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Thread: Fiscal poser !

  1. #1
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    Default Fiscal poser !

    Does anybody have a reasonable answer (and condensed) as to why a Government cant just print bucks to pay off its Countries bebt ? -- now we have a common currency I find the de-valuing issue hard to grasp.

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    Quote Originally Posted by GordonGayBennett View Post
    Does anybody have a reasonable answer (and condensed) as to why a Government cant just print bucks to pay off its Countries bebt ? -- now we have a common currency I find the de-valuing issue hard to grasp.
    Ireland has ceded a lot of the powers that the Central Bank had to Brussels, so I don't think we would be allowed. AFAIK we have to lie within given parameters to maintain our membership.
    The Gods are just, and of our pleasant vices
    Make instruments to plague us

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    We could leave the Euro, and then print more money.

    This would lead to inflation, and that would lead to devaluation of the punt.

    And, hey presto, our foreign debt would then be reduced
    The Gods are just, and of our pleasant vices
    Make instruments to plague us

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    Quote Originally Posted by scotus View Post
    Ireland has ceded a lot of the powers that the Central Bank had to Brussels, so I don't think we would be allowed. AFAIK we have to lie within given parameters to maintain our membership.
    And we will give away more power. The gov dont want to stop this because it will lead to a single EU gov. I hope i am dead and buried when this happens as it will suck donkey balls.

    Going back to your post, i still cant understand why in gods name give away monetary policy to the ECB? Its like you get paid for working and give me your money and i will tell you how to spend it and of course i will tell you how to spend it in a way that suits me.

    Its just not fuckin good enough at this stage. We are coming up to the next budget and still the public service have taken no cuts and continue to hold up economic recovery by not only not doing their bit but continuing to waste resources and be under productive big time. Suicides have risen by 45% and marriages under strain while these dirty selfish bastards of politicians sit back, pay themselves big time, still taking huge expenses and being downright arrogant with the private sector while shitting themselves with the public sector. Add to this that the ppl of this country have being brainwashed into staying quiet and its easy to see how this so called recession is still here.

    jaysus,
    Westside.

    PS bit of a semi off topic rant here.
    Last edited by Westsidex; 06-09-10 at 14:14.

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    Quote Originally Posted by GordonGayBennett View Post
    Does anybody have a reasonable answer (and condensed) as to why a Government cant just print bucks to pay off its Countries bebt ? -- now we have a common currency I find the de-valuing issue hard to grasp.
    I actually believe that most of these so called big companies and investors can absorb most of their losses and stop charging ppl more. Whats wrong is alot of companies are maintaining profits of boom times in recession times.

    Westside.

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    Quote Originally Posted by GordonGayBennett View Post
    Does anybody have a reasonable answer (and condensed) as to why a Government cant just print bucks to pay off its Countries bebt ? -- now we have a common currency I find the de-valuing issue hard to grasp.
    The Germans did this after the first world war to pay for all the repairations, as outlined in the Treaty of Versailles. Unfortunately this lead to mass inflation, and the Germany economy went into meltdown, causing prices to shoot out of control (a loaf of bread cost the equivelant to something like 1,000,000!). People had to carry money in wheelbarrows as inflation got so out of control.

    In a nut shell, it would ruin the economy.

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    Couple of issues here:

    (i) the problem with printing money is that it leads to inflation - with more money in circulation prices increase, the exchange rate decreases and the cost of imports increase. Inflation is particularly hard on those on fixed incomes (e.g. pensioners, welfare recipients) whose incomes do not increase in real terms (i.e. over and above the rate of inflation).

    (ii) as a member of the Eurozone we no longer have control over our monetary policy (i.e. we can not make the decision to print money). The main player in the Eurozone is, of course, Germany and given their experience of inflation both in the 30's (hyperinflation, Hitler, etc.) and more recently following German reunifiaction the policy of printing money is a complete no-no for them.

    (iii) countries who have control of their monetary policy that print money (e.g. currently the UK and US, although they prefer the current euphemism of quantative easing) will find that their currency devalues - goods for exports but bad for imports - and that the cost of borrowing increases. A country with a balance of trade deficict (i.e. imports exceed exports, e.g. the US) will be particularly hit by inflation.

    (iv) the cost of borrowing will increase as investors will seek a higher rate of return to compensate them in real terms - this will effect both Governments and individuals

    (v) a key ECB objective is to achieve a long term rate of inflation of 2% per annum or lower

    (vi) leaving the Euro is really not an option for various reasons - our cost of borrowing would increase dramatically, foreign direct investment (i.e multi-nationals investing here) would dry up and we would become prone to currency speculation.

    Having said all that the ECB have pursued a limited policy of printing money (or quantative easing as they prefer to call it) following the meltdown of the Greek economy - however, a policy of wholesale printing of money is not going to happen thanks to German influence. In any event printing money is more of a quick "fix" and not a long term solution.

    Westside's point about cuts in the public sector budget is important (I am assuming he actually meant budget rather than services). If we cannot control the exchange rate we need to manage our domestic economy better in order to maintain competitiveness. The private sector is on it's knees - increasing taxes here is not likely to yield much. This means that the only way the Government can keep our economy in any way competitive is to slash the Public Sector budget.

    The Pension "Levy" (really a tax in all but name) was a start but much, much more need to be done. Doing so in a way that does not impact dramatically on public services is the issue. Everyone knows that the Public Sector is massively bloated and inefficient - there is no question that cuts can be achieved without effecting services. The question is how afraid are the Government of upsetting the Public Sector trade unions?

    hd.

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    Well done. I Googled "Print Money to become rich" too Samlad , but I would like an explanation as to why a devaluation would occur within a common monetaty scenario ?
    Last edited by GordonGayBennett; 06-09-10 at 16:18.

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    surely the best thing to do is to contact your financial advisor. if this issue is troubling you this much, you obviously need professional guidance.. fnar fnar............
    I'm a well hung chap, hung like a bastard says i.

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    hd 7055 - thanks for that info --- so in essence within a common monetary zone a mass printing of money by just one member would not necessarily cause a devaluation but it is outlawed and prohibited as "Cheating".
    Well counterfitting is undertaken by organised criminals and gangsters , how are those at the top of the tree in Fianna Fail any
    different --- print away I say and lets get the show on the road again !

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