Timmy elsewhere

At the ASI.

Why London has rebounded.

12 thoughts on “Timmy elsewhere”

  1. It would have been quicker to just praesis it down to, “London is where the government pumps money into the economy, creating a bubble. Thank you government, for giving us all this money we can charge everyone else interest on. PS thanks for all the little brown people to be our nannies and gardeners.”

  2. Ian,
    Does the government really pump money into London? I was under the impression that the rest of the country receives the more than it pays in tax, whereas London (and the southeast) pays more in tax than it gets back.

    Besides, as Tim points out, London’s success is down to its role as a centre of global trade. Government largesse is ancillary. We can see the same effect in New York City, which is neither the U.S. capital nor even the state capital; yet its economy closely resembles that of London.

  3. Surreptitious Evil

    You misunderstand Ian. By ‘pumps money in to the economy’, he’s talking about where the banks are. Because that’s:

  4. Surreptitious Evil

    You misunderstand Ian. By ‘pumps money in to the economy’, he’s talking about where the banks are. Because that’s:

    A) who the government pay interest on their bonds to,

    B) aren’t charged enough for deposit insurance schemes

    C) and, intermittently (that Ian moans about it, not that it happens) that banksters are permitted by their political cronies not to maintain full reserves.

    So it is independent of capital status, tax inflows or or outflows.

  5. I think what SE was going to say before he was so rudely interrupted was something like, London and New York are both primary entry points for newly created money. Ludwig Von Mises demonstrated irrefutably that under an inflationary system, the people who get new money first get it at its higher value, before it has lost value due to inflation. This ratchets money from everybody else to those lucky few, which wipes out the lower and middle classes. Which is why bubbles form around the finance cities like London and New York.

    This has been exacerbated recently by deliberate government policies of not just inflating, but openly printing large sums of reserve money and giving it to the finance industry under QE. Anyone just handed a truckload of dollar bills is obviously better off than somebody who can only get those dollar bills by borrowing them at interest from the first guy (even if he cares to lend them, rather than use them to buy more government bonds and profit from the interest on them paid by taxpayers).

  6. Also-

    I was under the impression that the rest of the country receives the more than it pays in tax, whereas London (and the southeast) pays more in tax than it gets back.

    This is a necessary policy under the current State fiat system; the outflow of money via the government helps offset the impoverishment of the hinterland, but does so by creating Soviet boroughs. Then the people getting the free truckloads of money sit in their wine bars talking about how people outside the bubble are victims of their own laziness.

  7. Surreptitious Evil

    I would note that just because I understand Ian’s debating points doesn’t mean that I agree with him that they are the fountain of hell.

  8. Ian B has missed one of his other bêtes noires , the London Property market . Why bother to put money in a bank in London when you can get ginormous appreciations of capital value by buying expensive houses-you can even live in one of your investments if you have to. Tim also misses out on Ricardo’s main contribution: no matter how wealthy a place ;no matter how much money is around ,land values will always go up to equalise or nullify the beneficial effect.

  9. DBC-

    Because in my philosophy, the property bubble is merely a symptom of the finance bubble, rather than being Ricardian in origin. In a true free market, property values would gradually fall due to the declining rate of profit (to be a bit Ricardian/Marxist myself) like all other prices. They are maintained by deliberate pumping; which goes on all the time, but we have recent extreme examples like Osbourne’s pumping policy on top of that.

  10. @Ian B Quite. But as well as all the pumping up of property prices that’s been going on since the politicians realised high house prices were the way to guarantee elections (bribery with other people’s money in other words),there is also a lot of international flight capital in London as well.

  11. Sorry Ian, yes I did misconstrue what you wrote. The benefit of inflation does indeed accrue to the world of finance.

    This is one reason why an independent Scotland under Sterling would quickly go bankrupt, as all the money would continue to flow to London.

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