Ask HN: What Is Happening in the UK? • Hacker News Board

Re: Ask HN: What Is Happening in the UK?

#191

Post by gadders » Thu, Sep 29, 2022, 7:02 PM UTC

hunglee2 wrote: post #24

In simple terms, the Bank of England and UK Gov are pursuing conflicting economic policies, BoE trying to take money out of circulation through hiking up interest rates, whilst UK Gov is putting money into circulation by proposing massive debt funded tax cuts. The obvious incoherency of this then led to the markets losing confidence in the UK economy, crashing the value of the pound, which in turn makes the planned U…

Tax cuts aren't debt funded. Tax cuts are free. The (arguably excessive) government spending is what is debt funded.

Re: Ask HN: What Is Happening in the UK?

#192

Post by gadders » Thu, Sep 29, 2022, 7:08 PM UTC

pyb wrote: post #2

In a few words, PM Truss's first economic measures indicate that she's ideologically-driven and has no idea what she's doing. Namely, cutting taxes for the rich in hope that maybe some economic boost will "trickle-down" to the middle class and the poor. This idea is utterly discredited in economic circles. The UK central bank, the BoE, is forced to take measures to counteract what Truss and her government are doing !…

I think the only person ideologically driven here is you.

Re: Ask HN: What Is Happening in the UK?

#193

Post by gadders » Thu, Sep 29, 2022, 7:10 PM UTC

doublesocket wrote: post #42

JonChesterfield wrote: post #27

Our government announced new economic policies that have been judged extremely harshly by everyone. The public perception of them is also severely negative which increases the risk of the alternative party gaining control next time around. I really hoped the new leader would be the one with an economics background instead of the friendly optimist. Navigating out of brexit and covid is difficult and the leader sets th…

> Hopefully the people who chose Truss have made enough of a loss this week to reconsider their priorities. Except Kwarteng's former boss Crispin Odey is making a killing shorting the pound. https://www.independent.co.uk/news/uk/politics/tory-donor-pr...

Good to see the conspiracy theories starting already.

Re: Ask HN: What Is Happening in the UK?

#194

Post by gadders » Thu, Sep 29, 2022, 7:11 PM UTC

thewarrior wrote: post #16

The UK imports large amounts of energy and other things essential to its prosperity. The UK has a current account deficit which means it does not have enough of the dollar to cover for its imports. It has solved this problem over the years by borrowing and becoming a haven for investment to cover up the shortfall. Now we have a bat shit government that says we need to lower taxes and borrow a boat load of money to ti…

High energy prices due to Ukraine and Net Zero = Good

High energy prices due to pound weakening against dollar = Bad

Re: Ask HN: What Is Happening in the UK?

#195

Post by switch007 » Thu, Sep 29, 2022, 7:18 PM UTC

The Government made it to obvious to anyone who can get out, to get out.

They're quite obviously doing a smash-and-grab on the country for their remaining time in power.

Re: Ask HN: What Is Happening in the UK?

#196

Post by switch007 » Thu, Sep 29, 2022, 7:27 PM UTC

bvoq wrote: post #124

What’s really happening: Liz announced to remove the 45% tax bracket for people who earn more than 150K£ a year. This means that roughly 50 billion £ will be missing from the government. That money will have to be printed, decreasing the value of the pound. More pounds -> Less value.

The removal of the 45% tax bracket isn't the sole contributor to that £45bn/year figure, it's all the tax changes (a funny numerical coincidence though!)

"...due to the almost £45 billion a year of tax cuts announced by the Chancellor today" https://ifs.org.uk/articles/mini-budget-response

Re: Ask HN: What Is Happening in the UK?

#197

Post by colinmhayes » Thu, Sep 29, 2022, 7:27 PM UTC

jbm wrote: post #189

colinmhayes wrote: post #176

Earlier quoted context omitted.

Here you go https://www.igmchicago.org/surveys/tax-reform-2/

I was looking at that and it seems to be more of an opinion survey of university professors of economics about a bill that had trickled-down as a part of it, rather than a formal journal entry. > Tax policy appears to have little effect at the margin on GDP growth in OECD countries. This idea did come up repeatedly though, so I assume it is a common-enough belief in economic circles.

Some of the professors posted links to journals in their comments.

Re: Ask HN: What Is Happening in the UK?

#198

Post by klyrs » Thu, Sep 29, 2022, 7:34 PM UTC

colinmhayes wrote: post #173

rvieira wrote: post #170

Earlier quoted context omitted.

(Not an economist by any measure) Can you explain "tax cuts which will have a big inflationary impact". The 20% bracket went down to 19%. The 45% bracket disappeared (now included in the 40%) which is only for £150k+ earners, which is a tiny minority in the UK. I don't think the actual numbers move inflation. Isn't it more the conflicting policies (BoE and gov) in theory and the perception of them not being in the sa…

Increasing the money supply causes inflation. Rich people don't just put their money under their mattress. They invest it which means it's being given to other people who use it to buy things.

> They invest it which means it's being given to other people who use it to buy things.

Now do real estate investing.

Re: Ask HN: What Is Happening in the UK?

#199

Post by bombcar » Thu, Sep 29, 2022, 7:39 PM UTC

roenxi wrote: post #156

ceejayoz wrote: post #155

Earlier quoted context omitted.

The definition of default is to not be able to make loan payments . It's something the US has never done, and isn't considered likely to do in the forseeable future. The largest risk the US has in this regard is political; politicians occasionally use the routinely-raised statutory debt ceiling as a game of chicken. > How you think the debt load might shrink without the US defaulting. It won't, and it doesn't have to…

Ah, so you are arguing that it is feasible the US will keep paying all the interest payments on its debt? If so I misunderstood. I thought you were arguing that the US debt levels might drop at some point. Fair enough. I don't think it will play out that way, but do admit it is still arguably possible.

The US debt load will continue to grow until such point as it gets inflated away during a bout of hyperinflation or the US defaults.

There's really no other realistic option.

Re: Ask HN: What Is Happening in the UK?

#200

Post by colinmhayes » Thu, Sep 29, 2022, 7:41 PM UTC

klyrs wrote: post #198

colinmhayes wrote: post #173

Earlier quoted context omitted.

Increasing the money supply causes inflation. Rich people don't just put their money under their mattress. They invest it which means it's being given to other people who use it to buy things.

> They invest it which means it's being given to other people who use it to buy things. Now do real estate investing.

Real estate investing means either paying people to build things for you, or paying people for something that's already built. Obviously building things causes inflation as you compete for commodities required to build, but buying already built real estate also means the seller now has money that they invest and that will eventually get consumed too.