We are using Keynesian economics but giving the money to the banks instead of the people

By Dark Politricks

I saw an interesting interview with Simon Jenkins on This Week last week in which he described how at the moment we are stuck in a liquidity trap and the only solution we have is to print more money in the hope it sorts out the dying victim e.g the UK. As he said:

"the government would be better off giving the billions of pounds it plans to pump into the UK economy to the public in the form of a Christmas bonus." "The columnist damned the government plan to get out of recession, claiming "it's fraud, it's a scam, it's a lie".

However as the Bank of England enters phases of printing money - or quantitative easing as they call it, Simon Jenkins believes that they are giving the money to the wrong people i.e the banks.

He believes that instead of increasing the deficit by the Bank of England buying bonds from the banks and paying interest and all the other funny business our economy actually behaves like we should instead be giving the money direct to the people to stimulate demand in the dead economy before we suffer a lost 20 years like Japan.

Keynesian, yes, but he believes that although printing money could eventually drive up inflation - which we are doing already by printing money to give to the banks.

We should instead be printing it and giving it directly to the citizens and tax payers of the UK. The same people who are now paying for the mistakes of the bankers.

He believes that by doing so it wouldn't be adding to the national debt or increasing the deficit as it wasn't money being borrowed but printed.

By doing this demand in the economy will be created as the people will use the money to buy goods and services which in turn would help businesses who will start to invest and grow for the future.

Whether you like the idea of not what we have at the moment is a case of the government taking tax payers money as well as printing and borrowing it to hand it over to the same banks who caused the financial collapse of 2008 in the hope that they will in turn use it to help businesses.

In fact what these banks are doing are using the money to shore up their empty vaults to meet Basel Capital requirements that they must hold a certain percentage of money in their bank. The fact that nearly all these banks have no money and it's just one big stack of cards waiting to fall down as soon as a country defaults and can't pay back Bank A, who in turn cannot pay back Bank B who in turn asks the government for another bail out is irrelevant.

Anyone who knows how money is created knows that it is created through debt and new money is created every-time someone takes a loan out. That money is then multiplied and leveraged beyond belief even though it doesn't physically exist apart from digits in a computer database.

If there was no debt there would be no money - simple.

It's all one big ponzi scheme anyhow as we all know by now which is run by banksters who launder money for Mexican drug cartels, wide boys who fix Libor interest rates, and interchangeable politicians / bankers who move from one job to the other and then back again.

All as if there was nothing wrong with a politician developing banking policy that helps push millions of Brits over the financial cliff and then go off and work in one of the banks they created policy for once they are finally voted out of office.

Simon believes the politicians and those that demand we must be austere wince at the idea of giving money directly to people as it seems somehow vulgar. As if giving billions of our tax pounds direct to the same people who caused the mess so that they can carry on giving themselves huge wages and bonuses isn't somehow!

So if we are already using a Keynesian economic policy that is being masked as an Austrian one through the use of the words austerity, the cutting of  public services, and all the other spending cuts that the millionaire front bench don't rely on then why don't we try to stimulate demand by giving the money to the people rather than the failed banks and businesses?

We could even tailor this arrangement so that it doesn't seem so "vulgar" by declaring that the money is a once off (or yearly) dividend to all tax payers who helped bail out the banks. 

Banks we basically own anyway. The money could be in the form of a special coupon or voucher that was only redeemable in this country (to stop people putting it in offshore bank accounts or saving it in UK bank accounts).

The voucher would be accepted in any UK based shop or business as legal tender and that company would then be able to redeem it for cash if they so wished from the Treasury by taking it to a bank or a special government office.

To stop people just turning up at banks and transferring the coupons to cash there would be a stipulation that only businesses could redeem the vouchers and only as long as they had a receipt showing the goods or services purchased with said voucher.

Other ways could be created to prevent fraudulent black markets transference we Brits are so good at.

Also we could have a "double the value" scheme in which if  the holder of the coupon bought goods made in the UK (not in China with a made in UK sticker on it!) then they would get the item, good or service at a discount. This would help stimulate the UK manufacturing industry.

Obviously this would only apply to tax payers and not people on the dole or those who have no intention of ever working.

Different sizes of voucher would be created just like paper money so that change could be given in other vouchers and there would be a "use by" date of one year to ensure it was spent within a certain time frame. It would basically exist like a dual currency alongside the existing fiat one we call the pound.

You might not like the idea or the theory for many reasons including it's Keynesian nature but we are already in a double dip recession with no hope of growth on the horizon and a growing national debt due to all the dole money having to be paid out to the public service workers the Tory/Lib Dem coalition have sacked.

If they somehow expected the private sector just to zoom in and suck up all these workers they were poorly mistaken.

Our chancellor George Osborne has failed in what he set out to do - grow the economy and cut the debt so we need some kind of plan.

Giving money to the banks has failed so why not give it to those of us who have basically saved the country anyway?

If 20 million or so people all spending a few billion pounds in the UK economy this year doesn't help it grow at all then we are truly screwed. It's only an idea but one which few people seem willing to consider.

George Osborne shows his Tory colours by lowering taxes for the rich

By Dark Politricks

So Boy George Osborne delivered his 2012 budget mid week and as he obviously reads my blog every day LOL he decided to implement nothing that I advised him to do in my own Dark Politricks 2012 Budget Guide.

No despite his obvious distaste for diverse discourse and alternative news I doubt Boy George has ever even heard of my site unless it has crossed his desk on some kind of watch list compiled by MI5 or some other Internet Snoop brigade.

He decided to cut the top rate of tax from 50% to 45%. Deciding that the rich are obviously having a hard time at the moment and need all the help they can get.

It must be hard in your brand new Range Rover delivering little Timmy and Charlotte to their private schools, after school Cello lessons. Suffering with their private health care and living on money most of us can only dream of with the thought of gold plated pensions to retire on whilst inflation rises constantly and the public services everyone else relies on gets worse and worse by the day.

I wouldn't begrudge anyone who can afford private health care but as someone who has spent more than my fair share of time in hospitals and doctors waiting rooms lately I can attest to the utter uselessness of our national health system.

It seems that even when you have Cancer only a letter of complaint will bring about the necessary phone call to tell you what's going on with your health treatment. I dread to think of how I would be treated if I couldn't write English and had the same problems.

But Georgey Boy didn't scrap the higher 50p tax band Labour had brought in, in their dying days as a last ditch attempt to placate their core supporters. Those same supporters who they had spent the last 13 years pissing off with their "greed is good" mantra that allowed the first run on a British Bank in living memory to occur with Northern Rock.

No instead he cut it in half as if that would be enough to keep the Lib Dem's happy as well as the rich donors who, as the Sunday Times today exposed today, are promised access to David Cameron's very own dinner table in return for dosh and campaign contributions.

I suppose every party must be funded somehow. Labour sold gongs and honours, the Tories chose to sell dinner seats with their grandees. The Lib Dem's probably only hold annual raffles at Gay Pride marches which I suppose is the reason they fail so miserably at each election.

This wasn't a budget for growth, and it has been remembered for the "granny tax" which although has pushed Labour's poll ratings through the roof has probably been blown out of proportion. This is not down to any logic but more to George's attempt to hide it as a "simplification" of the tax system.

Everything else in his budget had been leaked anyway so this was the one thing the papers leaped upon once it became clear he felt the elderly hadn't paid their fair share in these times of austerity.

We are all in this together, we are all in this together - keep saying it enough and you might just believe it to be true.

If it is true then it sure doesn't seem like it when the Tories are sending out the message that the richest few percent need to pay less not more tax.

Now this might piss off class warfare warriors and those who see any progressive tax code as a way of attacking ambition but if I was on £150,000 a year I wouldn't really mind paying a few grand extra a year.

I mean if I did earn that much I can guarantee that I would already have a good lawyer and accountant  busily hunting through our overly complex tax code looking for loopholes and ways to avoid paying tax. It is the way of the world apparently to avoid tax as long as you do it legally.

If we did want to bring in the bucks and attract business to our shores we would be simplifying the tax code but not just for the OAP's but for those who have the means to use those over-complications to their advantage i.e the rich. Let Vodafone & co pay their fair dues if they want to sell their Chinese made phones & other goods on our shores.

A simple tax code equals less room for people to escape paying. Simples.

If lower taxes for everybody helps bring in more dosh then I'm all for it so sort it out George. But we should be putting money in those peoples pockets who actually spend it in shops each weekend rather than give it back to those who have already conned the system and own offshore bank accounts. A nice rebate for every tax payer would get our high streets humming in no time.

We need to stop moving allowances up and down a few percentage points here and there and think big for once.

Use all those fine brains on the Economist and Financial Times to our advantage for once instead of allowing people to pay for the privilege to persuade our government what's best for them equals best for everybody.

Lobbying is not what is needed to get us out this mess. A proper budget for everybody is.

My Dark Politricks Budget Proposals for 2012

By Dark Politricks

Tomorrow is the 2012 Budget in the UK, which comes at a time of low growth, austerity, high jobless rates, almost zero interest rates and high inflation.

There is lots of talk about what the Chancellor might be doing today including whether or not he will cut the top rate of tax 50% for the richest people in the country. Apparently these people are deterred from coming to the UK and creating jobs due to the perception that "Britain is not open for business" and we are "anti entrepreneurial". Whether there are any facts to back this I don't know but it would be interesting to see evidence either way.

I don't really care if they reduce this tax level or not as long as an independent organisation can show that doing so will bring in more tax revenue and create jobs than by having it.

There might be some truth when people like John Redwood, the right wing Tory MP says in he wants to see rich people pay more tax and the way to do this is by reducing tax rates so that less money is spent by those rich enough to afford expensive lawyers on getting round the existing and very complicated tax laws.

Most company owners don't pay the high tax rate anyway because they just pay themselves in other ways or though dividends and capital gains which has a rate much less tax rate than the current 50% top rate of income tax.

Therefore if I had to choose a budget for tomorrow I would do the following:

1. Scrap the existing tax code which is far too complicated with too many loopholes for those rich and clever enough to exploit and make a simple code in which:

• No one pays tax until they earn over a certain threshold like £10 or £20k. The coalition want to raise the threshold to £10k and they are on the right track by removing people out of paying tax at the lower end of the scale. These are the people who are reliant on all the bus routes, libraries and other public services that are being cut at the moment
• If a flat tax can be proven to bring in more tax revenue than a progressive rate then I am all for what works. I have no ideological problem with a flat rate if it can bring in more revenue. We need more money from the richest in our country and if a flat tax prevents them from using offshore accounts and loopholes then I am happy to try it.
• Close every tax loophole available. A simple and fair tax code with no loopholes to be exploited will ensure the richest cannot escape tax though their lawyers and clever avoidence schemes.

2. Make sure any company that wants to do business in this country pays tax in this country. No post boxes in the Cayman Islands as the Company HQ. A company who wants our huge market should have to set up a UK subsidiary and all revenue make in this country should be taxed at our rates and stay in our country.

3. Incentivise companies who take on any of the following people with tax breaks and other schemes.

• Long term unemployed.
• People with disabilities.
• People who have just come out of prison or are on the way to spending a life in and out of prison e.g gang members.
• Young people who have not had a job since leaving college or school for a year.
• Older people who have not worked for a while, have no private pension and are too young for the state pension.

4. Totally nationalise the banks we own the majority stake in and run them for the good of the nation. Profits are retuned to the treasury or given out as loans to more "riskier" small business who require funding. However the key aim should be to ensure that any company wanting to expand and create jobs but cannot currently get funding can get the money they need.

5. Parts of the country heavily reliant on Public Sector jobs that are being cut should have large amounts of government investment including incentives for private companies. Companies willing to relocate or base their factories and offices in Wales, Scotland the the North should get tax breaks at the very least.

6. Any company who hires a currently unemployed British citizen should be given a 1-2 year national insurance holiday. Get British people back working and make it worth UK companies while hiring them over cheap foreign labour.

7. Keep some pre-election promises by re-balancing the fuel tax escalator so that as the price of petrol rises the amount of tax going to the treasury decreases, keeping the overall price stable for the customer. As petrol speedily heads towards£1.50 a litre with most of it going to the Treasury the amount of fuel tax as an overall percentage should be reduced as the cost of oil rises.

8. Give every tax paying worker in the country a tax rebate of £1000-£2000 in the form of a voucher that can be redeemed in any shop in the country. The previous VAT cut wasn't even noticed by shoppers, especially at Christmas time when every shop reduces their stock by over 20% anyway. Cash can be saved or used for other means but a voucher with a use by date would ensure the tax payers who have basically bailed this country out of the bankster incurred mess are repaid as well as stimulating the economy by ensuring the money is spent in shops that badly need the business.

9. Scrap Trident - a nuclear missile system we cannot even use without US say so and their GPS guidance system, so in all likelihood will never be used anyway. Instead spend the multiple billions a replacement would cost on shoring up our overstretched armed forces. If we are going to continue to ask them to fight war after war we should ensure they have the best equipment, proper housing, proper help when they return limbless and mentally distressed as well as giving a sign to other countries like Iran and Israel that responsible nations that already have nukes are prepared to give them up.

10. Invest heavily in public transport without making it so expensive to drive a car that taking a bus or train looks cheap in comparison.

There can be no proper private competition on a railway - no two trains can run the same line at the same time. Public transport should be run for the good of the nation and any taxes spare from the multiple taxes on motorists (road tax, petrol tax, vat etc) should be used to make public transport cheap and a viable option not a second choice people are forced to use for whatever reason. If other countries can do this we surely can.

Those are just 10 points I've just thought of whilst watching TV. I'm sure with another five minutes I could come up with at least another 10 more.

Will Boy George Osborne look after his core constituents and screw the poor or are we really "all in this together" like we continually get told. Only time will tell.

Lets wait and see what happens tomorrow.