[Politics] Liz Truss **RESIGNS 20/10/2022**

[deletebeepbeepbeep]

Hunt apparently announcing that the energy price guarantee will only be fixed until April 23 at this point it will become targetted.

Massive embaressment for Truss who was criticising Starmer at PMQs on Thursday (4 days ago) for only backing an energy price guarantee for 6 months.

 

[mikeyjh]

And there are dark clouds coming in the property market. In BTL not being able to offset mortgage interest was OK with 2% rate but with 6% rates the business model will be on its arse, especially for JCL's

Prices are going to fall and the blame will be on the government, Labour will milk it

I have heard BTL landlords bemoaning legislation protecting tenants and how it will effect their ability to pay the mortgage. I imagine sympathy will be in short supply among rising interest rates. I've always thought an interest only mortgage a fairly terrible idea personally.

We should be bit careful though, while we're a nation obsessed with home ownership. There is a need for a strong and affordable rental market, reducing supply doesn't support that.

 

[nicko31]

Hunt has junked pretty everything

 

[Giraffe]

Standard stability statement from Hunt. Truss is now a puppet PM with others steadying the ship.

 

[Seaber]

I doubt Labour would do this well/Tories this poorly, but this polling suggests SNP would be HM Official Opposition with Cons as third biggest party.

 

[jakarta]

I'm afraid Property is a one way bet in our part of the World.

People aspire to live in the SE of England and how is that going to change?

Selfishly, I don't care as we have paid off our mortgage.

 

[BenGarfield]

I was meaning things that have a value most agree on. Gold for example, there is only so much of it is one reason it is valued highly, it doesn't corrode and become intrinsically less valuable over time is another. If a huge amount of previously unknown Gold was discovered, and the cost of extracting it was low, Gold value would decrease, sometimes even the suggestion that a lot more Gold will be hitting the market will decrease the value, as confidence in it's future value will diminish a little.
Money can also corrode though, in that inflation eats away at its value over time, you can print more of it, but that inevitably increases inflation, if it is greater than the demand for that currency, and it devalues the currency. Mitoma is valuable because there is a demand for his services, if there were 20 Mitoma's and only 15 clubs looking for a player like him, then a Mitoma would be less valuable. You might get away with there being 16 or 17 Mitomas, because one or two will be held in reserve by big clubs, but at some point, an excess of Mitoma's will devalue Mitoma's.
MMT pretends that a Government can just spend and spend without balancing the books, and stop inflation running away by increasing taxes. But where does it go when you can't raise taxes further? How likely will it be to collect all those due taxes when people are struggling with high inflation, or have clever accountants and access to Tax havens and foreign exchanges? How long before highly taxed people just start asking for payment in currencies that hold value, or returning to a barter system of exchange?
MMT also takes no account of what the real world believes, and how it will react. See what happened with the Truss budget, lets assume that what you believe will work, could work, it would still depend on the large majority to believe it will work, because you have to trust that the piece of paper we exchange for goods and services, is not just a a piece of paper. A fiat currency is only worth as much as people trust it is worth, when a Government treats it like monopoly money, it will be valued like monopoly money.
Yes I have heard of QE, no it is not the same, it is right in certain circumstances, not all circumstances.

In short, it is bollocks.

Edit: I should add, at the point MMT needs taxation to control inflation, doesn't it start to look like a more traditional model, where the books need to be largely balanced?

If MMT proposed many of the things that you says it does then yes I would agree, it would be bollocks. But it doesnt. MMT describes how our system actually works now all the time. New money is being created all the time. Apart from the job guarantee, its not a set of policy proposals. Its agnostic politically. The MMT description of the economy is a bit like a circulating water system. Money is introduces when the government/banks turns on the tap (keystrokes) , the water flows around the system (the economy), some leaks out (e.g. abroad), and then goes back to the governments drain (tax). New money is injected when required. You`re right when you say that a sovereign fiat currency such as the UK does have the capacity to create an infinite amount of money and does not have to balance the books. This is because it is not a currency user but the issuer of the currency. Its role is analogous to the banker in a monopoly game or the score keeper in a football match who can never run out of goals. Also as the government is money issuer it does not need taxation or "borrowing" to fund its expenditure. Taxation serves many functions, one of which is to help control inflation, but MMT also proposes other controls such as the job guarantee, and indeed a reduction in spending to cool things down. In a fiat system, taxation also gives value to the currency, and can be used to create equity and ecourage desirable social outcomes. MMT does not advocate big public spending when the economy is running at full capacity.

 

[LamieRobertson]

The energy cap is massively costly and needs to be offered to only those that need the help, plus they need to proper windfall tax on the fossil fuel companies or a commitment all excess profit will be invested back into renewables.

Who would you define as needing help (out of curiosity)

 

[Guinness Boy]

Truss is toast

 

[pb21]

Truss is toast

Quite, I don't see how she can stay. Any authority she had has completely gone, and she has been personally humiliated. She must be very tempted to resign.

 

[nicko31]

Who would you define as needing help (out of curiosity)

Mean testing isn't easy. But certainly no one on the higher rate of tax should get, treat it like child benefit.

As Hunt hinted we need to do more stuff on insulation. Instead the Tories have been putting all their energy into locking up a handful of protesters

 

[Leekbrookgull]

Can anyone confirm that the energy cap is only up to April 23 ?

 

[Seagull27]

Looking at this announcement from Hunt, the Tories must have formal plans to replace Truss underway already. I find it hard to believe that she would have chosen a chancellor who was going to completely reverse everything she had planned.

This must be the economic plan for an alternative PM - whether that's Hunt himself, or someone else who is working with Hunt behind the scenes.

 

[nicko31]

Can anyone confirm that the energy cap is only up to April 23 ?

Correct, only guaranteed for the winter. After that its being reviewed

 

[Guinness Boy]

Mean testing isn't easy. But certainly no one on the higher rate of tax should get, treat it like child benefit.

As Hunt hinted we need to do more stuff on insulation. Instead the Tories have been putting all their energy into locking up a handful of protesters

Not that I disagree, but the Tories are going to need to target a demographic voter to even stay in the game next time out. Will they stitch up middle class home owners in order to try and keep the red wall with a mixture of economic incentives and their culture war on the “woke”? They certainly can’t appeal to both any more

 

[KZNSeagull]

Not sure where people have got means tested from for the energy price cap - Hunt has announced a Treasury led review to decrease the burden on the taxpayer. That does not necessarily mean means testing, particularly as the treasury are really bad at identifying people's means, hence why Covid support wasn't means tested.

 

[Lenny Rider]

A work colleague has a friend that has just been told her rent is going up by £300 a month. Looks like they are just going to pass the cost on to the tenant...

I think its going to be the same with a lot of first time buyers, Amy's friends got the keys to their first house last Wednesday, but only after their mortgage had been 're-calibrated' and gone up £436 a month, from what they thought they were going to be paying.

 

[mikeyjh]

A work colleague has a friend that has just been told her rent is going up by £300 a month. Looks like they are just going to pass the cost on to the tenant...

That's awful and why interest only mortgages were such a bad idea. If it's bad news for BTL landlords, it's very bad news for renters.

 

[nicko31]

Not sure where people have got means tested from for the energy price cap - Hunt has announced a Treasury led review to decrease the burden on the taxpayer. That does not necessarily mean means testing, particularly as the treasury are really bad at identifying people's means, hence why Covid support wasn't means tested.

No that was just my suggestion...

 

[BBassic]

Can we please,  please, move this MMT willy waving to a different thread?

Tedious doesn't begin to describe it.