a PPE graduate might have noticed these things especially as it was in their interest to notice such things.
But as we know neither Cameron or Osborne are 'details people' nor do they look like people interested in what's happening outside their own privileged circle.
So they notice only what they experience first hand - the Notting Hill dinner party effect - London gentrification, rising house prices, increasing consumer spending, the Potemkin Village facade of economic affluence.
And they accept Gordon Brown not just as Chancellor in Downing Street but also as GODon Brown in his economic heaven.
Cameron and Osborne bought into Brown's economic vision - for them it wasn't something to be criticized but something to rejoice in. Something which would allow tax cuts and spending rises, something which would allow the 'sharing of the proceeds of growth'. All it required was a fresher face at the front ie 'Heir to Blair'.
And what's more they're STILL buying into that vision, the summer of 2007 is the economy they want to return to - rising house prices, increasing consumer borrowing, endless money to throw at political problems.
That is perfectly true but as I said it is all in the perception and in the eyes of the vast majority of UK voters it is not what they perceived by Osborne's budget . They saw it as we are not all in it together , there was money to spare to give his and Cameron's mates a tax cut .
What is wrong with telling the truth? If it is true, and can be proved to be true it needs to be stressed.
Nothing wrong with telling the truth but it is self delusion to do so and be convinced that the vast majority of voters will believe you when they clearly did and do not . The " all in it together " meme was destroyed and as it was a major plank of Cameron and Osborne's political strategy that was a blunder of the highest order.
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
Velocity of money simply measurers transaction volume in a unit of time. If people save money, then the velocity of money falls. This is what happened post GFC, and is why the Federal Reserve felt it could print money without stoking inflation - because the velocity of money had fallen.
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
If immigration drives down wages generally, it must increase the velocity of money.
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
Velocity of money simply measurers transaction volume in a unit of time. If people save money, then the velocity of money falls. This is what happened post GFC, and is why the Federal Reserve felt it could print money without stoking inflation - because the velocity of money had fallen.
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
If immigration drives down wages generally, it must increase the velocity of money.
Spending vs saving sure but different forms of spending will have different velocities as well.
Very good article David. It's clear that a reassessment of Ed's abilities is overdue, and I say that as an early and consistent critic. I have not changed my view that he is thoroughly unsuited to the position of prime minister. Indeed, if anything, recent developments have reaffirmed that view (I refer to his politicking over Syria, the shameless populism and economic illiteracy of his recent policy announcements and the revelation post-Grangemouth that his commitment to openness and transparency applies only to his partisan advantage).
However, he is proving himself a skilful LotO, with excellent instincts as to the public mood, an astute tactician and sound reader of his opponents' (to be fair, quite obvious) shortcomings. He is also becoming more personable, likeable and polished. So one hurrah for Ed. He also appears to be steadily asserting his authority over his shadow cabinet and parliamentary party. There's little talk of a Cooper-Balls coup now. That's worth another hurrah.
But its also worth remembering that his personal ratings remain very low, even amongst his own supporters. The media may be warming to him, party supporters may be warming to him, and that may begin to filter through, but he remains astonishingly unpopular given he is leading a part with a fairly steady 7-8 point lead in the polls.
Finally, as someone who leans Conservative but is by no means a card-carrying member, the big issue for me is the continuing failure of the Conservative leadership to counter the Miliband threat. I understand the strategy is to wait until nearer the election, when the recovery will be more established and will be filtering through to people's wallets and sense of security and wellbeing. But the Tories can't vacate the playing field in the meantime. They need to develop a response to the cost of living questions that demonstrates they get it and are working hard to address it. A small mea culpa from Cameron: "I know some say I am out of touch, but this is what we have been doing to help people on low and middle incomes..." is much needed.
Most of western Europe have yet to realise that especially since the 1980s, that they are part of a rapidly-changing global economy that is having ever increasing impact on its country economies. North America may buck this trend due to its own inbuilt resources.
As more of the 'developing' countries move from a subsistence economy to an industrial or semi-industrial economy then the demand for energy increases. At the same time as the standard of living in these countries increases then the demand for food (and better quality food) increases whilst the capacity and number of food producers has decreased.
At the same time the capacity of the identified energy sources in western Europe has declined, whilst the energy resources of the developing world are increasing.
Soon after May 2010, there was a global food shortage which has resulted in ever-increasing food price rises as well as energy rises.
However our politicians of all parties have so little experience of running any sort of business (a mini economy) that they are blindly leading the electorate to believe that British economy will return to health and we all will be better off.
That is a short and even medium term fallacy in the style of Gordon B, who rightly said he had abolished the cycle boom and bust but forgot to say the the boom may not return (at least in the near future) and we would be left with the bust.
I have to get back to work now, but will do a later post to illustrate why the UK is in one of the worst positions to meet the ongoing crisis and the possible means of emerging from it.
In relation to food, I seem to remember years (2006/07) when there were bad harvests and therefore there was less supply, increasing costs.
In regard to the other items, I suspect that if you research these, you will find factors which are behind the increases, which have nothing to do with government action/inaction.
A key driver of food prices is government policy - bioethanol subsidies diverted grain from the feedstuff market, increasing input prices for the agricultural sector and driving up food prices as a result
Perhaps you need to provide more of a rounded argument about food price increases. It is more complicated than saying government policies are a key driver.
More workers than jobs = wages fall More jobs than workers = wages rise.
Sadly, politicians seem incapable of leaving a free market alone and insist on interfering - and so screwing things up.
That's as true for SET (remember that?) employers NI (its successor) Unemployment pay/JSA Absurdly low pension age Minimum wage rates H&S rules and regulations which go far, far beyond anything sane. It's EVERYONE'S duty to look out for themselves and only WILFULLY failing to take safety precautions should be the employer's responsibility (failing to fit a safety guard, for example, AFTER they had been told the existing set-up was dangerous)
Just allow a free market in labour throughout whatever regional, national or international area is deemed fit BY THE PEOPLE and allow employers and employees to sort things out between them.
No outside interference by those not directly affected (and that includes unions based outside that employer) Everyone working in or for that firm - shareholders too - has a vested interest n it succeeding and making a larger and larger profit year-on-year.
Those OUTSIDE that firm have nothing to lose, whether it booms or busts.
'I think you are spot on. I was so irritated with what I saw as Lib Dem hypocrisy (the Syria vote was a much bigger betrayal than university fees in my opinion) that I wrote to my Lib Dem MP to clarify his position.'
Old Compton street no longer has the pleasure of your company?
Janan Ganesh tweets: Graduates in their forties, with mortgages and kids, mass-tweeting a lame scripted line on a Saturday morning. Oh, the greasy pole...
Anyone who spent a few hours looking through the economic stats would have realised this -
I think you are being unfair. Relatively few people noticed at the time, what was obvious in hindsight.
Perhaps they should have, perhaps they did, but the political necessities of the time meant they couldn't say so publicly. Look at the problems that Letwin got into, for instance, in 2005 (2001?) when he suggested cutting £20bn from spending. Or the reacting to some of Howard Flight's comments.
Why is it that we have to discuss that empty sack, Millipede? Surely there must be better threads than this?
Why not submit one to Mike? You could write it on how many MP's UKIP will have after the next election. It wouldn't take you long.
My best guess would be 23 MP's. I could be underestimating though, it could be 32. Be afraid; be very afraid. To all genuine UKIPers it doesn't make any difference who eventually wins t the 2015 GE. Labour and Tory are the Tweedledum and Tweedledee of British politics. Lewis Carroll was wise beyond his century.
How about a little bet. If kippers get 3 or greater MP's. I'll never darken the doors of PB again. If they get fewer than eleven you won't. Agree?
Perhaps you need to provide more of a rounded argument about food price increases. It is more complicated than saying government policies are a key driver.
The World Bank lists the effect of biofuels as an important contributor to higher food prices.[62] The FAO/ECMB has reported that world land usage for agriculture has declined since the 1980s, and subsidies outside the United States and EU have dropped since the year 2004, leaving supply, while sufficient to meet 2004 needs, vulnerable when the United States began converting agricultural commodities to biofuels.
Nowhere did I claim that government policy was the only factor, but constricting supply contributed to commodity prices becoming more volatile.
(Be aware that many of my clients and companies sell to industrial protein producers, so although I am not involved directly in the grain business, I do keep a careful eye on producer input costs)
Why is it that we have to discuss that empty sack, Millipede? Surely there must be better threads than this?
Why not submit one to Mike? You could write it on how many MP's UKIP will have after the next election. It wouldn't take you long.
My best guess would be 23 MP's. I could be underestimating though, it could be 32. Be afraid; be very afraid. To all genuine UKIPers it doesn't make any difference who eventually wins t the 2015 GE. Labour and Tory are the Tweedledum and Tweedledee of British politics. Lewis Carroll was wise beyond his century.
The problem is Mike that under the current electoral system UKIP could get 25% (at the very top or even just above what they are polling in local elections at the moment) in every constituency it stood in and probably would be lucky to get 1 or 2 MPs.
And no one seriously believes UKIP will get close to that level of support. It would be a mmiracle if they matched their current polling in opinion polls whoch is probably around 10-12%
This is not a criticism of UKIP nor a reason not to vote for them. It is just a fact of our electoral system and I am afraid that claims that we will get any where near 20 MPs at the next election are just fanciful. The aim should be to get a couple of MPs next time and show that it can be done then hopefully build on that for 2020.
Please don't take this as an attack on UKIP. Its not. And even though I don't like Farage as leader its not an attack on him either. It is simply being realistic about our election chances at a GE as opposed to local or Euro elections.
Oh I thoroughly agree that my sights are set unreasonably high, still, someone has to fly the flag and be upbeat. Hopefully miracles can still happen.
Anyone who spent a few hours looking through the economic stats would have realised this -
I think you are being unfair. Relatively few people noticed at the time, what was obvious in hindsight.
Perhaps they should have, perhaps they did, but the political necessities of the time meant they couldn't say so publicly. Look at the problems that Letwin got into, for instance, in 2005 (2001?) when he suggested cutting £20bn from spending. Or the reacting to some of Howard Flight's comments.
Absolutely, as Mr Senior argues below, re: telling the truth. Sometimes it isn't the wisest idea.
Good QT last night with strong Scottish lineup - Sturgeon, Lamont, Davidson & businessman from Indie camp - Surgeon & Davidson came across best - and Dimbleby deservedly shouted down for wishing goodnight from 'BearsdIn' - the audience corrected him & he did it again!
If immigration drives down wages generally, it must increase the velocity of money.
Please show your workings: Incorrect answers may gain marks for analysis (if not solution).
Edited-to-add:
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
FFS: Nominal =/= Real. If services become cheaper (due to a propensity for employees to seek lower recompense) then it does not imply (causation =/= correlation) that expenditure is a factor of income. A low-wage family may shop at Lidl for as many carbohydrates as your M&S shopping; consumption is not solely income-related!!!
Anyone who spent a few hours looking through the economic stats would have realised this -
I think you are being unfair. Relatively few people noticed at the time, what was obvious in hindsight.
Perhaps they should have, perhaps they did, but the political necessities of the time meant they couldn't say so publicly. Look at the problems that Letwin got into, for instance, in 2005 (2001?) when he suggested cutting £20bn from spending. Or the reacting to some of Howard Flight's comments.
No, I'm being perfectly fair and you are trying to defend the economic and political negligence of Cameron and Osborne.
Its may be relatively few people's business to notice what's going on in the economy.
But those relatively few people include the Opposition leader and Shadow Chancellor.
And there was plenty they could have have pointed out but didn't - rising debt, unaffordable housing, stagnant living standards (and falling living standards among low earners), permanent trade deficit, rising youth unemployment, deindustrialisation and decline in pension values for example.
Instead all they did was assume everything was fine and that there would be money for spending increases and tax cuts forever.
Even when in the summer of 2008 the effects of recession, rising prices and income tax increases on the low paid was giving them huge opinion poll leads they seemed unaware of what was happening - Osborne instead spending his time yachting with undesirables.
And then in autumn 2008 they looked like Bambi and Thumper stuck frozen in the headlights as reality was forced upon them with the bank crashes.
Anyone who spent a few hours looking through the economic stats would have realised this -
I think you are being unfair. Relatively few people noticed at the time, what was obvious in hindsight.
Perhaps they should have, perhaps they did, but the political necessities of the time meant they couldn't say so publicly. Look at the problems that Letwin got into, for instance, in 2005 (2001?) when he suggested cutting £20bn from spending. Or the reacting to some of Howard Flight's comments.
No, I'm being perfectly fair and you are trying to defend the economic and political negligence of Cameron and Osborne.
Its may be relatively few people's business to notice what's going on in the economy.
But those relatively few people include the Opposition leader and Shadow Chancellor.
There are lots of people who are paid to watch the economy.
The Treasury, the PM/CofE, their shadows, umpteen economic analysts from the City, international bodies, asset managers, business groups, etc.
Very few spotted the problems building up.
To uniquely ascribe blame to two individuals who missed it is unreasonable.
But you have already made up your mind that they are without redemption so there is little point wasting more pixels on the discussion
Perhaps you need to provide more of a rounded argument about food price increases. It is more complicated than saying government policies are a key driver.
The World Bank lists the effect of biofuels as an important contributor to higher food prices.[62] The FAO/ECMB has reported that world land usage for agriculture has declined since the 1980s, and subsidies outside the United States and EU have dropped since the year 2004, leaving supply, while sufficient to meet 2004 needs, vulnerable when the United States began converting agricultural commodities to biofuels.
Nowhere did I claim that government policy was the only factor, but constricting supply contributed to commodity prices becoming more volatile.
(Be aware that many of my clients and companies sell to industrial protein producers, so although I am not involved directly in the grain business, I do keep a careful eye on producer input costs)
I am particularly annoyed by the practise of turning foodstuffs into ethanol. It is immoral.
I am particularly annoyed by the practise of turning foodstuffs into ethanol. It is immoral.
I think it was fine as a concept.
Now that people are aware that the implications are that poor people can't afford food it is immoral to continue it.
But the farmers in Iowa like the scheme - and US politicians are not brave enough to take on the issue. In fact, it's such a well known situation that there was even a West Wing episode devoted to it! (Season 6, Episode 13; King Corn)
Ed's still making the running with his Energy stunt/con/stroke of genius:
EXCLUSIVE: Freezing energy bills would save the taxpayer £100MILLION: Miliband says schools, hospitals and Whitehall would benefit from Labour's gas and electricity crackdown
Anyone who spent a few hours looking through the economic stats would have realised this -
I think you are being unfair. Relatively few people noticed at the time, what was obvious in hindsight.
Perhaps they should have, perhaps they did, but the political necessities of the time meant they couldn't say so publicly. Look at the problems that Letwin got into, for instance, in 2005 (2001?) when he suggested cutting £20bn from spending. Or the reacting to some of Howard Flight's comments.
No, I'm being perfectly fair and you are trying to defend the economic and political negligence of Cameron and Osborne.
Its may be relatively few people's business to notice what's going on in the economy.
But those relatively few people include the Opposition leader and Shadow Chancellor.
There are lots of people who are paid to watch the economy.
The Treasury, the PM/CofE, their shadows, umpteen economic analysts from the City, international bodies, asset managers, business groups, etc.
Very few spotted the problems building up.
To uniquely ascribe blame to two individuals who missed it is unreasonable.
But you have already made up your mind that they are without redemption so there is little point wasting more pixels on the discussion
Likewise you have made up your mind that Cameron and Osborne are without blame. I remember your pathetic excuses for Cameron's lies about "paying down Britain's debts".
Cameron and Osborne weren't interested even when it was obvious, when it was to their own benefit to emphasise and be prepared for what was happening.
But worse is that Cameron and Osborne still seem to want to return to the ecoomy of summer 2007 hence encouragement for house price rises and increases in consumer spending.
If immigration drives down wages generally, it must increase the velocity of money.
Please show your workings: Incorrect answers may gain marks for analysis (if not solution).
Edited-to-add:
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
FFS: Nominal =/= Real. If services become cheaper (due to a propensity for employees to seek lower recompense) then it does not imply (causation =/= correlation) that expenditure is a factor of income. A low-wage family may shop at Lidl for as many carbohydrates as your M&S shopping; consumption is not solely income-related!!!
Fluffy Antoinette says " Let them eat cake from Lidl "
Ed's still making the running with his Energy stunt/con/stroke of genius:
EXCLUSIVE: Freezing energy bills would save the taxpayer £100MILLION: Miliband says schools, hospitals and Whitehall would benefit from Labour's gas and electricity crackdown
Exactly. The reality is the reverse. By paying more for fuel we all pay more tax for the government to waste spend wisely on our behalf. Ed should explain what hospitals he is going to close for the lost income.
Take a look at this piece of economic analysis and notice the date.
" Richard, do you think we’re going into recession? May 3rd, 2008 at 6:54 pm RICHARD Yes – the economic fundamentals of this country are very weak. We have an ‘Emperor’s New Clothes’ economy based on too much debt fuelled wealth consumption (both private and public sector) but with too little wealth creation. The sense of affluence caused by the house price pyramid scheme is going into reverse and this will lead to job losses in construction, financial services and retail. Manufacturing employment is already at its lowest level on record and is being very hard hit by rising commodity prices not to mention extra taxes, insurance costs and red tape. Issues like national energy security and savings/pensions are also very worrying. Expect the next few years to see rising prices, job losses, public sector strikes and repeated crises. Very 1970s! "
Actually its a statement of what was then obvious to anyone who looked. So why weren't Cameron and Osborne capable of looking and thinking along the same lines ?
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
Velocity of money simply measurers transaction volume in a unit of time. If people save money, then the velocity of money falls. This is what happened post GFC, and is why the Federal Reserve felt it could print money without stoking inflation - because the velocity of money had fallen.
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
If immigration drives down wages generally, it must increase the velocity of money.
I completely agree with this.
The paradox of thrift is simply an example of the reduction of velocity of money which can occur when the proportion of income spent is reduced.
So if we accept that immigration reduces wages (which is probably only true at the low skill end of the market, highly skilled immigrants will allow those working around/for them to earn more) then the tendency to save will be reduced increasing the velocity of money, not reducing it.
Contrary to Mr Jones's assertion discretionary spending has the lowest velocity as we may treat ourselves occasionally but we buy food every day.
One possible negative effect that immigration can have on total spending is where significant amounts of earned income are remitted to their home countries, thereby reducing demand in the UK. This would have a similar effect to saving. Is there any evidence that this happens in the UK to a material extent?
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
Velocity of money simply measurers transaction volume in a unit of time. If people save money, then the velocity of money falls. This is what happened post GFC, and is why the Federal Reserve felt it could print money without stoking inflation - because the velocity of money had fallen.
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
If immigration drives down wages generally, it must increase the velocity of money.
I completely agree with this.
The paradox of thrift is simply an example of the reduction of velocity of money which can occur when the proportion of income spent is reduced.
So if we accept that immigration reduces wages (which is probably only true at the low skill end of the market, highly skilled immigrants will allow those working around/for them to earn more) then the tendency to save will be reduced increasing the velocity of money, not reducing it.
Contrary to Mr Jones's assertion discretionary spending has the lowest velocity as we may treat ourselves occasionally but we buy food every day.
One possible negative effect that immigration can have on total spending is where significant amounts of earned income are remitted to their home countries, thereby reducing demand in the UK. This would have a similar effect to saving. Is there any evidence that this happens in the UK to a material extent?
We'll see if you agree after you read the rest of the exchange.
Ed's still making the running with his Energy stunt/con/stroke of genius:
EXCLUSIVE: Freezing energy bills would save the taxpayer £100MILLION: Miliband says schools, hospitals and Whitehall would benefit from Labour's gas and electricity crackdown
Exactly. The reality is the reverse. By paying more for fuel we all pay more tax for the government to waste spend wisely on our behalf. Ed should explain what hospitals he is going to close for the lost income.
Will Osborne be losing the VAT if he moves green levies then?
Yes.
So he needs to make sure that any transfer to general taxation is fully funded or borrowing will increase. And we certainly would want that this financial year would we?
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
Velocity of money simply measurers transaction volume in a unit of time. If people save money, then the velocity of money falls. This is what happened post GFC, and is why the Federal Reserve felt it could print money without stoking inflation - because the velocity of money had fallen.
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
If immigration drives down wages generally, it must increase the velocity of money.
I completely agree with this.
The paradox of thrift is simply an example of the reduction of velocity of money which can occur when the proportion of income spent is reduced.
So if we accept that immigration reduces wages (which is probably only true at the low skill end of the market, highly skilled immigrants will allow those working around/for them to earn more) then the tendency to save will be reduced increasing the velocity of money, not reducing it.
Contrary to Mr Jones's assertion discretionary spending has the lowest velocity as we may treat ourselves occasionally but we buy food every day.
One possible negative effect that immigration can have on total spending is where significant amounts of earned income are remitted to their home countries, thereby reducing demand in the UK. This would have a similar effect to saving. Is there any evidence that this happens in the UK to a material extent?
We'll see if you agree after you read the rest of the exchange.
I have read the entries on this thread. What other point are you making?
Labour shortlist for Keighley (Con majority 6.2%).
Kaneez Akthar (Cllr for Keihgley Central) Ralph Berry (Cllr for Wibsey ward, Bradford South) John Grogan (former Selby MP) Henri Murison (former Newcastle Cllr, currently living in Addingham and working as research director for the West Yorkshire PCC)
David Herdson has written a very fair piece. My only question to ask is: what took him so long ? He [ and the PB Tories ] should have learnt from the leadership elections. The PB Tories being Tories believe in patriarchal values and the right of elder brothers to inherit and therefore, according to them, somehow Ed knifed David in the back.
There is no brotherly love involved in gliding up the greasy pole. Both are politicians. The only difference was, perhaps, David was relaxed about his "inheritence". His election budget was several times bigger than Ed's. Yet he lost.
I did not vote for Ed Miliband. But I remember in one of the Party gatherings in the summer of 2010, an EdM supporter coming upto me and asking for my "second vote". We got talking and he was telling me their phone bank was concentrating on the second vote, knowing they could never win on the first one.
Ed had worked out the rules of the election. Just like Obama did in 2008. David, like Hillary, assumed the crown would fall into his lap. It always does not work out like that.
To David Herdson, I say, better late than never ! Never underestimate a ruthless winner !!
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
Velocity of money simply measurers transaction volume in a unit of time. If people save money, then the velocity of money falls. This is what happened post GFC, and is why the Federal Reserve felt it could print money without stoking inflation - because the velocity of money had fallen.
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
If immigration drives down wages generally, it must increase the velocity of money.
I completely agree with this.
The paradox of thrift is simply an example of the reduction of velocity of money which can occur when the proportion of income spent is reduced.
So if we accept that immigration reduces wages (which is probably only true at the low skill end of the market, highly skilled immigrants will allow those working around/for them to earn more) then the tendency to save will be reduced increasing the velocity of money, not reducing it.
Contrary to Mr Jones's assertion discretionary spending has the lowest velocity as we may treat ourselves occasionally but we buy food every day.
One possible negative effect that immigration can have on total spending is where significant amounts of earned income are remitted to their home countries, thereby reducing demand in the UK. This would have a similar effect to saving. Is there any evidence that this happens in the UK to a material extent?
We'll see if you agree after you read the rest of the exchange.
I have read the entries on this thread. What other point are you making?
"Necessities are concentrated: housing, energy, food etc so pass through fewer hands. Fewer hands, fewer transactions, lower velocity.
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity."
Ed's still making the running with his Energy stunt/con/stroke of genius:
EXCLUSIVE: Freezing energy bills would save the taxpayer £100MILLION: Miliband says schools, hospitals and Whitehall would benefit from Labour's gas and electricity crackdown
Exactly. The reality is the reverse. By paying more for fuel we all pay more tax for the government to waste spend wisely on our behalf. Ed should explain what hospitals he is going to close for the lost income.
Will Osborne be losing the VAT if he moves green levies then?
Yes.
So he needs to make sure that any transfer to general taxation is fully funded or borrowing will increase. And we certainly would want that this financial year would we?
He'll just invent some savings that'll never happen, the magic money tree and house price inflation, thats where he's ended up.
The chutzpah of a Labour supporter who is accusing others of relying on the magic money tree has to be admired.
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
money.
We'll see if you agree after you read the rest of the exchange.
I have read the entries on this thread. What other point are you making?
"Necessities are concentrated: housing, energy, food etc so pass through fewer hands. Fewer hands, fewer transactions, lower velocity.
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity."
That is a misunderstanding of what velocity of money is. If I spend a £1 on buyng a loaf of bread it goes into Tesco's coffers who will in turn use it to buy more flour and the miller will spend it on the farmer who will spend it on the crop sprayer etc etc. The velocity of money is simply the number of these transactions that take place in any given period.
If I save the £1 for several months to put towards my summer holiday then eventually the £1 is spent but the number of transactions will be fewer so the velocity will be less.
The insight that Keynes brought to velocity is that when you are measuring the quantity of money in the economy over a period it is not enough to measure the volume of cash in circulation. Printing money can, if it is not used, simply be "pushing on a string" as he put it. I think that has been one of the problems with QE. It has increased the volume of money in the system but if anything it has reduced its velocity so the effect on aggregate demand has been muted.
How does immigration impact on this? As a primary effect not at all. There are possible secondary effects if the level of consumption increases because more is spent on necessities or if significant quantities of money are remitted abroad. I would be interested to see any evidence by way of links that you may have as to either of those effects impacting on aggregate demand in the UK.
Comrades! This is your captain! It is an honour to speak to you today! And I'm honoured to be sailing with you on the maiden voyage of our Motherland's most recent achievement. And once more, we play our dangerous game. A game of chess... against our old adversary - the Conservative Party!
For a hundred years, your fathers before you and your older brothers played this game - and played it well. But today, the game is different. WE have the advantage! It reminds me of the heady days of 1945 and Clement Atlee, when the world trembled at the sound of our nationalisations. Now they will tremble again - at the sound of our populism. The order is: engage the Energy Price Freeze!
Comrades! Our own activists don't know our full potential! They will do everything possible to test us, but they will only test their own embarrassment. We will leave our activists behind! We will pass through the Conservative patrols, past their sonar nets, and lay off their largest parliamentary constituency, and listen to their braying and tittering - while we conduct anti-austerity debates! And when we are finished, the only sound they will hear is our laughter, while we sail to Brighton, where the sun is warm, and so is the... comradeship.
Likewise you have made up your mind that Cameron and Osborne are without blame. I remember your pathetic excuses for Cameron's lies about "paying down Britain's debts".
I think you are projecting when it comes to my views on Cameron and Osborne.
I'd say they have done an okay job of managing a difficult inheritance, and things seem to be slowing moving in the right direction on many areas. That said, they have missed some hugely important things (e.g. supply side reforms) and are too reliant on consumer spending. How much that is their failure and how much that is the realities of Coalition I am not in a position to judge.
Overall I'd give them a B or possibly a B+. No more than that.
That is a misunderstanding of what velocity of money is. If I spend a £1 on buyng a loaf of bread it goes into Tesco's coffers who will in turn use it to buy more flour and the miller will spend it on the farmer who will spend it on the crop sprayer etc etc. The velocity of money is simply the number of these transactions that take place in any given period.
If I save the £1 for several months to put towards my summer holiday then eventually the £1 is spent but the number of transactions will be fewer so the velocity will be less.
The insight that Keynes brought to velocity is that when you are measuring the quantity of money in the economy over a period it is not enough to measure the volume of cash in circulation. Printing money can, if it is not used, simply be "pushing on a string" as he put it. I think that has been one of the problems with QE. It has increased the volume of money in the system but if anything it has reduced its velocity so the effect on aggregate demand has been muted.
How does immigration impact on this? As a primary effect not at all. There are possible secondary effects if the level of consumption increases because more is spent on necessities or if significant quantities of money are remitted abroad. I would be interested to see any evidence by way of links that you may have as to either of those effects impacting on aggregate demand in the UK.
"That is a misunderstanding of what velocity of money is."
You're misunderstanding it. Necessity spending is fast but concentrated: housing, energy, food etc. Discretionary spending is much more varied - that's why it has a higher velocity. Number of transactions - not just how fast it goes out of a wage packet.
edit: jocasta's music lessons, wayne's football strip, saying yes or no to the window cleaner, getting some work down on the house, buying a magazine, a million and one different things -> more transactions, same money through more hands.
Should we not have an "Ed is crap" thread ? We haven't had one since............the Syria vote !
"You can fool some of the people all the time". Very good. Based on ReD's recent utterances the thread should be "Ed is crap prime ministerial material."
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
effective money supply = velocity of money x nominal money supply
Take a look at this piece of economic analysis and notice the date.
" Richard, do you think we’re going into recession? May 3rd, 2008 at 6:54 pm RICHARD Yes – the economic fundamentals of this country are very weak. We have an ‘Emperor’s New Clothes’ economy based on too much debt fuelled wealth consumption (both private and public sector) but with too little wealth creation. The sense of affluence caused by the house price pyramid scheme is going into reverse and this will lead to job losses in construction, financial services and retail. Manufacturing employment is already at its lowest level on record and is being very hard hit by rising commodity prices not to mention extra taxes, insurance costs and red tape. Issues like national energy security and savings/pensions are also very worrying. Expect the next few years to see rising prices, job losses, public sector strikes and repeated crises. Very 1970s! "
Actually its a statement of what was then obvious to anyone who looked. So why weren't Cameron and Osborne capable of looking and thinking along the same lines ?
Thanks for highlighting the date. Sorry to inform you, Richard, you are not some brilliant sage. By May 2008 it was blindingly obvious.
Ruffer called it in 2004 (too early), Jupiter in 2006, Hoare's in 2007, Blackrock missed it, an individual I know got it spot on in April 2007 (jammy bugger moved everything in cash because he couldn't believe the terms banks were offering him).
From Bear Stearns suspending their funds in June 2007, to the BNP issues in ?August, Northern Rock in September, it was game on.
I doubt that Osborne and Cameron fully accepted Brown's spending plans at that point, although they may not have highlighted their differing view. They were critical (rightly so) of his handling of Northern Rock, though, and various other issues. Certainly, IIRC, they were increasingly making noises about austerity during the second half of 2009.
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
effective money supply = velocity of money x nominal money supply
Dont be shy, MrJones. We all know the real equation you are interested in is:
Root of all evil = immigrants
And there's no line you wouldnt peddle to try to show it.
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
I did thanks and it is nonsense.
Immigration can have a deflationary effect if it reduces the value of labour but velocity has absolutely nothing to do with it. Similarly, immigration can reduce the per capita income of a country if their productivity, on average, is less than that of the domestic population. That has nothing to do with velocity either.
I actually agree with those who point out that the large scale immigration under the last govenment did a lot for the professional middle classes who got cheaper joiners, cleaners and other services but was pretty disastrous for the lower skilled with whom those immigrants were in more direct competition. But velocity has nothing to do with that either.
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
effective money supply = velocity of money x nominal money supply
Dont be shy, MrJones. We all know the real equation you are interested in is:
Root of all evil = immigrants
And there's no line you wouldnt peddle to try to show it.
Overall I'd give them a B or possibly a B+. No more than that.
Clearly I'm not projecting.
Cameron and Osborne have not only handled the economics badly they've handled the politics of the economics badly.
But just as they weren't competant enough to demolish Labour's economic record the Eds aren't competant to demolish this government's.
Cameron &, Osborne, Miliband & Balls - merely opposite sides of the same coin of incompetance.
And after they've all had their go we'll still be an economy which borrows £100bn more each and every year with a permanent trade deficit and stagnant productivity.
David Herdson has written a very fair piece. My only question to ask is: what took him so long ? He [ and the PB Tories ] should have learnt from the leadership elections. The PB Tories being Tories believe in patriarchal values and the right of elder brothers to inherit and therefore, according to them, somehow Ed knifed David in the back.
I don't think that any Tory (that I know of) believe in patrilineal inheritance. I know I don't!
Damien McBride's book is very interesting on the topic (worth buying, because it's pretty interesting about lots more than the last few months of gossip). His view was that EdM saw it as preserving his father's intellectual inheritance and didn't think that it was safe in David's hands.
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
I did thanks and it is nonsense.
Immigration can have a deflationary effect if it reduces the value of labour but velocity has absolutely nothing to do with it. Similarly, immigration can reduce the per capita income of a country if their productivity, on average, is less than that of the domestic population. That has nothing to do with velocity either.
I actually agree with those who point out that the large scale immigration under the last govenment did a lot for the professional middle classes who got cheaper joiners, cleaners and other services but was pretty disastrous for the lower skilled with whom those immigrants were in more direct competition. But velocity has nothing to do with that either.
Velocity has everything to do with it. People are taught that the maximum velocity is the poor spending on necessities but they're wrong. The maximum velocity comes from discretionary spending in the middle.
How does immigration impact on this? As a primary effect not at all. There are possible secondary effects if the level of consumption increases because more is spent on necessities or if significant quantities of money are remitted abroad. I would be interested to see any evidence by way of links that you may have as to either of those effects impacting on aggregate demand in the UK.
"That is a misunderstanding of what velocity of money is."
You're misunderstanding it. Necessity spending is fast but concentrated: housing, energy, food etc. Discretionary spending is much more varied - that's why it has a higher velocity. Number of transactions - not just how fast it goes out of a wage packet.
edit: jocasta's music lessons, wayne's football strip, saying yes or no to the window cleaner, getting some work down on the house, buying a magazine, a million and one different things -> more transactions, same money through more hands.
One last go. The diversity of transactions is completely irrelevant to the velocity of money. Completely.
The more of a person's income is spent the higher velocity that money has. The more it is saved the lower. Those on higher incomes tend to save more so their money has a lower velocity. The proposition in the article Neil linked to that a prosperous middle class's spending results in a higher velocity of money is wrong. Absolutely wrong.
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
effective money supply = velocity of money x nominal money supply
Dont be shy, MrJones. We all know the real equation you are interested in is:
Root of all evil = immigrants
And there's no line you wouldnt peddle to try to show it.
Comrades! This is your captain! It is an honour to speak to you today! And I'm honoured to be sailing with you on the maiden voyage of our Motherland's most recent achievement. And once more, we play our dangerous game. A game of chess... against our old adversary - the Conservative Party!
For a hundred years, your fathers before you and your older brothers played this game - and played it well. But today, the game is different. WE have the advantage! It reminds me of the heady days of 1945 and Clement Atlee, when the world trembled at the sound of our nationalisations. Now they will tremble again - at the sound of our populism. The order is: engage the Energy Price Freeze!
Comrades! Our own activists don't know our full potential! They will do everything possible to test us, but they will only test their own embarrassment. We will leave our activists behind! We will pass through the Conservative patrols, past their sonar nets, and lay off their largest parliamentary constituency, and listen to their braying and tittering - while we conduct anti-austerity debates! And when we are finished, the only sound they will hear is our laughter, while we sail to Brighton, where the sun is warm, and so is the... comradeship.
A great day, comrades! We sail into history!
It is well written and prescient ! My only hope is that you know it yourself.
How does immigration impact on this? As a primary effect not at all. There are possible secondary effects if the level of consumption increases because more is spent on necessities or if significant quantities of money are remitted abroad. I would be interested to see any evidence by way of links that you may have as to either of those effects impacting on aggregate demand in the UK.
"That is a misunderstanding of what velocity of money is."
You're misunderstanding it. Necessity spending is fast but concentrated: housing, energy, food etc. Discretionary spending is much more varied - that's why it has a higher velocity. Number of transactions - not just how fast it goes out of a wage packet.
edit: jocasta's music lessons, wayne's football strip, saying yes or no to the window cleaner, getting some work down on the house, buying a magazine, a million and one different things -> more transactions, same money through more hands.
One last go. The diversity of transactions is completely irrelevant to the velocity of money. Completely.
The more of a person's income is spent the higher velocity that money has. The more it is saved the lower. Those on higher incomes tend to save more so their money has a lower velocity. The proposition in the article Neil linked to that a prosperous middle class's spending results in a higher velocity of money is wrong. Absolutely wrong.
You're just reciting what you were taught some time back in the dim and distant.
Starting at the first step do you accept
effective money supply = velocity of money x nominal money supply
and that if so, if the velocity declines enough it is possible to have a deflation even if the nominal money supply is increasing?
If you accept that point then you accept that shifts in the velocity are potentially relevant.
If you accept that then it is just a question of what categories have what velocities and if there has been any shifts in the percentages.
Charles: Overall I'd give them a B or possibly a B+. No more than that.
Clearly I'm not projecting.
A B/B+ is not "blameless" by any means (which was what you accused me of). If I had rated them AAA (or "near perfect") then you might have a case.
Cameron and Osborne have not only handled the economics badly they've handled the politics of the economics badly.
They could have done better. I am not happy about their closeness to big business. I am not happy about some of their decisions. They've proved not to be great at politics. But they are still a lot better than the previous lot and a lot better than Miliband's team are likely to be.
After the beginning of David's piece, I was surprised the ending wasn't that Miliband is sensibly targeting his pitch at the depressingly large economically illiterate entitled classes - precisely the sort of people Labour can fool all of the time it seems.
How does immigration impact on this? As a primary effect not at all. There are possible secondary effects if the level of consumption increases because more is spent on necessities or if significant quantities of money are remitted abroad. I would be interested to see any evidence by way of links that you may have as to either of those effects impacting on aggregate demand in the UK.
"That is a misunderstanding of what velocity of money is."
You're misunderstanding it. Necessity spending is fast but concentrated: housing, energy, food etc. Discretionary spending is much more varied - that's why it has a higher velocity. Number of transactions - not just how fast it goes out of a wage packet.
edit: jocasta's music lessons, wayne's football strip, saying yes or no to the window cleaner, getting some work down on the house, buying a magazine, a million and one different things -> more transactions, same money through more hands.
One last go. The diversity of transactions is completely irrelevant to the velocity of money. Completely.
The more of a person's income is spent the higher velocity that money has. The more it is saved the lower. Those on higher incomes tend to save more so their money has a lower velocity. The proposition in the article Neil linked to that a prosperous middle class's spending results in a higher velocity of money is wrong. Absolutely wrong.
You're just reciting what you were taught some time back in the dim and distant.
Starting at the first step do you accept
effective money supply = velocity of money x nominal money supply
and that if so, if the velocity declines enough it is possible to have a deflation even if the nominal money supply is increasing?
If you accept that point then you accept that shifts in the velocity are potentially relevant.
If you accept that then it is just a question of what categories have what velocities and if there has been any shifts in the percentages.
I thought your gang rape obsession was tedious, I now look back upon it as a golden age of riveting prose.
"out of touch" is just an empty soundbite though isn't it?
Compared to "we're all in this together", "vote blue go green", "Alarm Clock Britain" or "No more broken promises"?
*chortle*
I can't agree that "all in this together" is an empty soundbite as Cameron has delivered on it:
High earners paying more tax Low earners paying less tax Inequality falling Impact of recession falling more on the wealthy than the poor 1m more jobs/below cost of living pay rises as opposed to 1m fewer jobs and above cost of living price rises - surely this would be what all socialists want, apparantly not.
In what universe did that happen, certainly not an honest view of the UK , unless you are being witty
Err, this universe right now.
Feel free to prove any of the statements wrong.
You certainly would be struggling to prove any of them
"out of touch" is just an empty soundbite though isn't it?
Compared to "we're all in this together", "vote blue go green", "Alarm Clock Britain" or "No more broken promises"?
*chortle*
I can't agree that "all in this together" is an empty soundbite as Cameron has delivered on it:
High earners paying more tax Low earners paying less tax Inequality falling Impact of recession falling more on the wealthy than the poor 1m more jobs/below cost of living pay rises as opposed to 1m fewer jobs and above cost of living price rises - surely this would be what all socialists want, apparantly not.
In what universe did that happen, certainly not an honest view of the UK , unless you are being witty
Err, this universe right now.
Feel free to prove any of the statements wrong.
You certainly would be struggling to prove any of them
I doubt it.
- Distributional impact of tax changes has been heavily weighted towards the top decline. - Low earners (not necessarily the worst off) have disproportionately benefits from the increase in personal allowance - Have seen this widely reported, but not the source data - Am sure this could be demonstrated, but it's always a definitional question - jobs point is accurate
"That is a misunderstanding of what velocity of money is."
.
.
You're just reciting what you were taught some time back in the dim and distant.
Starting at the first step do you accept
effective money supply = velocity of money x nominal money supply
and that if so, if the velocity declines enough it is possible to have a deflation even if the nominal money supply is increasing?
If you accept that point then you accept that shifts in the velocity are potentially relevant.
If you accept that then it is just a question of what categories have what velocities and if there has been any shifts in the percentages.
Yes, yes and yes. That is what I have been saying. That is why I referred to "pushing on a string". This point is as old as Keynes.
Where you are wrong is arguing that immigration has caused a reduction in the velocity of money. It is very likely to have had the opposite effect.
There are undoubtedly substantial deflationary pressures in our economy. They are being offset by very low interest rates, QE and very high government borrowing.
Those deflationary effects are not caused by immigration.
There has been a reduction in the velocity of money but this is not connected to immigration or even the fall in real earnings. This is occurring because Banks have been shrinking their balance sheets in a radical way and have been unwilling to lend. In addition some of the apparent increase in our money supply caused by endless leveraged transactions in the City pre 2008 have stopped. Furthermore although the absolute level of borrowing by the government remains far too high it has fallen by more than £30bn a year over the last 3 years.
This is why this recession is so much harder to get out of than a "normal" recession. As long as the supply of credit is restrained in this way there will be little growth in the money supply and very little growth in aggregate demand. It is one of the reasons I am so frustrated the government took so long to grasp the thistle on RBS. That bank alone had many, many times the impact on our money supply than immigration.
They could have done better. I am not happy about their closeness to big business. I am not happy about some of their decisions. They've proved not to be great at politics. But they are still a lot better than the previous lot and a lot better than Miliband's team are likely to be.
They're all going in the same direction. Cameron and Osborne at maybe a slower speed, but only because of the circumstances.
Until that point is accepted everything else is dancing on the head of a pin.
Yes, yes and yes. That is what I have been saying. That is why I referred to "pushing on a string". This point is as old as Keynes.
Where you are wrong is arguing that immigration has caused a reduction in the velocity of money. It is very likely to have had the opposite effect.
There are undoubtedly substantial deflationary pressures in our economy. They are being offset by very low interest rates, QE and very high government borrowing.
Those deflationary effects are not caused by immigration.
There has been a reduction in the velocity of money but this is not connected to immigration or even the fall in real earnings. This is occurring because Banks have been shrinking their balance sheets in a radical way and have been unwilling to lend. In addition some of the apparent increase in our money supply caused by endless leveraged transactions in the City pre 2008 have stopped. Furthermore although the absolute level of borrowing by the government remains far too high it has fallen by more than £30bn a year over the last 3 years.
(snipped a bit as too long)
Fair enough. So when you said before
"Immigration can have a deflationary effect if it reduces the value of labour but velocity has absolutely nothing to do with it."
It's because you believe
"Where you are wrong is arguing that immigration has caused a reduction in the velocity of money. It is very likely to have had the opposite effect."
that if there had been a shift from discretionary spending to necessities then it would have increased the velocity because you believe necessity spending has a higher velocity than discretionary - which might be right although I haven't seen any proof of that anywhere just lots of assertions.
And also that even if the theory is wrong and discretionary spending - aka trickle sideways economics - *does* have a higher velocity and therefore a shift from discretionary spending to necessity spending *does* have a deflationary effect then it doesn't matter at the moment because that deflationary effect would be massively outweighed by the deflationary effect of the bank's shrinking their balance sheets?
Of course if that was wrong it would have a pretty dramatic effect all round.
Not surprised to hear that Sunday Times hacks are all over Falkirk. Don't understand why Ed won't release the report into what happened. The story does not seem to want to die and can't help feeling there is a smoking gun somewhere and someone will find it sooner or later.
They could have done better. I am not happy about their closeness to big business. I am not happy about some of their decisions. They've proved not to be great at politics. But they are still a lot better than the previous lot and a lot better than Miliband's team are likely to be.
They're all going in the same direction. Cameron and Osborne at maybe a slower speed, but only because of the circumstances.
Until that point is accepted everything else is dancing on the head of a pin.
Think of it as cancer.
The art of chemotherapy is killing the cancer without killing the patient. You start with slowing disease progression and then turn things around. But it takes time.
The velocity of money depends upon it's measurement: M0 will give a different result when compared to M4. The idea that the quantity of note-and-coins-in-circulation is quaint: It is not fiduciary funds that matter but the access to capital. Irrespective of which pounds-sterling and pence-english my wallet contains (which is zilch) I still consume....
"out of touch" is just an empty soundbite though isn't it?
Compared to "we're all in this together", "vote blue go green", "Alarm Clock Britain" or "No more broken promises"?
*chortle*
I can't agree that "all in this together" is an empty soundbite as Cameron has delivered on it:
High earners paying more tax Low earners paying less tax Inequality falling Impact of recession falling more on the wealthy than the poor 1m more jobs/below cost of living pay rises as opposed to 1m fewer jobs and above cost of living price rises - surely this would be what all socialists want, apparantly not.
In what universe did that happen, certainly not an honest view of the UK , unless you are being witty
Err, this universe right now.
Feel free to prove any of the statements wrong.
You certainly would be struggling to prove any of them
I doubt it.
- Distributional impact of tax changes has been heavily weighted towards the top decline. - Low earners (not necessarily the worst off) have disproportionately benefits from the increase in personal allowance - Have seen this widely reported, but not the source data - Am sure this could be demonstrated, but it's always a definitional question - jobs point is accurate
The only people who have prospered with this government are the rich. Most people are worse off now than when they came to power, fact.
I reckon GW and EdM are political "anti-particles". If you put them into a room together would they annihilate? For reference, an electron and a positron annihilate to give photons, the species that includes light as a member.
Not surprised to hear that Sunday Times hacks are all over Falkirk. Don't understand why Ed won't release the report into what happened. The story does not seem to want to die and can't help feeling there is a smoking gun somewhere and someone will find it sooner or later.
The idea that the press are going to walk away from any story that potentially involves Tom Watson, is, to put it mildly start staring bonkers optimistic:
Then there’s the question of how and why these clearly illegitimate applications were processed by the party’s membership department. When the investigators looked into this element of the affair, they made a second, eye-opening discovery.
‘It turned out that someone in party HQ had indeed queried the Falkirk applications,’ says a party source. ‘At this point, Tom Watson [Deputy Chair of the Labour Party] is alleged to have intervened to ensure that the applications were processed.
‘What you’ve got to remember is that by that stage, Unite were getting desperate to recruit new members in Falkirk. Time was running out. So their ally Watson helped them out.’
In July, days after the report into Falkirk was handed to Miliband, Watson announced his resignation from the Shadow Cabinet, in a mysterious letter that failed to detail exact reasons for his departure. Watson’s exit surprised observers, and has never been fully explained.
However one senior Labour source has told the Mail that the report left Watson in a tricky position: it allegedly contained an email he’d sent to an individual in Labour’s membership department, encouraging them to process the applications.
Watson has not commented on this allegation and did not respond to inquiries yesterday.
Comments
http://www.dailymail.co.uk/news/article-2493691/Falkirk-vote-fixing-Cash-filled-envelope-truth-Labour-union-vote-riggers.html
This unremarkable venue is at the centre of an explosive political scandal with the potential, ultimately, to bankrupt the British Labour Party and derail Ed Miliband’s leadership.
For it was here that the now-notorious Falkirk ‘vote-fixing’ dispute was born.
Be afraid; be very afraid. To all genuine UKIPers it doesn't make any difference who eventually wins t the 2015 GE. Labour and Tory are the Tweedledum and Tweedledee of British politics. Lewis Carroll was wise beyond his century.
EXCLUSIVE: Freezing energy bills would save the taxpayer £100MILLION: Miliband says schools, hospitals and Whitehall would benefit from Labour's gas and electricity crackdown
http://www.dailymail.co.uk/news/article-2494711/EXCLUSIVE-Freezing-energy-bills-save-taxpayer-100MILLION-Miliband-says-schools-hospitals-Whitehall-benefit-Labours-gas-electricity-crackdown.html#ixzz2k93sE9UB
Feel free to prove any of the statements wrong.
Last time I tried a spread bet.
How about this: I'll offer you 5-1, any sum you name (up to £1,000) that UKIP gets less than 23 MPs in the 2015 general election
Why is that do you think?
*chuckles*
If, as you believe, immigration drives wage levels down, then velocity of money must rise, as low earners save a smaller proportion of their incomes.
But look, why don't you keep on pretending to understand economics, and I'll pretend to take you seriously.
Nope. Not about savings vs spending.
Necessities are concentrated: housing, energy, food etc so pass through fewer hands. Fewer hands, fewer transactions, lower velocity.
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity.
Trickle-sideways economics.
And no one seriously believes UKIP will get close to that level of support. It would be a mmiracle if they matched their current polling in opinion polls whoch is probably around 10-12%
This is not a criticism of UKIP nor a reason not to vote for them. It is just a fact of our electoral system and I am afraid that claims that we will get any where near 20 MPs at the next election are just fanciful. The aim should be to get a couple of MPs next time and show that it can be done then hopefully build on that for 2020.
Please don't take this as an attack on UKIP. Its not. And even though I don't like Farage as leader its not an attack on him either. It is simply being realistic about our election chances at a GE as opposed to local or Euro elections.
Anyone who spent a few hours looking through the economic stats would have realised this - the stock market had peaked in 1999, industrial production had peaked in 2000, government borrowing was rising inexorably (even with the boost the increasing household borrowing was giving to the economy), the trade deficit had become permantised, unemployment was rising while living standards were falling etc etc.
You would think a shadow Chancellor and a PPE graduate might have noticed these things especially as it was in their interest to notice such things.
But as we know neither Cameron or Osborne are 'details people' nor do they look like people interested in what's happening outside their own privileged circle.
So they notice only what they experience first hand - the Notting Hill dinner party effect - London gentrification, rising house prices, increasing consumer spending, the Potemkin Village facade of economic affluence.
And they accept Gordon Brown not just as Chancellor in Downing Street but also as GODon Brown in his economic heaven.
Cameron and Osborne bought into Brown's economic vision - for them it wasn't something to be criticized but something to rejoice in. Something which would allow tax cuts and spending rises, something which would allow the 'sharing of the proceeds of growth'. All it required was a fresher face at the front ie 'Heir to Blair'.
And what's more they're STILL buying into that vision, the summer of 2007 is the economy they want to return to - rising house prices, increasing consumer borrowing, endless money to throw at political problems.
Someone earning £10/hour will save a greater proportion of their income than someone earning £7. That's not an abstract statement, it's been demonstrated over many decades.
If immigration drives down wages generally, it must increase the velocity of money.
edit: different categories rather
However, he is proving himself a skilful LotO, with excellent instincts as to the public mood, an astute tactician and sound reader of his opponents' (to be fair, quite obvious) shortcomings. He is also becoming more personable, likeable and polished. So one hurrah for Ed. He also appears to be steadily asserting his authority over his shadow cabinet and parliamentary party. There's little talk of a Cooper-Balls coup now. That's worth another hurrah.
But its also worth remembering that his personal ratings remain very low, even amongst his own supporters. The media may be warming to him, party supporters may be warming to him, and that may begin to filter through, but he remains astonishingly unpopular given he is leading a part with a fairly steady 7-8 point lead in the polls.
Finally, as someone who leans Conservative but is by no means a card-carrying member, the big issue for me is the continuing failure of the Conservative leadership to counter the Miliband threat. I understand the strategy is to wait until nearer the election, when the recovery will be more established and will be filtering through to people's wallets and sense of security and wellbeing. But the Tories can't vacate the playing field in the meantime. They need to develop a response to the cost of living questions that demonstrates they get it and are working hard to address it. A small mea culpa from Cameron: "I know some say I am out of touch, but this is what we have been doing to help people on low and middle incomes..." is much needed.
http://www.spectator.co.uk/features/9074091/ab-fab-britain/
As more of the 'developing' countries move from a subsistence economy to an industrial or semi-industrial economy then the demand for energy increases. At the same time as the standard of living in these countries increases then the demand for food (and better quality food) increases whilst the capacity and number of food producers has decreased.
At the same time the capacity of the identified energy sources in western Europe has declined, whilst the energy resources of the developing world are increasing.
Soon after May 2010, there was a global food shortage which has resulted in ever-increasing food price rises as well as energy rises.
However our politicians of all parties have so little experience of running any sort of business (a mini economy) that they are blindly leading the electorate to believe that British economy will return to health and we all will be better off.
That is a short and even medium term fallacy in the style of Gordon B, who rightly said he had abolished the cycle boom and bust but forgot to say the the boom may not return (at least in the near future) and we would be left with the bust.
I have to get back to work now, but will do a later post to illustrate why the UK is in one of the worst positions to meet the ongoing crisis and the possible means of emerging from it.
Perhaps you need to provide more of a rounded argument about food price increases. It is more complicated than saying government policies are a key driver.
http://en.wikipedia.org/wiki/2007–08_world_food_price_crisis
More jobs than workers = wages rise.
Sadly, politicians seem incapable of leaving a free market alone and insist on interfering - and so screwing things up.
That's as true for
SET (remember that?)
employers NI (its successor)
Unemployment pay/JSA
Absurdly low pension age
Minimum wage rates
H&S rules and regulations which go far, far beyond anything sane. It's EVERYONE'S duty to look out for themselves and only WILFULLY failing to take safety precautions should be the employer's responsibility (failing to fit a safety guard, for example, AFTER they had been told the existing set-up was dangerous)
Just allow a free market in labour throughout whatever regional, national or international area is deemed fit BY THE PEOPLE and allow employers and employees to sort things out between them.
No outside interference by those not directly affected (and that includes unions based outside that employer)
Everyone working in or for that firm - shareholders too - has a vested interest n it succeeding and making a larger and larger profit year-on-year.
Those OUTSIDE that firm have nothing to lose, whether it booms or busts.
'I think you are spot on. I was so irritated with what I saw as Lib Dem hypocrisy (the Syria vote was a much bigger betrayal than university fees in my opinion) that I wrote to my Lib Dem MP to clarify his position.'
Old Compton street no longer has the pleasure of your company?
http://www.buzzfeed.com/jimwaterson/labour-have-found-a-new-way-of-spamming-everyone
Perhaps they should have, perhaps they did, but the political necessities of the time meant they couldn't say so publicly. Look at the problems that Letwin got into, for instance, in 2005 (2001?) when he suggested cutting £20bn from spending. Or the reacting to some of Howard Flight's comments.
The World Bank lists the effect of biofuels as an important contributor to higher food prices.[62] The FAO/ECMB has reported that world land usage for agriculture has declined since the 1980s, and subsidies outside the United States and EU have dropped since the year 2004, leaving supply, while sufficient to meet 2004 needs, vulnerable when the United States began converting agricultural commodities to biofuels.
Nowhere did I claim that government policy was the only factor, but constricting supply contributed to commodity prices becoming more volatile.
(Be aware that many of my clients and companies sell to industrial protein producers, so although I am not involved directly in the grain business, I do keep a careful eye on producer input costs)
Banks were regulated! Unfortunately the system was built by Gormless McBruin and his Balls: Scottish-basing didnae 'elp...!
"Old Compton street no longer has the pleasure of your company?"
It does but recently I've also been spending time in Didsbury where I have family. Observant of you nonetheless!
"control or maintain the rate or speed of (a machine or process) so that it operates properly"
Edited-to-add: FFS: Nominal =/= Real. If services become cheaper (due to a propensity for employees to seek lower recompense) then it does not imply (causation =/= correlation) that expenditure is a factor of income. A low-wage family may shop at Lidl for as many carbohydrates as your M&S shopping; consumption is not solely income-related!!!
Its may be relatively few people's business to notice what's going on in the economy.
But those relatively few people include the Opposition leader and Shadow Chancellor.
And there was plenty they could have have pointed out but didn't - rising debt, unaffordable housing, stagnant living standards (and falling living standards among low earners), permanent trade deficit, rising youth unemployment, deindustrialisation and decline in pension values for example.
Instead all they did was assume everything was fine and that there would be money for spending increases and tax cuts forever.
Even when in the summer of 2008 the effects of recession, rising prices and income tax increases on the low paid was giving them huge opinion poll leads they seemed unaware of what was happening - Osborne instead spending his time yachting with undesirables.
And then in autumn 2008 they looked like Bambi and Thumper stuck frozen in the headlights as reality was forced upon them with the bank crashes.
The Treasury, the PM/CofE, their shadows, umpteen economic analysts from the City, international bodies, asset managers, business groups, etc.
Very few spotted the problems building up.
To uniquely ascribe blame to two individuals who missed it is unreasonable.
But you have already made up your mind that they are without redemption so there is little point wasting more pixels on the discussion
Now that people are aware that the implications are that poor people can't afford food it is immoral to continue it.
But the farmers in Iowa like the scheme - and US politicians are not brave enough to take on the issue. In fact, it's such a well known situation that there was even a West Wing episode devoted to it! (Season 6, Episode 13; King Corn)
Cameron and Osborne weren't interested even when it was obvious, when it was to their own benefit to emphasise and be prepared for what was happening.
But worse is that Cameron and Osborne still seem to want to return to the ecoomy of summer 2007 hence encouragement for house price rises and increases in consumer spending.
Fluffy Antoinette says " Let them eat cake from Lidl "
wastespend wisely on our behalf. Ed should explain what hospitals he is going to close for the lost income."Good QT last night with strong Scottish lineup'
It's like 4 Kirsty Warks screaching at each other. Too noisy for my taste
Take a look at this piece of economic analysis and notice the date.
" Richard, do you think we’re going into recession?
May 3rd, 2008 at 6:54 pm
RICHARD
Yes – the economic fundamentals of this country are very weak. We have an ‘Emperor’s New Clothes’ economy based on too much debt fuelled wealth consumption (both private and public sector) but with too little wealth creation.
The sense of affluence caused by the house price pyramid scheme is going into reverse and this will lead to job losses in construction, financial services and retail.
Manufacturing employment is already at its lowest level on record and is being very hard hit by rising commodity prices not to mention extra taxes, insurance costs and red tape.
Issues like national energy security and savings/pensions are also very worrying. Expect the next few years to see rising prices, job losses, public sector strikes and repeated crises. Very 1970s! "
Actually its a statement of what was then obvious to anyone who looked. So why weren't Cameron and Osborne capable of looking and thinking along the same lines ?
The paradox of thrift is simply an example of the reduction of velocity of money which can occur when the proportion of income spent is reduced.
So if we accept that immigration reduces wages (which is probably only true at the low skill end of the market, highly skilled immigrants will allow those working around/for them to earn more) then the tendency to save will be reduced increasing the velocity of money, not reducing it.
Contrary to Mr Jones's assertion discretionary spending has the lowest velocity as we may treat ourselves occasionally but we buy food every day.
One possible negative effect that immigration can have on total spending is where significant amounts of earned income are remitted to their home countries, thereby reducing demand in the UK. This would have a similar effect to saving. Is there any evidence that this happens in the UK to a material extent?
So he needs to make sure that any transfer to general taxation is fully funded or borrowing will increase. And we certainly would want that this financial year would we?
Kaneez Akthar (Cllr for Keihgley Central)
Ralph Berry (Cllr for Wibsey ward, Bradford South)
John Grogan (former Selby MP)
Henri Murison (former Newcastle Cllr, currently living in Addingham and working as research director for the West Yorkshire PCC)
Hustings on Nov 23
There is no brotherly love involved in gliding up the greasy pole. Both are politicians. The only difference was, perhaps, David was relaxed about his "inheritence". His election budget was several times bigger than Ed's. Yet he lost.
I did not vote for Ed Miliband. But I remember in one of the Party gatherings in the summer of 2010, an EdM supporter coming upto me and asking for my "second vote". We got talking and he was telling me their phone bank was concentrating on the second vote, knowing they could never win on the first one.
Ed had worked out the rules of the election. Just like Obama did in 2008. David, like Hillary, assumed the crown would fall into his lap. It always does not work out like that.
To David Herdson, I say, better late than never ! Never underestimate a ruthless winner !!
"Necessities are concentrated: housing, energy, food etc so pass through fewer hands. Fewer hands, fewer transactions, lower velocity.
Discretionary spending has the highest velocity so a shift from discretionary spending to necessities lowers the velocity."
http://bankstastuff.blogspot.co.uk/2013/11/how-mass-immigration-destroys-economy.html
If I save the £1 for several months to put towards my summer holiday then eventually the £1 is spent but the number of transactions will be fewer so the velocity will be less.
The insight that Keynes brought to velocity is that when you are measuring the quantity of money in the economy over a period it is not enough to measure the volume of cash in circulation. Printing money can, if it is not used, simply be "pushing on a string" as he put it. I think that has been one of the problems with QE. It has increased the volume of money in the system but if anything it has reduced its velocity so the effect on aggregate demand has been muted.
How does immigration impact on this? As a primary effect not at all. There are possible secondary effects if the level of consumption increases because more is spent on necessities or if significant quantities of money are remitted abroad. I would be interested to see any evidence by way of links that you may have as to either of those effects impacting on aggregate demand in the UK.
The Hunt for Ed October
Comrades! This is your captain! It is an honour to speak to you today! And I'm honoured to be sailing with you on the maiden voyage of our Motherland's most recent achievement. And once more, we play our dangerous game. A game of chess... against our old adversary - the Conservative Party!
For a hundred years, your fathers before you and your older brothers played this game - and played it well. But today, the game is different. WE have the advantage! It reminds me of the heady days of 1945 and Clement Atlee, when the world trembled at the sound of our nationalisations. Now they will tremble again - at the sound of our populism. The order is: engage the Energy Price Freeze!
Comrades! Our own activists don't know our full potential! They will do everything possible to test us, but they will only test their own embarrassment. We will leave our activists behind! We will pass through the Conservative patrols, past their sonar nets, and lay off their largest parliamentary constituency, and listen to their braying and tittering - while we conduct anti-austerity debates! And when we are finished, the only sound they will hear is our laughter, while we sail to Brighton, where the sun is warm, and so is the... comradeship.
A great day, comrades! We sail into history!
I'd say they have done an okay job of managing a difficult inheritance, and things seem to be slowing moving in the right direction on many areas. That said, they have missed some hugely important things (e.g. supply side reforms) and are too reliant on consumer spending. How much that is their failure and how much that is the realities of Coalition I am not in a position to judge.
Overall I'd give them a B or possibly a B+. No more than that.
You're misunderstanding it. Necessity spending is fast but concentrated: housing, energy, food etc. Discretionary spending is much more varied - that's why it has a higher velocity. Number of transactions - not just how fast it goes out of a wage packet.
edit: jocasta's music lessons, wayne's football strip, saying yes or no to the window cleaner, getting some work down on the house, buying a magazine, a million and one different things -> more transactions, same money through more hands.
Based on ReD's recent utterances the thread should be "Ed is crap prime ministerial material."
@guyadams: Sunday Times hacks have been over Falkirk like a rash this week. Brace yourselves!
You should read the blog post I linked to below in full. It's fascinating to see what some minds will turn to when their favourite argument that immigrants are bleeding the country dry has been debunked.
Ruffer called it in 2004 (too early), Jupiter in 2006, Hoare's in 2007, Blackrock missed it, an individual I know got it spot on in April 2007 (jammy bugger moved everything in cash because he couldn't believe the terms banks were offering him).
From Bear Stearns suspending their funds in June 2007, to the BNP issues in ?August, Northern Rock in September, it was game on.
I doubt that Osborne and Cameron fully accepted Brown's spending plans at that point, although they may not have highlighted their differing view. They were critical (rightly so) of his handling of Northern Rock, though, and various other issues. Certainly, IIRC, they were increasingly making noises about austerity during the second half of 2009.
Root of all evil = immigrants
And there's no line you wouldnt peddle to try to show it.
Immigration can have a deflationary effect if it reduces the value of labour but velocity has absolutely nothing to do with it. Similarly, immigration can reduce the per capita income of a country if their productivity, on average, is less than that of the domestic population. That has nothing to do with velocity either.
I actually agree with those who point out that the large scale immigration under the last govenment did a lot for the professional middle classes who got cheaper joiners, cleaners and other services but was pretty disastrous for the lower skilled with whom those immigrants were in more direct competition. But velocity has nothing to do with that either.
Clearly I'm not projecting.
Cameron and Osborne have not only handled the economics badly they've handled the politics of the economics badly.
But just as they weren't competant enough to demolish Labour's economic record the Eds aren't competant to demolish this government's.
Cameron &, Osborne, Miliband & Balls - merely opposite sides of the same coin of incompetance.
And after they've all had their go we'll still be an economy which borrows £100bn more each and every year with a permanent trade deficit and stagnant productivity.
The brick wall awaits and approaches steadily.
Damien McBride's book is very interesting on the topic (worth buying, because it's pretty interesting about lots more than the last few months of gossip). His view was that EdM saw it as preserving his father's intellectual inheritance and didn't think that it was safe in David's hands.
The more of a person's income is spent the higher velocity that money has. The more it is saved the lower. Those on higher incomes tend to save more so their money has a lower velocity. The proposition in the article Neil linked to that a prosperous middle class's spending results in a higher velocity of money is wrong. Absolutely wrong.
Starting at the first step do you accept
effective money supply = velocity of money x nominal money supply
and that if so, if the velocity declines enough it is possible to have a deflation even if the nominal money supply is increasing?
If you accept that point then you accept that shifts in the velocity are potentially relevant.
If you accept that then it is just a question of what categories have what velocities and if there has been any shifts in the percentages.
- Distributional impact of tax changes has been heavily weighted towards the top decline.
- Low earners (not necessarily the worst off) have disproportionately benefits from the increase in personal allowance
- Have seen this widely reported, but not the source data
- Am sure this could be demonstrated, but it's always a definitional question
- jobs point is accurate
Where you are wrong is arguing that immigration has caused a reduction in the velocity of money. It is very likely to have had the opposite effect.
There are undoubtedly substantial deflationary pressures in our economy. They are being offset by very low interest rates, QE and very high government borrowing.
Those deflationary effects are not caused by immigration.
There has been a reduction in the velocity of money but this is not connected to immigration or even the fall in real earnings. This is occurring because Banks have been shrinking their balance sheets in a radical way and have been unwilling to lend. In addition some of the apparent increase in our money supply caused by endless leveraged transactions in the City pre 2008 have stopped. Furthermore although the absolute level of borrowing by the government remains far too high it has fallen by more than £30bn a year over the last 3 years.
This is why this recession is so much harder to get out of than a "normal" recession. As long as the supply of credit is restrained in this way there will be little growth in the money supply and very little growth in aggregate demand. It is one of the reasons I am so frustrated the government took so long to grasp the thistle on RBS. That bank alone had many, many times the impact on our money supply than immigration.
Until that point is accepted everything else is dancing on the head of a pin.
"Immigration can have a deflationary effect if it reduces the value of labour but velocity has absolutely nothing to do with it."
It's because you believe
"Where you are wrong is arguing that immigration has caused a reduction in the velocity of money. It is very likely to have had the opposite effect."
that if there had been a shift from discretionary spending to necessities then it would have increased the velocity because you believe necessity spending has a higher velocity than discretionary - which might be right although I haven't seen any proof of that anywhere just lots of assertions.
And also that even if the theory is wrong and discretionary spending - aka trickle sideways economics - *does* have a higher velocity and therefore a shift from discretionary spending to necessity spending *does* have a deflationary effect then it doesn't matter at the moment because that deflationary effect would be massively outweighed by the deflationary effect of the bank's shrinking their balance sheets?
Of course if that was wrong it would have a pretty dramatic effect all round.
The art of chemotherapy is killing the cancer without killing the patient. You start with slowing disease progression and then turn things around. But it takes time.
Your approach would risk killing the patient.
Then there’s the question of how and why these clearly illegitimate applications were processed by the party’s membership department. When the investigators looked into this element of the affair, they made a second, eye-opening discovery.
‘It turned out that someone in party HQ had indeed queried the Falkirk applications,’ says a party source. ‘At this point, Tom Watson [Deputy Chair of the Labour Party] is alleged to have intervened to ensure that the applications were processed.
‘What you’ve got to remember is that by that stage, Unite were getting desperate to recruit new members in Falkirk. Time was running out. So their ally Watson helped them out.’
In July, days after the report into Falkirk was handed to Miliband, Watson announced his resignation from the Shadow Cabinet, in a mysterious letter that failed to detail exact reasons for his departure. Watson’s exit surprised observers, and has never been fully explained.
However one senior Labour source has told the Mail that the report left Watson in a tricky position: it allegedly contained an email he’d sent to an individual in Labour’s membership department, encouraging them to process the applications.
Watson has not commented on this allegation and did not respond to inquiries yesterday.
http://www.dailymail.co.uk/news/article-2493691/Falkirk-vote-fixing-Cash-filled-envelope-truth-Labour-union-vote-riggers.html#ixzz2kALqT100