Joined: 13 Jan 2007
Location: Westminster, LONDON, SW1A 2HB.
|Posted: Tue Jul 04, 2017 8:33 am Post subject:
|At the heart of a rotten system
Is a basic rotten lie
Repeated like a mantra
On BBC and Sky
There Is No Alternative
We must live with in our means
So cut your cloth accordingly
And set aside your dreams
Education fueled by debt
Feeds parasites in banks
No money for a hospital
But plenty spare for tanks
No money left for libraries
Or to care for the old and needy
But plenty left for Trident
And bonuses for the greedy
But when do we hear the question
In the House or in the press?
Where does money come from?
The root of our distress
What is this magic substance
That can cultivate or kill
That can build a home or smash it
That can work for good or ill?
Is there a magic money tree
In some walled-off sacred wood?
Or does government create it
In the name of the public good?
We never hear the question
In case we get upset
For the truth is banks create it
Out of pure fresh air as debt.
We can't run out of money
As some letters might suggest
And before we get to tax it
First we must invest.
So next a time a politician
Tells you money has run out
Ask then where it comes from
And watch them fill with doubt
And if they try to dodge your question
Keep on til they reply
There is no more vital matter
It is why we live or die.
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
Trustworthy Freedom Fighter
Joined: 30 Jul 2006
Location: East London
|Posted: Mon Jul 24, 2017 6:41 pm Post subject:
|'Quantitative Easing, The Largest Transfer Of Wealth In History':
'....Given that – judged by its official aims – QE has been a total failure, this makes perfect sense. By ‘injecting’ money into the economy, QE was supposed to get banks lending again, boosting investment and driving up economic growth. But overall bank lending in fact fell following the introduction of QE in the UK, whilst lending to small and medium sized enterprises (SMEs) – responsible for 60 percent of employment – plummeted.
As Laith Khalaf, a senior analyst at Hargreaves Lansdown, has noted: “Central banks have flooded the global economy with cheap money since the financial crisis, yet global growth is still in the doldrums, particularly in Europe and Japan, which have both seen colossal stimulus packages thrown at the problem.”
Even Forbes admits that QE has “largely failed in reviving economic growth”.
This is, or should be, unsurprising. QE was always bound to fail in terms of its stated aims, because the reason banks were not funneling money into productive investment was not because they were short of cash – on the contrary, by 2013, well before the final rounds of QE, UK corporations were sitting on almost £1/2trillion of cash reserves – but rather because the global economy was (and is) in a deep overproduction crisis. Put simply, markets were (and are) glutted and there is no point investing in glutted markets.
This meant that the new money created by QE and ‘injected’ into financial institutions – such as pension funds and insurance companies – was not invested into productive industry, but rather went into stock markets and real estate, driving up prices of shares and houses, but generating nothing in terms of real wealth or employment.
Holders of assets such as stocks and houses, therefore, have done very well out of QE, which has increased the wealth of the richest 5 percent of the UK population by an average of £128,000 per head.
How can this be? Where does this additional wealth come from? After all, while money – contrary to Tory sloganeering – can indeed be created ‘out of thin air’, which is precisely what QE has done, real wealth cannot. And QE has not produced any real wealth. Yet the richest 5 percent now have an extra £128,000 to spend on yachts, mansions, diamonds, caviar and so on. So where has it come from?
The answer is simple. The wealth which QE has passed to asset-holders has come, first of all, directly out of workers’ wages. QE, by effectively devaluing the currency, has reduced the buying power of money, leading to an effective decrease in real wages, which, in the UK, still remain 6 percent below their pre-QE levels. The money taken out of workers’ wages therefore forms part of that £128,000 dividend. But it has also come from new entrants to the markets inflated by QE – primarily, first time buyers and those just reaching pension age.
Those buying a house (which QE has made more expensive), for example, will likely have to work thousands of additional hours over the course of their mortgage in order to pay this increased cost. It is those extra hours that are creating the wealth which subsidizes the spending spree for the richest 5 percent. Of course, these increased house prices are paid by anyone purchasing a house, not only first time buyers – but the additional cost for existing homeowners is compensated for by the rise in price of their existing house (or by their shares for those wealthy enough to hold them).
QE also means that newly retiring pensioners are forced to subsidize the 5 percent. New retirees use their pension pot to purchase an ‘annuity’ – a bundle of stocks and shares generating dividends which serve as an income. However, as QE has inflated share prices, the number of shares they can buy with this pot is reduced. And, as share price increases do not increase dividends, this means reduced pension payments.
In truth, the story that QE was about encouraging investment and boosting employment and growth was always a fantastical yarn designed to disguise what was really going on – a massive transfer of wealth to the rich.
As economist Dhaval Joshi put it in 2011: “The shocking thing is, two years into an ostensible recovery, [UK] workers are actually earning less than at the depth of the recession. Real wages and salaries have fallen by £4bn. Profits are up by £11bn. The spoils of the recovery have been shared in the most unequal of ways......................”
'And he (the devil) said to him: To thee will I give all this power, and the glory of them; for to me they are delivered, and to whom I will, I give them'. Luke IV 5-7.