Wednesday, March 07, 2018

Economics 101


A wealth plan for the ages and for all

Now, I am the first to admit that I am functionally economically illiterate. I must point out that this in itself is not necessarily a bad thing. After all even though there is a loud and boisterous group who like to pretend that economics is a science, most people recognize that economics is to science as bookmaking is to wealth. The systems involved in each are, at best, enlightened guesswork and at worse ill-informed charlatanism.

I have long had an economic plan. This plan has been the subject of ridicule and approbation from all sides.

By way of illustration: it resembles my famous cherry-pie mathematics theory. Cherry-pie maths postulates what happens when you apply some mathematical principles to a cherry pie. For example, if you add one cherry pie to another cherry pie you get two cherry pies. OK?

Now if your multiply instead of add you get something different, so the mathematicians tell us. Where I come from, adding is like multiplying. Add two things together you get more. Multiply two things together you get more. (Like rabbits for example or cherry pies)

Therefore when the mathematicians tell you that 1x1 = 1 – hey! not where I come from! IF you multiply 1 cherry pie x another cherry pie – the maths genii say you get one cherry pie. Crazy – what ever happened to the law of conservation of mass and energy? Where did the rest of the pie go to?

No, multiplying one cherry pie by another cherry pie means you get two pies – not one!

Similarly, if you ask maths guys they will tell you that multiplying two negative numbers together creates a positive sum. So -10 x -10 = 100. Yeah, right.

In the real world if I go to Barclays bank and borrow £1000 pounds – go next door to HSBC borrow another £1000 and then ask them to multiply my borrowings together and send me the cheque for 1 000 000, they just won’t do it! (Go ahead, try it and see, but be prepared to be laughed at!)

Result: my cherry-pie maths is rooted in the real world. Economics is rooted in the mathematical world. And, the two rarely meet - and if they do it is usually with an earth-shattering collision.

How does this fit with my plan to exploit the economists? Simples.

Take as an example the National Lottery. Since it’s inception in November of 1994, the National Lottery has produced more than 4,750 millionaires. Gosh, that seems a lot – especially since I’m not one of them! Not only is it a lot of winners: it is also a lot of money. And, here is the important point: it (apparently) does not cause inflation – or indeed any other blip in the economic life of the nation. This could be because it is essentially self-financing – indeed there is money left over to give to good causes. In actuality the National Lottery is a wealth redistribution vehicle. It takes money from millions of citizens and gives it to a few.

I propose something similar. But, why not just cut out the middle man and give money directly to the public. There are about 27 million households in the UK.

For 2015/16, the overall NHS budget was around £116.4 billion. That’s about 5000 per year per household. The government seems content to fund this.. Of course, they could just give every household £ 5 000 and say you get your own healthcare – use it to buy health insurance for example. By way of comparison: How much does the US spend on healthcare per person?
$10,345 per person.

So, here in the UK we are content to let the government redistribute wealth through the NHS.

Why not let the government do this on an industrial scale?

My plan: the Chancellor writes to all 27 million households and tells them that on January 1, 2019 he is going to deposit 1 million pounds in their bank account. He explains that if asked he will, of course, deny this. All you have to do is provide the Inland Revenue with your bank account details and on Jan first the money will be deposited. The only proviso, if you haven’t spent the money by Jan 5 he will take it back.

I figure that 5-10 million households will think it’s a hoax and do nothing. Another 5-10 million will lose the letter, or forget or be so drunk after New Year they just fail to do anything. So, 10 million folks will get the million and spend it (oh, yeah, one more proviso). You can spend it either to pay off your debts or buy stocks, shares or bonds. Or a combination of either.

The result: the total cost to the exchequer will be about the same as the annual spend on the NHS. 
 
10 million households will no longer have a mortgage payment to find every month. Those 10 million will also own most of the shares in VW, GM, US Steel and South Africa’s diamond industry.

And, here’s the best bit, they will have paid for these non-perishable assets with mostly worthless paper currency, for the pound will sink like a rock. No real matter – that’s why only non-perishable assets are allowed. Makes no difference if the pound in your pocket is worthless, if you own real assets. Works for me. Also, the best bit is the economists will hate it!

From where I’m standing it looks like winning..

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