Thursday, January 26, 2012
Total M4 money supply in Britain £2,100 billion
British GDP £1,600 billion
Maximum theoretical sustainable growth rate 23.8%. OK I will accept that this is theoretical but the theory is unquestioned. In the actual world the highest growth rates, excluding countries coming out of wars or discovering vast quantities of oil are, for sovereign state, Singapore last year at 14.4% and for economic areas, Guandong province in China which has been doing 20% for years so not that far short of theory.
Amount raised by British taxes 36.9% of GDP (app £600 bn)
Amount by which money should be raised if we had 23.8% growth = £1.600bn X 23.8 X 1.31 = £500 million.
Amount in the second year (23.8% higher) £620.
And so on.By the 3rd year we would be getting in £760 bn - roughly current government spending (so no deficit). Obviously also with the GDP base growing there would be absolutely no problem borrowing.
Not saying that we shouldn't be cutting the cost of government - we definitely should if only because big government parasitism is what is preventing growth. Nor that we should rely on that sort of growth rate - nobody sensible relies on best possible outcomes all the time.
But I am saying that deficits, inflation, national bankruptcy etc are not the real issues. All of those are merely the symptoms of the real problem which is that growth is being deliberately prevented by Luddite government parasitism. Solve that, the solution is easy and obvious, and everything else is easy.
24 point out of recession in days plan