Who should pay for social care ?

[Ponty]

Incoherent. QE is the (unnecessary) filling of bank reserves, Since the central bank guarantees all reserves at clearing anyway ot reflecvts nothing more than the upside-down that banks lend out according to reserve positions. What it isn't is 'spending'. If a government chooses to also 'issue debt' on the back of that, they should be back at economics school to explain WTF they are doing.
There has been no inflation in austerity economies for 4 decades, even when the US, UK and ECB did a massive bailout after 2008. It's nothing but fear-mongering out of ignorance.

We’re not in an austerity economy. The govt spends more than it receives.

 

[Le Baron]

We’re not in an austerity economy. The govt spends more than it receives.

It spends it into places where it ends up idle and therefore blocks up fiscal space. It isn't being spent widely into the general public or infastructure or services and the now common practice of people taking out private loans should be a clue. For the ordinary working person or the unemployed it's an austerity economy.

 

[matthewr]

We’re not in an austerity economy. The govt spends more than it receives.

I have been arguing against this view on this forum for about 13 years to such an extent that even I was bored of the subject. It's as incoherent now as it was in 2008 and all it does is allow governments to keep making decisions that benefit one political class at the expense of ordinary working people.

 

[matthewr]

It spends it into places where it ends up idle and therefore blocks up fiscal space. It isn't being spent widely into the general public or infastructure or services and the now common practice of people taking out private loans should be a clue. For the ordinary working person or the unemployed it's an austerity economy.

Broadly, I agree.

 

[ks.234]

I think the most shocking thing about it all, is that no-one has to find more than 86k. That’s great for the wealthy, but simply keeps the less well off, well, less well off. How wouldn’t an increase in inheritance tax help fairness?

It does very much seem as if the older generations are being allowed to pull up the ladder on young people, unless their parents are extremely wealthy of course!

As I understand it the £86k limit is for Personal Care, but if you go into a Care home the vast bulk of costs will be residential, i.e the so called hotel fees for food, rent etc. I’m looking at a Care home for my father; residential care will be £1250 per week, but if he needs nursing care the costs is £1350 to £1400 pw. If my understanding is correct then it will be the residential costs that will be the killer and will not be protected by Johnson’s £86k limit

 

[Ponty]

I have been arguing against this view on this forum for about 13 years to such an extent that even I was bored of the subject. It's as incoherent now as it was in 2008 and all it does is allow governments to keep making decisions that benefit one political class at the expense of ordinary working people.

OK, if the govt isn’t currency limited and inflation just isn’t an issue, let’s credit everyone’s bank account with £50K a year. Why not? Many wouldn’t even need to work. I think I’ve cracked it!

 

[matthewr]

OK, if the govt isn’t currency limited and inflation just isn’t an issue, let’s credit everyone’s bank account with £50K a year. Why not? Many wouldn’t even need to work. I think I’ve cracked it!

I know you are exaggerating but that's actually a better idea than QE as it would have been certainly more equitable and in retrospect almost certainly more effective.

And people like me did say so at the time and I firmly believe the only reason we didn't do this is essentially a certain moral squeamishness about literally giving people money.

 

[Ponty]

I know you are exaggerating but that's actually a better idea than QE as it would have been certainly more equitable and in retrospect almost certainly more effective.

And people like me did say so at the time and I firmly believe the only reason we didn't do this is essentially a certain moral squeamishness about literally giving people money.

You honestly don’t think that would be inflationary? I’d prefer a tax free allowance of say £20 - 25K instead to encourage work and enable people to keep more of what they earn.

 

[NigelP]

I know people are focused on the NI rise but the government has been pretty profligate in raising revenue with the 1.25% dividend tax increase and breaking for a year the triple lock on pensions so quite a lot of different demographics and social classes caught.
Just saying.

 

[matthewr]

You honestly don’t think that would be inflationary?

Hopefully, yes!

Again what the BoE was trying to do was stimulate demand enough so we could raise interest rates. My argument at the time was that it would have been more effective to do this by giving people cash directly instead of giving it to corporations via (mostly) buying shares because it would have been more equitable and more effective.

And the main reason we didn't do this, whether by via cash payments or more QE, was because for a decade people kept saying "Yeah, but inflation is coming! Any minute now!". The fact that there is some stirrings of life in the moribund economy as we (sort of) get a V-shape recovery from the pandemic recession doesn't give people the right to say "See! Inflation!" after being wrong literally every week for a decade.

I might also add that the "Magic Money Tree" didn't exist under labour governments or when Cameron and Osborne were hell bent on wrecking the economy but we (correctly!) had a whole freaking forest full as soon as we needed it under this government.

<fumes>

 

[matthewr]

I know people are focused on the NI rise but the government has been pretty profligate in raising revenue with the 1.25% dividend tax increase and breaking for a year the triple lock on pensions so quite a lot of different demographics and social classes caught.
Just saying.

Not quite sure what you mean, but as has been widely noted the triple lock is being broken for a year because if we didn't pensioners would get a budget busting 8.5% increase.

 

[Joe Hutch]

Not quite sure what you mean, but as has been widely noted the triple lock is being broken for a year because if we didn't pensioners would get a budget busting 8.5% increase.

You say that like it’s a bad thing.

Anyway, attempting to unravel what, specifically a lucky person such as myself should do about the whole inter generational thing, what should I do, apart from feeling guilty? (I mean, I don’t actually feel guilty, but I’m prepared to fake guilt as a first step).

I’ve made precisely two sensible financial decisions in my lifetime, maybe three if you include living beyond my means for several years. These have turned out to be the equivalent of winning the Lottery, but I honestly didn’t intend to have as much money as I seem to have. Maybe I should have developed a cocaine habit, but then I’d probably have made even more money to fund it.

 

[matthewr]

Anyway, attempting to unravel what, specifically a lucky person such as myself should do about the whole inter generational thing, what should I do, apart from feeling guilty? (I mean, I don’t actually feel guilty, but I’m prepared to fake guilt as a first step).

I’ve made precisely two sensible financial decisions in my lifetime, maybe three if you include living beyond my means for several years. These have turned out to be the equivalent of winning the Lottery, but I honestly didn’t intend to have as much money as I seem to have. Maybe I should have developed a cocaine habit, but then I’d probably have made even more money to fund it.

Of course, you don't need to feel guilty.

The main thing people can do is stop voting for reactionary, (small c) conservative governments who have less than zero intention of addressing generational and wealth inequalities for essentially the selfish reasons of them and their supporters. Which, of course, may well already apply to you and other people in your position.

And it's not just your generation. I got a grant to fees paid to go to university which then set me up for life. And my siblings (although somehow not me!) got lots of help of our parents who also won the house price lottery.

 

[paulfromcamden]

I know you are exaggerating but that's actually a better idea than QE as it would have been certainly more equitable and in retrospect almost certainly more effective.

And people like me did say so at the time and I firmly believe the only reason we didn't do this is essentially a certain moral squeamishness about literally giving people money.

To a non-Economist layman like myself it seems common sense that if the government creates more money then existing money will be worth slightly less and so you'll need more of it to buy stuff i.e. inflation. And if the government continues 'printing money' you end up with the Weimar Republic or Zimbabwe.

So this is genuinely a really interesting discussion. Can you explain in simple terms how the government creating more money doesn't reduce the value of existing money. Be gentle please - no long words!

 

[Darth Vader]

I've posted links to this before. However once again

Money money money,

DV

 

[ks.234]

According to the BBC “Those with between £20,000 and £100,000 in assets will get means-tested help towards costs from their local council”.

While we’re having a national conversation about who pays for Care, why is no one asking where councils will get this extra money from? Especially as, according to the same source “Mr Johnson has said the majority of the £36bn fund raised by the tax rise will go towards catching up on the backlog in the NHS created by Covid.” So as things stand none of the money raised by NI will go to councils.

If the £86k ceiling is meaningless and the means tested help unlikely to happen or only come at the expense of losing local services, who is the PM’s promises designed to help?

 

[Ponty]

Hopefully, yes!

Again what the BoE was trying to do was stimulate demand enough so we could raise interest rates. My argument at the time was that it would have been more effective to do this by giving people cash directly instead of giving it to corporations via (mostly) buying shares because it would have been more equitable and more effective.

And the main reason we didn't do this, whether by via cash payments or more QE, was because for a decade people kept saying "Yeah, but inflation is coming! Any minute now!". The fact that there is some stirrings of life in the moribund economy as we (sort of) get a V-shape recovery from the pandemic recession doesn't give people the right to say "See! Inflation!" after being wrong literally every week for a decade.

I might also add that the "Magic Money Tree" didn't exist under labour governments or when Cameron and Osborne were hell bent on wrecking the economy but we (correctly!) had a whole freaking forest full as soon as we needed it under this government.

<fumes>

Labour effectively grew a magic money tree with PFI, but that’s another discussion. I suppose the govt had little choice with covid but to throw money around. We’re going to have to start paying it back. We have 0.1% base rates and soaring prices, many of which are now baked in. 10+ years of emergency IR’s, record personal and govt debt, absurdly priced assets and record printy printy. To me, and the next generation, that’s really not a good situation all round.

 

[matthewr]

Labour effectively grew a magic money tree with PFI, but that’s another discussion.

Yes it's irrelevant. I would also argue that it's to a large part a function of how we cannot have sensible conversations about taxation and wealth inequality yet so Labour had to do that to ever get elected again.

I suppose the govt had little choice with covid but to throw money around. We’re going to have to start paying it back. We have 0.1% base rates and soaring prices, many of which are now baked in. 10+ years of emergency IR’s, record personal and govt debt, absurdly priced assets and record printy printy. To me, and the next generation, that’s really not a good situation all round.

And again this analysis has been repeated literally every week for the last decade and it's just not true. It's a self serving view of the world penned by the city, the rich and the Dailies Telegraph and Mail.

 

[Joe Hutch]

And the two papers in question essentially have no choice but to continue backing Boris, because they’re hardly going to advise their readers to switch to Starmer.

It’s an interesting parallel, with Tory scribes saying that Boris has ‘destroyed’ Conservatism and Labour scribes saying Starmer is destroying Socialism. But for the foreseeable future tax and spend is the only game in town.

 

[Ponty]

And again this analysis has been repeated literally every week for the last decade and it's just not true. It's a self serving view of the world penned by the city, the rich and the Dailies Telegraph and Mail.

You don’t think asset prices are absurd? It’s rent for life for many as a result. That’s going to get difficult when people want to retire or dare I say, require care.