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Tuesday, 25 March 2014

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I only wish I understood how to get our money, legitimately and securely, to Switzerland. (I don't expect ever to be subject to Swiss sanctions against British oligarchs.}

My dear old friend, fear no more, I am your man! Scottish groats to Cuckoo-clock-land, no probs, and you know you can trust me!

There is austerity - the silver savers, like you!

If you added up all the interest that would have been received over the last 6 years if interest rates had been "normal", I bet that would come to a tidy sum.

Well if this is to be believed, it's the interest on around 6 trillion (total wealth including pensions, but excluding property and physical wealth).

So if the base rate had stayed at 4%, instead of 0.5%, over the last 6 years, then the savers would have been 210 billion a year better off per annum.

210 billion is twice the size of the annual deficit.

Now that's where the austerity is!

Think of it like the old days when I used to tap you up for a sub to go out and get pissed on a Saturday night - it's all in good cause!

But for the silver savers, it doesn't end there either.

Once the real economy does genuinely pick up, and the printed money does start circulating - the M, the V, and the T in MV=PT have all gone up - so the P (the Price level) must go up too.

So the silver savers will be stung again with inflation whittling away their nest eggs.

I'll raise a glass from the battle cruiser in your honour next time I'm down there!

SoD

And now the Jerries are limbering up for QE-fest.

Funny that should come out as the Western powers are discussing their long term response to Putin.

I reckon they're gonna go for the end game for Putin. And they need the markets to know that Germany will release the QE spigot to keep the Euro well lubricated while Russia implodes. If you think Blighty spent 210 billion per annum of our silver saver's wedge to fend off the crash, imagine what the Jerries have got up their savings sleeves to fund the final count down for Vlad the ex-Impaler?

Interesting times.

SoD

Well, in Australia there are no soup kitchens or ragged families on the back of old trucks trekking off to Chicago or somewhere because everybody is on some sort of government welfare.
As I understand it there's only me and roughly half a dozen other people in Aus. working to support the other 22 million.
Frankly, I'm getting a bit sick of it, not to mention, bloody long in the tooth.
Surely it's got to be my turn soon to lie back and be waited on by others.
But, judging by the look of my mortgage and my superannuation, apparently not.
And so, hi ho, hi ho, it's off to work I go.

SoD has it right on the button.

It can't last - you're right - but it can and will last as long as the prudent and provident have anything left to be robbed of.

The central problem is the State's overwhelming need for cash, now - ever-increasing amounts of it, to keep its hungry millions quiet - and when I say its hungry millions I don't mean the poor, I mean the six million or so tax-eaters we support in this country, who must have their salaries maintained (and increased), and their pensions assured - inflation-proofed, of course - devaluation of savings is only for the little people.

Oh Christ! I was a bit down when I wrote it, then SoD rubbed my nose in it and now, Andrew, have given me an even greater attack of the grumps!

I actually think it can go on. In essence, instead of having a short, sharp and very painful burst of "real austerity" a la 1930's or early 1980's, we're having a long, slow moderate pain, paid for by the silver savers.

Let's say it stays like this for 5 years until the deficit reduces to zero - moderate growth, low inflation, falling unemployment, no tax cuts, 50 bn QE per annum (all Govt bonds i.e. Govt lending to itself), low interest rates.

Then we're still not out of the woods, because the Govt can't put interest rates up with the colossal national debt that's accumulated from the successive large deficits. So we'll need another 5-10 years of the same to reduce the national debt: moderate growth, low inflation, falling unemployment, no tax cuts, 50 bn QE per annum (perhaps tapering off), low interest rates.

So for this 10-15 year period that's ahead of us, we also require four things don't happen to avoid collapse of the system -

(1) External shocks - War with Russia, implosion of Euro, credit crash in China
(2) Inflation - That free variable V (the velocity of money) in MV=PT picks up. This one won't necessarily collapse the system economically (they haven't printed quite as much as Weimar / Mugabe etc.), but it might through social-political unrest.
(3) The voters dump the Tories and slide left or right. By right I mean Ukip, who would induce the very short, sharp (we're still talking 5-10 years) austerity that might well provoke a collapse itself. Or Lib / Lab who would continue the robbery until no private wealth existed (as described by Andrew).

So yes, it can go on, but it's going to be a damn close run thing!

SoD

Which is precisely why I would have preferred a short, sharp shock which at least would have returned us to financial reality - and incidentally, it's not just us 'silver savers' who are on the rack, who do you think eventually is going to pay off that national debt? It won't be me because I won't be around!

"Which is precisely why I would have preferred a short, sharp shock which at least would have returned us to financial reality " - Or financial oblivion!

"and incidentally, it's not just us 'silver savers' who are on the rack, who do you think eventually is going to pay off that national debt? It won't be me because I won't be around!" - You never know who's first, but I know, like Andra, I'll be working 'til I drop, whenever that might be. Just be happy you can potter about in Dorset, albeit skint, and write full posts, whereas I will be confined to the comments section in my coffee break or whilst perched on the throne with my mobile phone (as indeed, I am right now).

SoD

Thank God you didn't take a 'selfie'!

TMI, Lawrence, TMI. I do that sort of thing, but am forbidden by Madame to report it in real time. I'm also incurring extra demerits for laughing so hard at it all.

Don't encourage him, Michael!

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