UK ‘Recovery’ based on unsustainable debt.

Once again economists blunder around in the dark.

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A report out from the Resolution Foundation makes predictable but sobering reading for anyone with a basic understanding of how our debt based monetary system works.

The key points were:

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* More than a million people saddled with huge mortgages risk losing their homes if there is even a small rise in interest rates.

* Despite super low interest rates people with high debts have not been paying them off

* If interest rates rose to 3% then more than a million people would be paying more than half of their income to service mortgage debt.

Matthew Whittaker, who is described as a ‘senior economist’ at the Resolution Foundation is behind some of the predictions and cannot mask his shock that people are not paying down their debts – illuminating once again that economists lack a fucking clue about how the modern monetary system actually works.

When over 97% of our means of exchange is interest bearing debt, how on earth are we to have any growth if people pay off their debts and reduce the money supply?

With the current money supply you CANNOT have more growth without more debt.

And has Matthew not been reading the news lately? Real incomes have been falling since 2007 hopelessly outstripped by galloping rises in energy, transportation and housing costs – but the property market is enjoying a lovely new bubble created by…

…people taking on more mortgage debt.

How does Matthew imagine that people can pay more for life’s essentials, be paid less, take on more mortgage debt and pay it off at the same time??

Only an economist can be surprised by the oncoming debt disaster – anyone that understands money is way ahead of them once again.

You can find out why economists argue for a hopelessly flawed model of money creation on this page (watch the third video)

Meanwhile the evidence piles up of just how George Osborne’s ‘recovery’ has been achieved.

A survey carried out by Which? shows that around 13 million people (25%) paid for Christmas purchases using  credit cards, loans or overdrafts.

The Guardian quotes Gillian Guy, chief executive of Citizens Advice warning of:

“financial ticking timebomb”: “The rising cost of energy, food and travel has been absorbing any spare income people may have. This means that in some cases there is little or nothing left to cope with larger mortgage repayments.”

Yo ho ho – quelle surprise.

The ‘hard work’ that George Osborne boasts about that has somehow sorted out the UK economy is nothing more than families up and down the land busily filling in loan applications and the banks happily creating new (debt) money.

and when it all goes tits up guess who is going to get hit the hardest?

The oh-so-clever chaps at the Resolution Foundation have noted that  lower-income households “look particularly vulnerable”