The last resort of desperate government

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RubberRims's picture
RubberRims
Status: Silver Member (Offline)
Joined: Nov 22 2008
Posts: 145
The last resort of desperate government

With the Vat increase today in the UK, the reaction of each business to each other’s attempts were to keep profits at a level to provide incomes with sustained purchasing power. This looks like prices are set to spiral upwards.

Small businesses that are already run very lean will have no option but to put up prices. Larger businesses may be able to find efficiency / op ex savings, or simply make people redundant. Those small businesses will be unable to compete and could go out of business as their prices become uncompetitive, or if they don’t increase their prices they are unable to make sufficient profit – either way any small business that is already struggling is now screwed.

So, we’re set for crazy inflation coupled with rising unemployment. This is what happens when the Government interferes in business.

Pure laissez faire trading is the only way for the economy and the individuals in society to prosper, but what is the chance of the looters releasing their strangle hold on the producers’ necks when leaching off them like a malignant parasitic disease is their only means of survival? It’s rather scary actually that the government will destroy this country before admitting that tighter and tighter control, unlimited handouts to the ‘needy’, and more and more taxes, is not the way to fix it.

I almost feel like screaming. The logic is simple. The answers are within rational thought. There is no doubt where we are headed. The only conclusion I can draw is that, as John Galt says, they want not to live but to suck the life out of everyone else around them in the process.

regarding the actual question, i we consider that in 1694 when the Bank of England was founded interest rates were set a 6% and stayed there or there abouts (4-6%) until the mid 1800's. Interest rates then jumped up as a result of war (max 10%) and leading to the great depression where rates were then slashed (2%). Rates under thatcher climbed fueled by inflation and capped 17% in 1992 (black wednesday) before regaining stability until mid 2008 (when we all know what happened!). Pre 2009 QE had never been tried before in the UK. 

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
Re: The last resort of desperate government

RubberRims - You sooooooo right.  The democrats here were floating ideas about a VAT tax here a few months ago.  Absolutely no freak'in way - period.  People in GB should start a campaign to repeal the VAT tax.  It could be reduced every year for say 5 years and then eliminated.  If I was a politician in GB I would run on a platform of reducing and then eliminating the VAT tax.  I would also run on a massive reduction in the petrol taxes you pay.  The petrol taxes you pay are simply outrageous.  Have to cut the government and reduce taxes.  If that is done there will be an increase in economic activity.

 

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1982
Re: The last resort of desperate government

I have a friend in the UK who just made all of his major electronics purchases for 2011 in December 2010; that was before the VAT increase. My guess is that people making such purchases are going to "show" the UK government that they had a "good" holiday season. Ha! The citizens are battening down the hatches, that's all it is. Higher tax revenues on lesser sales (due to higher taxes) always leads to a decrease in tax revenues.

As always, the trick is to get a grip on government spending.

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