Monday, 18 May 2020
The UK surviving on confetti money
I know the US finance people talk in trillions and we in UK only talk of billions but basically it's the same. Both economies are surviving on what I can only call confetti money, or Monopoly money or money that appears to grow on trees. Both the US and UK are now running their economies on a philosophy of pure socialism. Handing out money to the workers to keep them afloat, saving businesses and industry with huge injections of cash and even, in the US case, sending cheques to every household just to keep them alive and smiling. It's no longer a market capitalist economy. It's a hand-out economy Soviet-style. In the good old days of the Soviet Union there was never any unemployment because the Kremlin made sure everyone had a job even it meant just turning up at the factory and clocking in and then sitting around all day or polishing door knobs. So millions and millions of people have been furloughed - such a common word today but rarely mentioned pre-virus days - and the government has paid a large percentage of the wages. All fine and wonderful. But when will the financial pain arrive? No government can borrow billions/trillions of cash without having some plan in mind to pay it all back. The interest rates are thankfully low at the moment but even so, interest is going to pile up and at some point we, the taxpayers, are going to have to foot the bill. Higher taxes, frozen wages, reductions in public spending on a huge scale? How is it going to be done? No one is telling us. But you can see why most government leaders are now clamouring for everyone to go back to work to generate some revenue for the treasury departments. Every country is in recession, with a few exceptions, so the payback for all the money hand-outs is coming soon. We can't live on confetti money for ever.
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