Keynesian economics
there was an economic crisis just after WWI, the very early twenties. The solution was to say to hell with asset values, let them fall.
When the crisis of the late twenties first materialised in 1928 they pumped money in to protect asset values. What happened they blew the money and when in 1929 the Stock markets fell again they were the sympton of the malais, production levels and wages could not be maintained. Was it not Churchill who mistakenly took us back on to the Gold Standard and set an appallingly high exchange rate.
Now we have the reverse, the Gold is nearly all gone, the exchange seems to have no floor, money is being pumped in to preserve asset values, and failing, and manufacturing is not going to manufacture if the price paid is less than the year before.
The only solution is to reduce the cost of production by a combination of reducing staff numbers and lowering the wages of those who remain. Nobody sells goods for very long where the cost of production is actually higher than the proceeds of sale. The answer is not to throw money at it.
The British government has defaulted on its debts in the past, I thought that the redemption date for War loan was 1928/9 only there was no money so they made it an irredeemable stock, it is of course still a gilt.
As for reducing wages just look at the Invergordon Mutiny, that is when the world knew that the game was up with the British economy, I mean a naval mutiny.
When the crisis of the late twenties first materialised in 1928 they pumped money in to protect asset values. What happened they blew the money and when in 1929 the Stock markets fell again they were the sympton of the malais, production levels and wages could not be maintained. Was it not Churchill who mistakenly took us back on to the Gold Standard and set an appallingly high exchange rate.
Now we have the reverse, the Gold is nearly all gone, the exchange seems to have no floor, money is being pumped in to preserve asset values, and failing, and manufacturing is not going to manufacture if the price paid is less than the year before.
The only solution is to reduce the cost of production by a combination of reducing staff numbers and lowering the wages of those who remain. Nobody sells goods for very long where the cost of production is actually higher than the proceeds of sale. The answer is not to throw money at it.
The British government has defaulted on its debts in the past, I thought that the redemption date for War loan was 1928/9 only there was no money so they made it an irredeemable stock, it is of course still a gilt.
As for reducing wages just look at the Invergordon Mutiny, that is when the world knew that the game was up with the British economy, I mean a naval mutiny.
posted by Catch22 at 5:31 AM
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