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    (Original post by Aliccam)
    From your comment I would put you on the right not the middle.
    Corbyn will be good for real business because he will put more money into circulation and in peoples pockets, which they will spend in our businesses. He will also invest in infrastrucure generating more business. The Tories are good if you are very rich, have lots of shares and don't need to work.
    Corbyn actually cares about social issues. the Tories just regard them as an expense.
    Corbyn wants to tackle the route cause of problems associated with immigration. the Tories just want to blame immigrants, and cut more services.
    Corbyn wants to tackle poverty which breeds crime. the Tories would rather just lock people up and make money out of it.
    Somebody needs to learn a thing about inflation, I suggest you look up hyperinflation, there are plenty of examples, perhaps Weimar Germany? Maybe Hungary? Maybe we should look at Corbyn's beloved Soviet Union? Maybe the best known to the average Joe, Zimbabwe?
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    (Original post by Jammy Duel)
    Somebody needs to learn a thing about inflation, I suggest you look up hyperinflation, there are plenty of examples, perhaps Weimar Germany? Maybe Hungary? Maybe we should look at Corbyn's beloved Soviet Union? Maybe the best known to the average Joe, Zimbabwe?
    It seems your argument is that we shouldn't make ordinary people better off as it may cause inflation.
    There have been many events over the last low-inflation period which should have triggered hyper-inflation by now but haven't. The 2008 crash caused by the banks not government spending. Out of control government borrowing by all Parties. High employment. Massive swings in the value of the pound.
    What is stopping inflation is that the wealth, which would be the victim of inflation, is held so dis-proportionally by the wealthy, who really control what happens. Governments around the world owe so much money, they would all immediately go bust if interest rates go up, which they would with inflation. There will be no hyperinflation. Corbyn's proposed £500bn investment, won't even tickle the trillions held by the wealthy, that is just sat doing nothing.
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    Comrade Corbyn will be most pleased with this piece of propaganda.
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    (Original post by Aliccam)
    It seems your argument is that we shouldn't make ordinary people better off as it may cause inflation.
    There have been many events over the last low-inflation period which should have triggered hyper-inflation by now but haven't. The 2008 crash caused by the banks not government spending. Out of control government borrowing by all Parties. High employment. Massive swings in the value of the pound.
    What is stopping inflation is that the wealth, which would be the victim of inflation, is held so dis-proportionally by the wealthy, who really control what happens. Governments around the world owe so much money, they would all immediately go bust if interest rates go up, which they would with inflation. There will be no hyperinflation. Corbyn's proposed £500bn investment, won't even tickle the trillions held by the wealthy, that is just sat doing nothing.
    None of those things should actually have caused hyperinflation because none of their are highly inflationary with a practically necessary negative feedback loop.

    I think we need to answer a few simple questions first:
    1) How much money do you think there is, because in the UK the wealthy certainly don't hold trillion?
    2) Depending on how you want to look at the question, how much do you think is spent on different areas by private individuals, or alternative what do you think drives the inflation figures?
    3) How do you think inflation is controlled and guided to try to maintain the 2% target?
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    (Original post by Jammy Duel)
    I think we need to answer a few simple questions first:
    1) How much money do you think there is, because in the UK the wealthy certainly don't hold trillion?
    Total UK wealth around 10 trillion. Top 10% approx 5 trillion. UK National debt 1.7 trillion Private debt 1.4 trillion.
    2) Depending on how you want to look at the question, how much do you think is spent on different areas by private individuals, or alternative what do you think drives the inflation figures?
    Demand versus supply. Within the UK Goods and Food are in relatively good supply, so inflation is low. Housing is in short supply so inflation is high. Energy and transport are monopolies yet unavoidable expenses and inflation is relatively high. Exchange rates affect imported goods inflation, though margins are often adjusted to offset this in the short term.
    3) How do you think inflation is controlled and guided to try to maintain the 2% target?
    We are lead to believe this is done by money supply, and interest rate changes. Doesn't really, it just placates the financial markets. Real world inflation is down to the price the seller can get away with, which is down to supply and demand.

    What is your idea of what causes inflation?
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    (Original post by Aliccam)
    Total UK wealth around 10 trillion. Top 10% approx 5 trillion. UK National debt 1.7 trillion Private debt 1.4 trillion.
    Demand versus supply. Within the UK Goods and Food are in relatively good supply, so inflation is low. Housing is in short supply so inflation is high. Energy and transport are monopolies yet unavoidable expenses and inflation is relatively high. Exchange rates affect imported goods inflation, though margins are often adjusted to offset this in the short term.
    We are lead to believe this is done by money supply, and interest rate changes. Doesn't really, it just placates the financial markets. Real world inflation is down to the price the seller can get away with, which is down to supply and demand.

    What is your idea of what causes inflation?
    Seems we have a bit of work to do

    For a start, wealth=/= money, in theory you could be the richest man in the world but have a 0 share of the global money supply because they are two completely different things, basically everybody is wealthier than their share of the money, especially when looking at narrow money (by my reckoning in the G7+rest of the Eurozone there is only about $20tn, CIA Factbook puts the global total at about $28.6tn). I would also wager that the general trend will be that the wealthier you are the lower the proportion of that wealth is money. If we narrow it right down to cash you will need all the cash in the world two and a half times over to buy the private assets of all UK citizens, there is only about $5tn, and Sterling isn't even $100bn, money is what is important, not wealth, which is a measure of all assets.

    The cash, M0, isn't really that important, we should be more interested in M1-4, and I'll stick with M1 because that's where the biggest jump comes and it's still incredibly liquid. We get though that this $100b is not all the money, when you put money in the bank they then lend that money out, and since 2009 they have not been required to hold on to a single penny of it by the BoE, so this money is lent back out, and that "creates" more money, which itself will be lent out, and lent out, and lent out, I suppose in a way M1 measures cash+private debt, this sits at £1.6tn (continuing up to M4 we get all the way to £2.1t, but most of this £500b isn't very liquid). So depending on how you look at it there is between £100bn and £2.1tn. In effect there is £1.6tn floating about. Most of the rest of the £10tn is property, all the houses in the country combined are worth over £6tn ($217tn globally). Interestingly, the UK housing stock is worth more than all commercial real estate in the world.

    ------------------------------------

    You seem to be suggesting that inflation is simultaneously low and high, but I mean, what do you think the weightings are on the basket used for inflation calculation, for instance, how much does food inflation contribute to the headline rate, housing and bills where applicable, transport, alcohol, etc. That's what the question was about

    It's also worth noting that pensioners and the top 4% are excluded with a household being considered a pensioner household if the head of the household is economically inactive and retired, and where at least 75% of household income comes from the state. There are 700 items and they are all weighted proportionally to what's spent on them by the 96% non pensioners on average. It also gives a nice insight into how the average Briton spends their money and it really shows some stereotypes to be true.

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    I think the fact you said "lead to believe" highlights the exact problem we have, which is that you seem to reject the basic premise required to accept that an increased money supply leads to inflation, because you pass off the manipulation of the money supply as a way to line the pockets of bankers. I suppose it's a case of whether you reject that the money supply is actually changed or you reject that the change in money supply actually has any effect on inflation.
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    (Original post by Jammy Duel)
    I think the fact you said "lead to believe" highlights the exact problem we have, which is that you seem to reject the basic premise required to accept that an increased money supply leads to inflation, because you pass off the manipulation of the money supply as a way to line the pockets of bankers. I suppose it's a case of whether you reject that the money supply is actually changed or you reject that the change in money supply actually has any effect on inflation.
    Thanks for the financial education. Returning to your original premise was that by injecting 500bn Corbyn is going to cause hyperinflation. By your measure the 350bn put into the markets/banks by the BoE following the crash should have caused hyperinflation, or a the very least inflation. Within your what you have said was that it is only money in circulation which affects inflation. As the 500bn is for 'investment' much of it will be taken out of circulation fairly quickly. This is also not all at once it is a long term plan.
    There are also global factors keeping inflation very low, which the UK government of whatever colour has very little control over.
    Whilst the 'wealth' is not liquid it does have the effect of taking a large amount of money out of circulation in the form of mortgages.
    Another large chunk of money is in circulation solely in the 'markets' in the form of speculation. I may not be correct, but I had heard that this dwarfs that in circulation elsewhere.
    When it boils down to it I don't think Corbyn's aim is for the population to all get rich overnight, just share out what there is a bit more evenly among the people and the country, so that we don't have those at the bottom, struggling unnecessarily, and also that we have services that work well and don't put a strain on those working within them.
 
 
 
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