Friday, October 18, 2013

The triumph of the Wonga Economy

From Brother Ivo:

Students of irony must have enjoyed listening to the news on Thursday as "Credit Union Day" stories sat back-to-back with reports of "sanity breaking out on Capitol Hill".

The iniquity of escalating debt was recognised in the context of individuals and families falling into the clutches of payday loan companies like the much derided Wonga, and Brother Ivo will be supporting his local credit union to do his bit for Archbishop Justin's plan to offer a better alternative. What was odd was the apparent inability of news editors to scale up that mode of thought and to apply exactly the same principles on the macro level when reviewing the American "moderate" Republicans' emulation of the Grand Old Duke of York.

It is worth recalling that the United States adopted legislation to control public debt in an attempt to constrain the spending proclivities of politicians, and to impose some degree of discipline, making the Government live within its means. It is very easy to buy popularity today with tomorrow's money, especially if you bequeath that debt to your successors. You leave them to grapple with the problem and you dissolve the potency of the debt you inherited by degrading the currency.

Here Brother Ivo's love of paradox returns.

Two groups of people benefit from this. In the first group there are those who depend upon the state, either as supplicants or contracting parties. Such people can lobby for inflation-proof rises, and as they are a significant voting block, they will be listened to.

In the second group we find the investment community and their dependent infrastructure. If you can talk up "market confidence", the fear (and certainty) of inflation will encourage market activity. If you can make 5% against 4% inflation you will be able to afford next year's BMW.

So far, this political three-card-trick seems to make everyone a winner. Except it doesn't. The saver, the pensioner, the trader and his employees in a market sector whose customers are not blessed to be within reach of the magic porridge pot, are the folk who are not able to join the party, so they form their own - the Tea Party.

Their "insanity" - as the media frequently describe it - lies in an awareness of historical precedent, and taking seriously the iniquity of unpayable debt.

Inflation ultimately destroys economies and countries, as the Weimar Republic demonstrated. Borrowing more eventually breaks the imprudent individual Wonga borrower, and even if a nation state does not borrow at those catastrophic rates of interest, it follows the same path when the increased borrowing has been spent but the proportion of future income servicing the debt has increased.

The US legislation to require the Government to at least look at the problem before raising the debt ceiling was not ignoble. Unfortunately for the USA, its friends and dependants, the progressive movement has, for now, captured the legislators and the media narrative. Anyone suggesting that the passing of the last "debt ceiling" is problematic is portrayed as reckless, which raises a simple, perhaps naive question.

If the debt ceiling is to be routinely and unhesitatingly increased, why have it? Why not repeal it? Why not go to the voters and simply say, "We can borrow, print money and spend indefinitely, my friends, because tomorrow never comes"?

There are, of course, the inconvenient examples of Greece, Portugal and Spain to demonstrate what happens to economies, unemployment and public services when such an approach is adopted, yet still, it is the sceptics of progressive economics who receive the bad press and not the proponents of Wonga Economics - on Capitol Hill or within the Westminster bubble.

We in the UK are in no position to gloat. We have not yet balanced our budget, still less begun to pay down our debt. Although Brother Ivo may sound US-fixated, it is the contemplation of their woes that leads him to warn of our own.

The BBC spoke of the US Government being "paralysed" by the debate. In truth, 85% of government continued: in its own language, it was the "non-essential" workers who were laid off. Tellingly, those on the public payroll will have their lost wages made up - they always do. It is the little folk in the private sector who will have lost - they always do.

Contrary to the rhetoric, the US was never going to default on its bond repayments. The US takes in something like $250bn a month in tax. The IRS was still working. The debt interest is currently running at approximately $20bn per month. That would have been paid. It was other expenditure which would have come under scrutiny - and that was the point of the exercise. If you are in deficit on current expenditure, is this really the best time to take on the additional massive unfunded debt that is Obamacare?

Whether one scales down the problem from US debt to payday loan, or scales up from the worker imprudently succumbing to the temptation to live-now-pay-later, the issues are much the same.

We have heard our bishops raising their voices against the payday loan culture and calling for a more sensible approach to debt. Please God, we shall hear one or two speaking out against the Wonga Economics of those entrusted - or hoping to be entrusted - with the government and future economic security of our country.

Brother Ivo is the Patron Saint of Lawyers


Blogger Uncle Brian said...

Bro Ivo, as you point out, The debt interest is currently running at approximately $20bn per month. One key difference between the US debt problem and that of Greece and Portugal is that the US debt is owed largely to US banks, whereas the Greek and Portuguese governments were not massively in debt to Greek and Portuguese banks, but to other countries' banks.

Thanks to Obama, the big banks, not only on Wall Street but right here in our very own City of London, have all the business they need handed to them on a plate. All they need to do, to keep the profits flowing in, is to come across with Mr Obama's loan every time he asks for one. And that nice Mr Cameron's, too, of course.

18 October 2013 at 10:33  
Blogger David Hussell said...

An excellent short article Brother Ivo, encapsulating a financial truth and comparison which otherwise would escaped me, so thank you.

Whether it is the way that much of the western world arranges its finances, or whether it is about looking with honest realism at the nature of man, woman, society and God, this is an age which loves to bury its head in the sand. It is so strange that in an age when science has helped us understand so much more about the "how" of things, the mechanisms of matter and physical forces, we are also so blind to many other things such as, the practicalities of life, like financial systems, or our human nature and how we were formed, as men and women, or again the spiritual realities of our relationship with God.

One day we will wake up with a very large, very painful bump, and all these truths will flood in. It will be a tsaunami !

18 October 2013 at 11:03  
Blogger Avi Barzel said...

What's with the hilarious chart, Brother Ivo? It should compare CO2 output (a very skewed "estimation" anyway) with the progressive greying of my beard. A much tighter correlation and easy to validated empirically, I assure you.

O, look, I see it's a pastiche by the notorious radical environmentalist and fraud, Ira Glickstein, of the stolen Heartland Institute data and documents fraud. Even his red squiggles have been jumbled, I mean of course "adjusted" with upward "smoothings" and abruptly end in 2010, even though we've had much more recent surface temperature satellite data sets from the NOAA. One would hope it's not to shove the 16-year mean temperature flat-line and relative decline under the parlour rug, what! Sneaky little rat he is, that Ira, Brother. Wouldn't trust him for five minutes with a bag of dirty rocks.

18 October 2013 at 12:18  
Blogger Happy Jack said...

The wages of sin is debt.

18 October 2013 at 12:20  
Blogger IanCad said...

Good editorial Brother Ivo,

For sure, one of the time honoured ways to be rid of debt is to print and inflate your way out of it.
Another is to welsh on your obligations.

As we look to the US it would be good to remember that their crisis was precipitated by an over-valued real estate sector.
The cure was savage and quick. Property values are now low and relative rents extremely high.

No such correction happened here.
It has to.
With average annual incomes at about 25K and house prices at nearly 200K something has to give.

With our government pushing the innocents into buying new homes, the stage is set for chaos.

Forget the US, we'd better look to our own problems.

18 October 2013 at 12:25  
Blogger Avi Barzel said...

Hi, Dodo.

18 October 2013 at 12:27  
Blogger Archbishop Cranmer said...

Mr Barzel,

Whom are you alleging is Dodo?

18 October 2013 at 12:28  
Blogger E.xtra S.ensory Blofeld + Tiddles said...

Avi Barzel said...

Hi, Dodo.

Which only goes to prove "You can't keep a goose birds down" *Sniggers*


18 October 2013 at 12:31  
Blogger Avi Barzel said...

"Happy Jack," Your Grace. An unfounded allegation based solely on an intuitive hunch and the hope of a response which would yield a clue or two. Wouldn't stand up in a clean court of law, I admit.

18 October 2013 at 12:37  
Blogger Avi Barzel said...

It occured to me, Brother Ivo, that the chart you posted could be used to indirectly show the deleterious effects of "climate mitigation" on the US economy, namely in crippling environmental legislation, billions spent on useless "green" technologies for crony capitalists, the carbon credit scams, the hobbling carbon energy exploration and extraction bans, the destruction of the coal industry...the list is long.

18 October 2013 at 13:13  
Blogger Len said...

'Happy Jack' of course was a 'Who' song.

At the tail end of the song, you can hear Townshend yelling the phrase "I saw yer!" to Who drummer Keith Moon. Apparently, Moon had been banished from the studio and was trying to sneak back in.
Just sayin'.

18 October 2013 at 13:58  
Blogger Avi Barzel said...

Len, you surprise me with your hidden musicology talents. Imagined you as singer of hymnals, but now, after your revelation of hidden Rock memorabilia knowledge, I wouldn't be surprised if you fessed up to having been on stage with Black Sabbath, swinging your wild mop of hair, eating live bats....

18 October 2013 at 14:15  
Blogger Archbishop Cranmer said...

Mr Barzel (again),

Whom are you alleging is Dodo? His Grace would very much like to know. Shalom.

18 October 2013 at 14:17  
Blogger Uncle Brian said...

Your Grace, Avi replied at 12:37, to which Len added (at 13:58) an erudite explanation of the musicological symbolism underlying the choice of name.

18 October 2013 at 14:30  
Blogger Archbishop Cranmer said...

Apologies, Mr Barzel.

No, Happy Jack is not Dodo. Should he plague this blog again, it will be shut down.

18 October 2013 at 14:36  
Blogger Avi Barzel said...

Shalom to you as well, Your Grace. Our Uncle Brian above kindly supplied the reference to my reply, namely at 12:37. I cannot help but think I'm heading for the proverbial dog house with my careless guess (allegation is too strong of a description).

18 October 2013 at 14:43  
Blogger Avi Barzel said...

No apologies, necessary, Your Grace, missed your post above as well; these blogs appear to slip in and out of real time depending on traffic and location...and probably fluxes in the time-space continuum, for all we know. May I humbly offer counsel and caution His Grace that the warning he issued can serve as an invitation for bitter and malicious characters with skills at manipulating and masking ISP signatures?

18 October 2013 at 14:51  
Blogger Len said...

Avi,I belive are a few who would like to shut this blog down and your advice to HG is good advice. 'Tares' exist and God will deal with them in due time because whenever the Gospel is preached tares will spring up .'But while men slept, his enemy came & sowed tares among the wheat, and went his way'. (Matthew 13:25)

It would be a great shame to lose this Blog for a 'tare'or even two?.

About the music.. I like all sorts from classical to 'Guns n roses'(being a Child of the sixties I grew up with the 'Who' etc.(Not got much hair left to swing about though!.)

18 October 2013 at 15:13  
Blogger Uncle Brian said...


About the music.. I like all sorts from classical to 'Guns n roses'(being a Child of the sixties I grew up with the 'Who' etc.

So you're really just a nipper, then, Len. In my day (ahem) we grew up with Thelonious Monk, Gerry Mulligan, and Charles Mingus.

18 October 2013 at 15:29  
Blogger David Hussell said...

If it's time for confessions of a musical variety, here goes,

I am a musical ignoramus, a member of the great unwashed.
Since my youth I have liked folk music of all types, traditional English, Scottish and Irish, Country, Mountain and since my little tour of european Russia I am exercising (physically that is) to the stirring, deep sounds of Russian folk, without understanding a word of it !
Apart from that I'll own up to a penchant for some military music and national anthems, would you believe, inherited from my High Church grandmother, God rest her incense saturated soul !

My favourite Hymnal is "Mission Praise" to the horror of our musical, classically educated incumbent, who has much to put up with from me !
So I am beyond musical redemption ! Please pray for me.

18 October 2013 at 15:56  
Blogger Phil Roberts said...

Let us assume we borrow 100 billion for the next 100 years and pay nothing back and not add to the debt in that time. What is envisaged perhaps?

The interest at 4% we would owe 4 trillion (4000 million)

Interest at 7% we would owe nearly 90 trillion!!!! 90,000 million

Interest at 12% we would owe ....wait for it...

835 trillion !! £835,000,000,000,000

Just by borrowing 100 billion


OK this make no sense to most people so if we borrow £10 for 100 years paid nothing back and did not borrow any more.

at 4% we would owe £505 !

at 7% we would owe £8600 !!

at 12% we would owe £835000 !!!

Just to borrow £10.

Fancy a default anyone? I thought so


18 October 2013 at 16:03  
Blogger Avi Barzel said...

Len, "tares" is too mild a term for the new crop of angry trolls who belatedly realized that there is a culture war raging on the blogosphere, well away from the snoozing mainstream media which they pretended to despise, but relied upon, and that they have been on the losing end. The most spectacular victim of this communications battle has been the cleverly engineered "Global Warming" scam. Backed by the UN, governments, industry, academia and billions of dollars, it chugged along nicely until savvy bloggers, humble weathermen, statisticians and competent amateurs chopped it off at the knees with nothing more than their smarts and free or cheap blog space.

The other surprise for the Left has been the emergence of conservative bloggers who within a few short years wreaked havoc on the rigged political playing field. They did this by exposing lies and casually questioning the unquestionable holy cows of yester-year. The Left, which once chattered away to itself complacently in its own echo chamber, thinking that institutionalized political correctness would protect it until the Sun goes supernova, suddenly found itself sandbagged from behind, bare-arsed and intellectually defenseless, challenged at every step and at the butt end of jokes it couldn't even understand. So, now, their only hope is to shut down the critique through sabotage on one end, and to lobby governments to control the Internet and free speech through regulation and "hate speech" legislation.

The best defense I know of for busy or exhausted blog owners under concentrated assault is not to walk away or rely on dumb word filters and techno-gewgaws, but to entrust a cadre of responsible volunteers with moderator status, as at Anthony Watts' climate science blog. Spaced across different time zones, they can rapidly and cheerfully shame and blow away pests who, seeing their efforts wasted time and again, eventually tire and move on. His Grace's blog has not been under such an assault, but I would recommend to His Grace and any other concerned blog owner to at least informally set up a reserve of core of volunteers as a contingency for when, not if anymore, that day comes.

Good taste in music, btw.

18 October 2013 at 16:16  
Blogger Phil Roberts said...

The problem is that for most people borrowing works

Borrowing money to buy property has been fantastically lucrative especially in the 1970 to 2006 period and is still a good bet in most parts of the UK.

Borrowing money to buy a new car is also good value, savings on petrol, road tax and repairs far outweigh the interest and depreciation in many cases. My last new car lost £500 in 13 months in depreciation. If I had borrowed the money at 10% I would have paid £2000 in interest. £7 a day for a new car. You could easily save this in petrol alone


18 October 2013 at 16:16  
Blogger Avi Barzel said...

Back to the topic at hand and with apologies for creaking and squeeking on the same hurly-gurdy, but the seemingly massive debts everyone seems to be sweating over could be solved in a matter of months ...seriously... by even partially relaxing the most unreasonable energy regulations.

Energy--be it in the form of grain for slaves in Classical times; wood, wind and water power during the Medieval mini-industrial revolution; whale blubber, charcoal, coal and finally oil and gas--powers our civilization. Anyone who talks about reducing our "dependence" on the best and cleanest energy sources we've had in history is talking about bringing back wars, famines, misery and deaths for millions, especially among the poor. A firing squad for such ghouls is too kind.

18 October 2013 at 16:29  
Blogger David Hussell said...

Phil Roberts,

Compound Interest.

A financial director, a former colleague, had a wonderful phrase when someone mentioned upping our borrowing to get over some passing cash flow problem, "Compound interest is the most powerful force known to mankind, don't get ensnared!". It headed off most foolishness about feeding the current account with borrowed money. But what we are up against politically, is the short termism much encouraged by the electoral cycle and the foolish myopia of a large slice of humanity.

18 October 2013 at 16:52  
Blogger Dr.D said...

Sanity is NOT breaking out on Capital Hill. Bullying, private deals, and spine removal are the order of the day there. This is just one more in a long series of disasters that have come to the US since the election of Oblama. The presidency has been vacant since Jan, 2009, and a communist thief and con artist has been in the WH since that time.

18 October 2013 at 16:58  
Blogger David Hussell said...


The blogging fight back from the traditionalists. You are spot on the money there.

Leftists as we all know spread their divisiveness and nonsenses by deliberately aiming to dominate what appeared to be uninteresting talking shops the world over, from the UN downwards, whilst more practical, usually right leaning types get on with actually doing things in the real world, producing, growing, manufacturing or distributing, like you do I suggest?
So they have had an open road, a clear run for a very long time. They have had runaway success at distorting our laws and our young peoples ways of thinking, with disastrous results. But now come the open, largely unregulated blog sphere real alternatives and rational , evidence based thoughts are being aired, even by busy productive types with just a few minutes to spare each day. And they like it not !
Hence as you say the rush to close us down. They sense that they are the establishment now and so have switched from supporting a free press to arguing for restrictions. In a free market place of ideas they lose.
So yes, His Grace is well advised to prepare an effective global, plan B. The Anglican Communion, albeit a bit shaky at the moment, is very much a global phenomenon, and many of the traditionalists are in time zones distant from Albion's shores, so it should, with a following wind be a practical proposition.
So may I respectfully suggest Your Grace, that young Avi's advice is sound, and worthy of serious consideration ? There will be, I predict, erudite, intellectually robust, traditionalist Anglicans eager to protect your blog.

18 October 2013 at 17:09  
Blogger Happy Jack said...

Jack has just come home from shopping and this and that. He says, no he is not Dodo and has not heard of him. He is still happy though.

18 October 2013 at 17:11  
Blogger Avi Barzel said...

Mr Happy Jack, Avi apologizes humbly for his irresponsibility and for nearly staining your good and happy name. Avi hopes that you will forgive his trespass and that you will remain all bright and happy, retaining your rosy and happy grin on that sunny visage of yours. Happy munching and a happy weekend to you and your undoubtedly happy family.


Thank you for backing what some might think of as my overly paranoid thoughts, David. The current calm is but a symptom of the Left's confusion and their dependency on received wisdom. Without the old KGB to provide ideological guidance, abandoned by a China gunning for leather after groaning harvests of das Kapital and with its intelligentsia embroiled in the petty back-biting and power shuffles of academia whilst busy looking after their unexpected windfall in bloated salaries and ludicrously generous pension plans, the young pinko warriors are at a loss. Being from-top-on-down, conspiracy-obsessed centralizing statists, they are still looking for an imaginary conservative centre, a gaggle of secretive capitalists, a vulnerable heart, but soon enough they'll figure out that the threat is far more elusive as it comes from the people themselves, the dreaded working chumps lie us, the despised lumpenproletariat. So, let us all stand together, sure and ready at the cobblestone barricades, flintlocks cocked, bayonets fastened, sabres drawn...

18 October 2013 at 17:41  
Blogger Office of Inspector General said...

Profligacy at the expense of ruinous borrowing is only a comparatively recent event in the US. Government spending increased massively in 1942, understandably, and never really came down from those dizzy heights. Admittedly, the post WW2 economic boom kept the burden down to manageable levels, but that boom has been over for some time. Unlike the British Empire, which paid for itself, the US empire of world influence is staggeringly costly. But they wouldn’t have it any other way.

One was amused to read in the yesteryear column of his local paper that in the mid fifties, the crossroads not far from his childhood home was the subject of interest from the local council. They wanted to replace a couple of ‘Yield Right of Way’ road signs with traffic lights. The Town Clerk (…that’s now the borough CEO, for you younger types…) was far from convinced it was value for money, and referred it back to the planning committee. You’d think the cost was coming out of his own pocket ! That’s the sort you need in charge of the money bags. Not self serving politicians who would spend the next generations’ inheritance to stay in power, literally, at any cost…

18 October 2013 at 17:53  
Blogger Office of Inspector General said...

Ah, there you are Len. One notes you are doing to the history of the Who what you do to Christ’s mission on this earth. To wit, getting it wrong...

Moon was not banned from the recording studio, and thus was not trying to sneak back in. He was the drummer, you half wit. What he HAD been banned from doing was contributing to the choral lines. However, the rest of the group omitted to remove the upper microphone from his kit, and so there you have it, an annoyed Townshend. The cut was the best they managed, so it was released complete with Townshend’s ad lib.

18 October 2013 at 18:05  
Blogger Happy Jack said...

Avi, no sweat as Jack has been called far worse. I live on my own and there is no happy little Jack or Jill or happy Jackie to share his home. Jack likes it this way too. .

18 October 2013 at 18:18  
Blogger Len said...

'fraid like most of your comments you are wrong[again] Inspector.

Your knowledge of recording techniques is about the same[non existent] level as your knowledge of Christianity.

18 October 2013 at 18:41  
Blogger Office of Inspector General said...

Phil Roberts. Re your calculations. In 1914, a soldiers pay was a shilling a day (£0.05)

Today the value of that shilling would be £32

One wonders what the compound interest on 99 years for that single shilling would have achieved. One suspects it would fall well well short of £32

18 October 2013 at 18:43  
Blogger Avi Barzel said...

You are truly a generous and forgiving man, Happy Jack. A truly happy rarity to witness and be warmed by in these rough and cold times, sir. I am in your debt and from hereon you may count on my friendship and on my brass shield and iron broadsword should any unjustly or meanly assail you on these turbulent electronic fields of battle here.

Shabbat shalom to you and all here!

18 October 2013 at 18:45  
Blogger David Hussell said...

Happy Jack,

I am truly happy, deliriously happy indeed, at the spectacle of all that happiness flowing like a torrent from your most happy, happy self.

Your happy presence is much needed to lift some of us, me included, from a tendency suffered by many of a traditional leaning, in these unhappy times.

18 October 2013 at 18:53  
Blogger David Hussell said...


My flintlock has been known to be, well I admit half-cocked at times, but my sabre is a far more trusty and ever ready weapon !

Anyone know where a stout defender can purloin a handy load of cut price cobblestones for this end of the barricade ? It's a bit low at times.

18 October 2013 at 18:58  
Blogger Office of Inspector General said...

More on the eroding value of our money. The Inspector pays £100 a month from his salary in his contingency fund. For emergencies, that sort of thing. Every so often he rebanks a chunk of it into his ISA, or TESSA, or whatever that tax free thing is called these days, but always makes sure a sizable amount is left in there. The last interest he received on that account (net of tax) wouldn’t have bought a half pint of beer.

We trust our precious wealth to bastards, no less...

18 October 2013 at 19:16  
Blogger Uncle Brian said...

Inspector General, Sir:

On the subject of crossroads and traffic lights, it quite often happens that local councils turn down proposals to instal new traffic lights where there were none before, not on grounds of expense but of safety. At a crossroads where there is only light traffic, drivers can grow impatient waiting for the lights to turn green. And, of course, in full accordance with Murphy's Law, just at the moment when the over-confident motorist has decided it's quite safe to disregard the red light ... Wham!

18 October 2013 at 19:22  
Blogger Phil Roberts said...


"Phil Roberts. Re your calculations. In 1914, a soldiers pay was a shilling a day (£0.05)

Today the value of that shilling would be £32

One wonders what the compound interest on 99 years for that single shilling would have achieved. One suspects it would fall well well short of £32"

Your soldier's wage has risen by just under 7% pa on average. I am not sure it is a fair comparison as soldier was regarded as pretty unskilled in 1914 compared to today.

Also the wages of the less skilled have been kept artificially high in Europe due to a combination of employment pay, low birthrate and relatively well paid state jobs. Unskilled rates of pay have collapsed in much of the US which gives you an indication of the real earning potential.

Would a soldier still be paid £32 if there were 100 applications for every job?

One would like to think they would.


PS if we borrowed at 8% pa to pay that soldier (borrowing costs of Spain etc) that 5p would have cost us £110 but only "worth" £32. Our kids can never afford to pay that sort of debt off.

That is why Spain etc is in a mess

18 October 2013 at 19:43  
Blogger David Hussell said...


This amateur economist understands that inflation was at one time based on the price of a loaf of bread, which seems eminently sensible. Then after the 1930s I'm told that the price of Mars Bars, of all things, became part of the calculation, apparently. A much superior foodstuff though to mere bread don't you think ? Then, to my horror, the favoured chocolate bars shrunk ! So further Governmental obfuscation involved switching to the mythical "weekly shopping basket" whatever that contains ? Further along we have RPIs and later CPI's, all very arbitrary I suspect. So now I'm left with the vague feeling that comparison across the decades is an uncertain thing, influenced by economists in the pay of the Government of the day, to indicate what they wish to prove, I suspect . I am left feeling sceptical, doubting these claimed "independent" indexes of prices.

18 October 2013 at 20:31  
Blogger Avi Barzel said...

why not evaluate according to cost per calorie? Food, fuel or both?

18 October 2013 at 20:37  
Blogger Uncle Brian said...

David H

Don't knock the Mars Bar Index!

18 October 2013 at 20:55  
Blogger bluedog said...

Inspector & Phil Roberts, perhaps Brother Ivo can be persuaded to post a chart showing the expansion of the UK franchise in the nineteenth and early twentieth centuries over-laid with the rate of inflation. The correlation is perfect; universal suffrage equals total debasement of the currency.

The only hope is to borrow as much money as you can afford secured against a reliable income stream. Your own financial objectives are then aligned with those of the government, whose intention is never to repay debt but to steal the savings of the prudent through inflation.

Cynical? Absolutely, but then so is the political class.

18 October 2013 at 21:10  
Blogger Office of Inspector General said...

Chaps, very quickly, as an old friend has dropped by, but with him in the privvy, one can answer David Hussell’s mars bar dilemma. In 1970, ones father took this boy to the church club after mass. He remembers well being told that the price of a pint in the establishment was then one shilling (1/0). And that the price in town was 1/3.

It’s the price of beer that counts that man, they can’t shrink a pint, not yet anyway...

18 October 2013 at 21:40  
Blogger David Hussell said...


You have the point, but only in part. Now pay close attention!

It's a Mars Bar first, then with appetite sated, wash it down with a pint. As quickly as possible mark you ! With beer at one shilling per pint you're a winner, every time !
Do they have mid-week services at your fine church ? This game needs practice to be perfect.

18 October 2013 at 22:06  
Blogger Roy said...

Brother Ivo is right to draw attention to the growing problem of debt but has omitted one important point in which the United States is different from all other countries.

The US dollar is a reserve currency. As long as it retains that status the US government can pay its foreign debts simply by printing more money.

Of course, even that situation cannot last indefinitely. Before the US dollar gained ascendency the pound sterling was the international reserve currency. Britain's economy lost ground to that of the United States after World War I, but it wasn't until well after World War II that the pound sterling completely lost its reserve currency role.

If the US debt problem continues to grow then perhaps we might enter a period like that between the wars hopefully without another Great Depression. The Chinese have been talking about the possibility of a mixture of currencies taking over the reserve currency role.

That mixture would presumably still include the dollar as the most important currency, but others, presumably the Chinese renminbi, the euro and the Japanese yen would also be used to a greater extent than at present. How that would work remains to be seen.

Of course, as Brother Ivo pointed out, other countries are also facing a serious debt problem. George Osborne has just hailed a deal with the Chinese whereby they will pay for the construction of new nuclear power stations in Britain. He claimed that would enable the British government to use taxpayers' money on other things, such as schools and hospitals, instead.

Listening to Osborne would give anyone the impression that we will be getting nuclear power stations for free! And to think that the Conservatives like to depict themselves as the party of economic realism!

To make things worse, when I was a boy Britain led the world in the development of nuclear power for civilian use. Now we have to go cap in hand to the French and Chinese and beg them to build new power stations for us.

19 October 2013 at 09:50  
Blogger bluedog said...

Roy @ 09.50 says, ' How that would work remains to be seen.'

Simple, it wouldn't work, just as the Euro doesn't work. A currency requires a sovereign, and the Chinese proposal for a currency syndicate lacks a sovereign. If the Chinese want to offer full convertibility of the renminbi, let them do so. But they won't, they'll just carp on the sidelines and continue to undermine the West where and when they can.

Is Osborne really as naïve as he seems, or am I missing something?

And, 'when I was a boy Britain led the world in the development of nuclear power for civilian use. Now we have to go cap in hand to the French and Chinese and beg them to build new power stations for us.'

Hear, hear. British nuclear engineering was once the envy of the world, but its gone the way of every other valued added business at which Britain once excelled. Tragic. The recent re-emergence of Mesdames Keeler and Rice-Davies prompts the thought that the principle business in London today is that of a high-class brothel for third world elites.

20 October 2013 at 11:07  

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