Monday, 27 October 2014

The purchasing power crisis

Talk about hockey sticks, my previous (deleted by MSN) post showing the only thing in the world which doesn't seem to be following a hockey stick is the temperature, while in fact world population has shot up from 1 to 8 billion in a very short time, and food and commodity prices as possibly a direct result, and certainly contributory as demand is outpacing supply and distribution.

Now given these diagrams, the average earnings adjusted for inflation which were actually shared during Russell Brand's BBC interview last Thursday, so they must be serious, and not just in the UK but similar across the western world. Therefore the prices are shooting up exponentially while British wages at least are falling, making the problem far worse.

What are the reasons and treatments? Starting with the policies, the Keynesian fuelling the fire with petrol policies (ie more borrowing to stop debt) are pretty well universal, and a few years after using the combined weapons (to ordinary people that is) of quantitative easing (increasing the money supply with no related growth in GDP/capital) and low interest rates (most people are net savers) are behind growing debts, increasing unemployment, with lower rates for those working and massive house price inflation as it is both stoked by paying less per month in interest which simply goes on the asking prices, and savers shifting into property to get more than 2% a year interest.

So your governments (as most do) have kept these policies in place since the 2008 crash, haven't reformed the banks to stop them investing depositor's money or lending more than 3X income for mortgages, and not lending more than seven times their capital as before, rather than the more recent 30-40X leverage. So by either keeping the same policies which allowed the banks to waste our money (who bailed them out and pays their bonuses now?) or keeping the financial policies which haven't improved either price inflation or wage deflation, having tried and tested them for years, one would argue this is a deliberate means to transfer money from normal working people elsewhere, as it does. QE and low interest rates simply allow banks (who else borrows at 0.5%?) to take less risk, do huge transactions overnight for 1% and borrow at 0.5%, making a massive profit by ploughing millions of someone else's money into a sure deal they probably manipulated first just to make sure it was. Add the toxic green taxes, which make energy and all goods more expensive for everyone, but affecting the poor the most as we all need heating and light but they pay more in proportion to their total capital than everyone else.

So by making poor people poorer by taxing both their energy, travel and indirectly food prices with these carbon taxes with no known benefits (even the totally harmless CO2, which I can prove beyond reasonable doubt, has not ever gone down from these taxes, so do they stop? No, they tax even more) they have sacrificed the least able to manage for some imaginary future problem we can't live long enough to see. They are definitely deliberately hurting savers (mainly pensioners, public and private) as keeping interest rates low they are saving the arses of bankers, as they have such enormous debts as both the UK with Thatcher's 'big bang' deregulation, and Clinton's equivalent, they busted themselves with other people's money and were then handed over ours to keep doing it. Raise interest rates a few percent and there won't be enough money in the galaxy to bail them out, so they don't do it to protect them. It's far cheaper to pay the depositors and let the banks go broke, but they won't do it.

Never take the crap that these policies are not optional, every policy is optional, as even if you hate it there is only the power of the people to stop your government turning fascist or communist. In fact without our power they nearly always would as one thing governments hate is having to do what people want, they prefer to play Sims or whatever the equivalent was from the 20th century, and mould society the way they want to with as little control as possible from the actual people they are shoving around. When you read yet another economic journalist promoting Keynesian discredited policies then they are just part of the same problem, clearly benefitting from said polices otherwise why would they promote something making them personally worse off? That's why so many politicians, especially the Lords, and their families have massive stakes in wind farms, renewable companies and carbon trading, as they are in a position to legislate to help their own interests, something technically illegal in British law but hard as hell to prove.

Therefore we have some facts. British average wages have fallen back to the adjusted level of the industrial revolution, while world commodity prices have risen exponentially, meaning national policies will have far less effect as oil and wheat are not easy to regulate with market manipulation and protectionism being rife. The people aren't informed enough to have a clue, so we can't rely on them to sort things out as unless I was given my own TV series and some newspaper articles instead of a blog 12 people read (I have the figures, it's a bit of a disaster) it may get just enough aware to do something, but the facts are here until they are taken down, and all verifiable and confirmable. The most being the commodity prices versus the average income, which is really all you need to know there's a very new and serious problem, and the reasons which mean it's almost certain by carrying them on the problems have got worse, and anything else within a democracy must be an improvement.

Alternatives? of course I have alternatives, I am not an Occupy member, I have a preferred set of policies which would one by one build and reverse each aspect of the situation, along with a few optional extras which my own experience tells me would also help.

Of course interest rates must reach market levels, around 5% according to the experts. House prices would tumble, making it easier for everyone to buy and everyone trading up (nearly all sellers) will pay less to do so in the same sort of area. Very few people lose from falling house prices, and if someone's paying too much then firstly it's their own fault as no one else decided they could afford it at the time, and secondly if they don't need to move then keep paying and you won't lose a penny. That will be a genuine quantitative easing as that money saved will go back into the economy, making everyone better off with less to pay for housing per month, as rents must follow, and of course QE must end immediately or it will dilute the currency.

Bringing back genuine money will help, and stop both speculation and massive fluctuations in money and related commodity prices. The gold standard or its equivalent are the only way to stop debasing currency with computer programs adding zeroes to absolutely nothing when lending money, and restricting the economy to printing exactly the amount it has and no more. Reducing income tax has the same effect as reducing house prices, as most people paying over 40% fiddle them, work less or simply bugger off abroad, so paying even less at a flat rate, calculated on how much is needed genuinely to pay each year's bills, will mean hardly anyone would bother to evade it and the overall take would increase. Population is, as discovered originally, a sap on either fixed resources or ones which take far longer to catch up than its rise such as housing and medical care. Education and contraception campaigns wherever they are needed the most worldwide must be brought in, just as they have been very successfully in India (with no legal obligation, unlike China), and countries at breaking point like Britain must do all they can to stabilise populations at current levels, and do anything they can to encourage many passengers who take more than they create to return. Of course not letting millions (with another ten million planned by 2030 or so at current rates) in in the first place (they didn't have to, it was Tony Blair's personal mission), combined with massive expansion of the EU to allow the poor countries to simply let their talented people leave rather than work to catch up the others. That is both wrong, unfair, and guarantees their own countries will never improve when all their best workers leave and many others do just to get decent free benefits.

Green taxes were described in the Kyoto Protocol which created the current system as being 'To reduce demand for energy'. Switch that to 'Reducing demand for food' and you'll see what they've done. We can all eat less and have worse health, and we can all heat less and the same. We need an exact amount of calories to survive at our best, and need an exact temperature range. Lower either or both and as reported by the NHS each year, many more people die or end up in hospital each winter. That is guaranteed, raise prices of essentials and the poor and weak die off gradually, we all know that is inevitable, so that is the first price we pay to 'save the planet from global warming', while the CO2 goes up. In fact the only way to stop it is to reduce the population as then divide the power needed to live by the numbers and it has to go down. Nothing else will unless you make power so expensive or ban it (as the EU are with cars) and one way or the other the people will die off and reduce CO2 through higher death rates. That is not a solution to anything, it's been tried before and finished off 3/4 of my own relatives (I have the family records). So rather than killing millions of people CO2 will only otherwise be reduced the day a power source which can produce the same or more constant power at the same or a lower price. Till then the unconfirmed claims of rising CO2 could never come even to the ankle of dying poor people from cold and starvation, and many more suffering while surviving.

There is little doubt among any of these claims, some are definite (eg the number of people losing from low interest rates) while the rest can either be confirmed from history or economic principles. And really knowing the results of years of the same on half the world's countries could the alternatives be any worse, except for the bankers and their associated parasites.Iceland (apart from defaulting on their debts, which is the act of a scoundrel) let their banks fail and prosecuted any genuine criminals involved, and sorted out much of the previously corrupt system (they bought up massive businesses around the world by offering incredible rates of interest they couldn't deliver) and the economy is bouncing back. There are alternatives, they have been tried, tested and passed, and pretty well proven. If enough people know it then it can happen in other countries as well, as the problems are pretty certain, not improving (the Eurozone is slipping back again) and why carry on the same rubbish that got the world into this state in the first place?

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