I’ve heard of inflation but this is ridiculous.

[CaptainBarnacles]

I noticed lots of price hikes in the new Axminster catalogue. A table saw I had had my eye on was £1600, now £2000!! Their AT406 lathe has gone up substantially too, glad I got some machines bought in July/August. Hand tool prices (LN, Veritas etc) have also had a bump. I remember a few years ago when Axi sent out a mailshot proclaiming price drops of LN tools because of the strong Pound/weak Dollar, my plastic got a work-out that day! Happy days. ☺

 

[Rorschach]

I don't dare compare prices of some of my axi tools to their current equivalent, I wouldn't use them for fear of having to replace them if they break!

 

[evildrome]

Interesting. So, in order to pay for all goods and services etc. why do governments tax the people? Why not simply print the money they need? It would make them more sure of re-election.

Beardsley Ruml was chairman of the NY Fed in 1945.

He gave a speech to the ABA which nails the purpose of taxation in a post gold standard, Fiat currency world.

"

The legitimate purposes of taxation are:

1) "to give purchasing power of the dollar",

2) to "express public policy in the distribution of wealth and of income",

3) "in subsidizing or in penalizing various industries and economic groups" and to

4) "isolate and assess directly the costs of certain national benefits, such as highways and social security".

"


By "give purchasing power of the dollar" he means "control inflation". That is the fiscal purpose of taxation.

Does anyone here think that the Government does not create its own money?

Anyone? No.

So if it can create its own money then why would it need your or anyone else's money?

Short answer... it doesn't.

Longer answer, it does need your money but only in order to destroy it to stop it being spent.


Look at your tax demand.

What's the pay to account?

Does it have a 01-01-01 sort code?

Or is it the Nat West?

Why is your tax money going to an account in the Nat West?

Have the Revenue been banned from holding a government bank account?

This is how government creates money to spend...

The government creates a 'reserve' asset on a commercial bank's balance sheet much like a customer would when it signs a loan agreement.

The bank simultaneously creates a bank money deposit in the government payee's account. For all the world it looks very similar to a traditional commercial bank loan operation.

However, this ignores the 'forced' nature of the transaction. The government is forcing the commercial bank to expand its balance sheet at a dictated interest rate. There is no choice involved like the choice it has to grant a loan or not to a high street customer.

Government similarly forces the banks to contract their balance sheets when taxes are paid to HMRC. Hence the payment to the Nat West.

When your tax money hits the Nat West account it pays down the "loan" the government took out.

+1 & -1 = 0

Your tax money is literally destroyed on receipt. Which is what must happen in order to control inflation.

In return, the commercial bank gains a banking licence and access to the Bank of England payment system, lender of last resort and ability to clear its money at par.

 

[Terry - Somerset]

This is a thought provoking concept. Another way to look at it is that the government should tax nobody, but print money to provide those public services it endorses.

Print too much and there will be insufficient privately produced goods in the economy. The result is inflation, imports, and lower sterling

Conversely print too little and government services reduce. Too many goods circulating. Prices fall.

Foreign trade may be one safety valve - eg: print too little money, prices fall, exports increase, sterling increases, imports become cheaper.

This is a simplistic "black or white" analysis - but reinforces the thought that public and private endeavour needs to be in some sort of equilibrium.

Policies need to create the right behaviours in the economy - optimise productive effectiveness, ensure government services deliver value to the community etc.

Thus it seems that "print money" has many of the problems of traditional tax and spend, save that printing money cannot so easily:

• influence social policies through differential tax rates
• subsidize or penalise sector/industries to achieve policy objectives

The major benefit of tax and balance the books is that any divergence from plan can be quickly identified and remedied. The print money option would lack regular precision and discipline.