Inequality

AngryHippie

http://www.irishtimes.com/business/economy/why-inequality-is-such-a-drag-on-economies-1.1947257?page=1

Interesting piece here on the erosion of the debt market being caused by inequality, thereby hamstringing the entire economy.

How to go about rolling that back though ?

KomradeBishop

Debt forgiveness, at an EU level, so that it isn't just added to our public debt.

The author of that article, Martin Wolf, has also advocated (for the UK anyway) the central bank directly providing money to the UK government, with no added public debt, and that being used to fund a large increase in public spending, which would boost the private economy, boost money in peoples hands, and help them with paying down debts.

Yet another idea, a 'debt jubilee', is a mix of both (but can only be performed by UK or whole of EU) - a fixed amount of money provided by the central bank (with no debt attached), and provided to every citizen, on the condition that it is used to pay down debts first; this is more fair, to people who never got into debt in the first place, as they still get something.

Might want to fix the link btw - points to page 2 of the article.

sin_city

Is there a possibility that governments will take the power of issuing their currency again?

The debt money central banking scheme is basically a Ponzi scheme at from what I can see (0% interest and so on) it’s close to imploding.

I see Switzerland is having a vote on a requirement that a certain amount of gold backs their currency next month.

I think the issue is not what backs the currency…in fact it does not have to be back by anything.

It would be better for government to take control back and inflate or deflate as per the economies demands.

AngryHippie

Debt forgiveness has to be the simplest way to do it, but that way, people who have been prudent and haven't over-borrowed lose out.
I don't think there is an equitable way for it to be done, which will probably hamper it.
To be honest, I don't think there is a way out, other than to bite the bullet and reinstate free education across the board, education is the primary route out of ti, but it needs to be accessible. The flip side is that unless that education is free everywhere, people will avail of the free system, then migrate to where their skills are in demand (the shortage will inevitably have been caused by an economic boom, or an expensive education system).
In Australia at the moment, they are in the process of deregulating Uni fees, which is going to ultimately drive the cost up for everyone.
Unfortunately for Oz, they have a Higher Education Loan Program, (Basically a low interest long term loan facilitated by govt.) which means that the higher fees are going to end up parked in long-term government loans anyway. It's a pretty dumb decision that is going to have more serious implications for their economy than they realize.

When I studied back home in DIT, it was registration fees only and while the standard of the facilities were pretty dire, many of the lecturers etc. were excellent. The reverse has been my experience in Aus so far.

Is education the smoothest (even if its the slowest) way to reduce inequality?
Or is it just window dressing as it remains almost impossible to escape the poverty cycle once you slip below the disposable income thresholds. ?

sin_city

AngryHippie wrote: »

Debt forgiveness has to be the simplest way to do it, but that way, people who have been prudent and haven't over-borrowed lose out.

Those who are saving are already getting ripped off with the devaluation of their money due to the low interest rates from the ECB…that will only get worse when velocity kicks in.

Debt forgiveness will not happen. The central bankers and the governments are pushing for inflation so that when they pay back the interest on government bonds that it has devalued.

When people start paying down debt it takes currency out of existence and so deflation increases. Actually good for the everyday person but bad for the bankers and the governments.

AngryHippie wrote: »

To be honest, I don't think there is a way out, other than to bite the bullet and reinstate free education across the board.....

Free? You mean the government raising taxes or take funds from other areas such as health or welfare for pensioners?
My brother recently got a “free” degree in law.
He’s now working in LIDL. Money well spent by the government…..Why don’t they lower taxes and so give more incentive for those on the dole to work?

KomradeBishop

AngryHippie wrote: »

Debt forgiveness has to be the simplest way to do it, but that way, people who have been prudent and haven't over-borrowed lose out.

The debt-jubilee idea I mentioned, solves that - those who have been prudent are rewarded equally with all the debtors.

sin_city

KomradeBishop wrote: »

The debt-jubilee idea I mentioned, solves that - those who have been prudent are rewarded equally with all the debtors.

No it doesn't...it would totally devalue the savings of for example the elderly living off fixed incomes.

How much tax money is used to pay national debts?

KomradeBishop

sin_city wrote: »

No it doesn't...it would totally devalue the savings of for example the elderly living off fixed incomes.

How much tax money is used to pay national debts?

Your claim that it would devalue anything is unbacked.

sin_city

KomradeBishop wrote: »

Your claim that it would devalue anything is unbacked.

It's a law of economics.

I fully understand why you think how you think now.

I suppose you would be a socialist then?

Manach

The issue of economic equality is being marked as an issue in the US by Democratic politicians. This was dwelled on by such as Elizabeth Warren. A counter argument by their opposition seems to be growth does not depend on fairness, but on how best the economy functions by allowing businesses (large and small) to grow without the corresponding growth of Gov control of GNP.

Here while education is important, recent Government changes to the tax system reducing the amount of monies available for people to spend on education as well as reducing tax benefits from returning to education. The return on investment from the salaries to 3rd level staff might be an issue as well, but one I'd not have evidence to make a judgement either way.

KomradeBishop

sin_city wrote: »

It's a law of economics.

I fully understand why you think how you think now.

I suppose you would be a socialist then?

There are no 'laws of economics', only theories. If you think anyone who points out that your argument is unbacked, is a 'socialist' (I would guess you use that as a pejorative...), then you're not really worth the time debating with.

sin_city

KomradeBishop wrote: »

There are no 'laws of economics', only theories. If you think anyone who points out that your argument is unbacked, is a 'socialist' (I would guess you use that as a pejorative...), then you're not really worth the time debating with.

Yes, thought you were a socialist.

Inflating the currency supply rises prices. It has been observed(though not by you) in numerous cases since the creation of paper money.

It's common sense really.

sin_city

sin_city wrote: »

Yes, thought you were a socialist.

Inflating the currency supply rises prices. It has been observed(though not by you) in numerous cases since the creation of paper money.

It's common sense really.

No offence, but this is the kind of answer you'd expect from a person who attended an Introduction to Macroeconomics lecture, figured it wasn't for them, and never returned.

Increasing the moneys supply will often lead to price inflation. But to call this a "law" or to view price inflation as inevitable is plainly mistaken.

Remember when the ECB supplied €450 bn. one-year cash in 2009? No? Well maybe figure out why it didn't cause price inflation and you'll be all the richer for it.

Not that I view price inflation as being so necessarily evil as you presumably view it. But that's beside the point.

Geuze

sin_city wrote: »

No it doesn't...it would totally devalue the savings of for example the elderly living off fixed incomes.

How much tax money is used to pay national debts?

Approx 7-8bn in interest.