@Kevin Dreamlive: What alternative monetary system would you like to see adopted?

@eoin fitzpatrick: people drinking far less nowadays too, which is to be welcomed

@Freda Peeple: it’s only going to get worse not only in Dublin but all over Ireland it’s been coming for a long time so called government haven’t a clue how to run Ireland

@Alan Moloney: restaurants close due to high menu prices, high costs, high rent, staff demanding higher wages cos they know they can move, bad food and / or poor service. The Govt doesn’t run restaurants ! You can also blame the consumers whom won’t support their local restaurants. Historically, and long before this Govt, most restaurants don’t last 3 years. So get out and support your local restaurant this week.

@Kevin Dreamlive: There are lots of good reasons that the gold standard was abandoned, the simplest of these being that you have almost no flexibility in relation to either fiscal or monetary policy; so during a recession a government can’t borrow to pay wages or build infrastructure. This would lead to a much more pronounced (or ‘pro-cyclical’) boom and bust cycle. The current fiat money system may certainly have a lot of flaws, but using the gold standard instead would be even worse.

Cryptos are not backed by anything at all other than ‘confidence’ and would be even worse again. Cryptos aren’t money in any case and are functionally useless as money given that they satisfy none of the three tests of what is needed for something to be used as money (unit of account, store of value and means of exchange).

@Freda Peeple: and due to dire city council and a judicial system that doesn’t punish and a lack of effective policing

@Alan Moloney: go out and run for election then

@Kevin Dreamlive: While you raise some valid points, you make several unsupported leaps in logic regarding the impacts on small businesses. While the abandonment of the gold standard and shift to fiat currency had significant economic effects, these events are weakly related to small business closures, if at all.

On the contrary, the shift away from the gold standard provided central banks with more flexibility in monetary policy, which can be beneficial to small businesses, depending on economic conditions (Eichengreen, 1992). For example, during recessions, central banks can more easily expand the money supply to stimulate growth and support small businesses under a fiat system; increasing access to credit and boosting consumer demand.

Indeed, your assertion that the 2008 financial crisis bailouts and quantitative easing programs were harmful to small businesses is completely contradicted by the evidence.

While there are some valid criticisms of how these policies were implemented, they demonstrably helped prevent the closure of many small businesses, who did not have the ability to survive the recession and the banks’ reluctance and indeed inability to lend (Bernanke, 2015).

Furthermore, your claim that the 2020 COVID-19 stimulus was the “final nail in the coffin” for small businesses is completely wrong. Many economists point out that the stimulus measures prevented widespread small business failures during the unprecedented economic shock (Chetty et al., 2020). While the long-term impacts are still being studied, characterising the stimulus as harmful to small businesses is not supported by the current evidence.

Finally, your conclusion that only “debt default or hyperinflation” remain as options is also wrong. While high government debt and inflation are concerns, there are many policy options that prevent the catastrophe you appear to envisage (Blanchard, 2019) such as:

1. Gradual fiscal consolidation: Governments can implement measured spending cuts and revenue increases over time to reduce deficits without causing severe economic shocks.

2. Growth-oriented policies: Promoting economic growth through targeted investments, regulatory reform, and productivity enhancements can help countries “grow out” of debt over time.

3. Debt restructuring: Countries can negotiate with creditors to modify debt terms, potentially extending the time required to pay back loans and/or adjusting interest rates, without defaulting.

4. Monetary policy adjustments: Central banks can fine-tune interest rates and other tools to balance inflation concerns with economic growth objectives.

5. International cooperation: Coordinated efforts among countries can address global imbalances and promote stability.

6. Structural reforms: Addressing underlying economic inefficiencies can improve long-term fiscal sustainability.

7. Tax reform: Modifying tax structures can potentially increase revenues and rive down depth without stifling growth.

8. Public-private partnerships: Leveraging private sector resources for public projects can reduce government spending needs.

These options demonstrate that policymakers have a wide range of tools at their disposal to prevent defaulting and hyperinflation.

Your view seems to assume that current economic trends will continue unabated, leading inevitably to crisis. However, history shows that economies are dynamic and adaptive. Policies can be adjusted, new technologies can boost productivity, and unexpected positive developments can change economic trajectories, e.g. look at Denmark with Ozempic and Wegovy.

“Weight loss drugs like Ozempic and Wegovy are fattening up Denmark’s economy and helped it dodge a recession last year.”

It’s also worth noting that most economist believe moderate levels of inflation, when managed properly, are not necessarily a bad thing; that some inflation can be beneficial for economic growth and debt management (Krugman, 2014).

While it’s important to be aware of economic risks, characterising the situation as having only two extreme outcomes is an oversimplification, it ignores the complex realities of economic policy and the many tools availably to policymakers, that I listed. In summary, while you raise some valid historical points about changes in monetary policy, you make many unsupported claims.

References:

Bernanke, B.S. (2015). The Courage to Act: A Memoir of a Crisis and Its Aftermath. W.W. Norton & Company.

Blanchard, O. (2019). Public Debt and Low Interest Rates. American Economic Review, 109(4), 1197-1229.

Bordo, M.D. and Eichengreen, B. (1993). A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform. University of Chicago Press.

Chetty, R., Friedman, J.N., Hendren, N., Stepner, M., and the Opportunity Insights Team. (2020). The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data. NBER Working Paper No. 27431.

Eichengreen, B. (1992). Golden Fetters: The Gold Standard and the Great Depression, 1919-1939. Oxford University Press.

Krugman, P. (2014). Inflation Targets Reconsidered. Draft paper for ECB Sintra Conference.

@Fintan Pox: Exactly people drinking far too much and snorting cocaine all the time in these places. It is not pleasant

@Sean Money: I totally agree, when I go for a coffee, I don’t want to see cokeheads

@Fintan Pox: ludicrous view. As you hand over hundreds of percent in mark up on coffee to said publicans

@Niall English: We’ve a household income of over 130K a year, no kids and no mortgage. The times I go on the lash in Dublin have been massively curtailed, partly because I’m an old codger, partly because there is less Garda/Police presence than a small market town in the South East of England on a Tuesday afternoon but the price is a massive factor. Maybe you’re more successful than me or maybe you’re locked after two pints but Dublin City is an absolute rip off.

@Mark Anthony Savage: Cornwall is the best country in Britain.

@Patrice Ahern: I think you’re right, a change in the vat rate won’t work. I think it’s that people got used to drinking and eating at home during Covid and liked the amount of money it saved them. Now they’re gone all American style drinking wine at home and cooking the steaks on their new barbecues. Pubs are now open fewer hours and less days of the week and restaurants are closing; they’ll need more than a 4% vat reduction to change that.

@Patrice Ahern: hear something €98 euros for a meal and drinks same meal and drinks in Spain

@Patrice Ahern: I agree. Rent is usually 25% of total costs. Most restaurants pay €2,000+ per week for high street rent. I seek out unfashionable located restaurants and pay for food, not rent. “Liath” got a Michelin star from a corner spot in Blackrock Market.

@Paul O’Mahoney: Totally agree a drop in VAT may increase footfall but at the end of the day the any VAT collected goes straight to the Exchequer. The RAI would be better comparing Suppliers Prices to the Hospitality Sector which have increased by as much as 100% over the last couple of years. As well as that they need to lobby the Government to lower State imposed Costs like Rates, Water Charges etc.

@The next small thing: rent and insurance costs. Nothing being done about it.

@Mick Hyland: And charging €3.30 for a 250ml coke is just a rip off…I’ve no sympathy for them whatsoever

@Jessie Pinkman: that happened to me

@Patrice Ahern: It doesn’t. It’s just more lobbying for a return to something that was only ever temporary to try to help business through the largest economic crash in living memory which was a long time ago now. They got a taste of it and didn’t want to give it up and never stop moshing about it. The fact is that restaurants always come and go. They are trendy for a while and then people move on somewhere else much like bars and nightclubs which then get reinvented and open as something else. Hotels also did their part to send rates back to normal by gouging like there is no tomorrow. If restaurants can’t stay open at the prices they are charging then it just isn’t a viable business.

@the next small thing. Hi! If you sell €500k worth of food in a year, 4% amounts to €20kp.a. which is the difference between success & failure (profit or a loss). While margins are high on food, they have to be, because of the many costs involved in producing good food. Lots of chefs , cooking and prepping (the hours are frightful), kitchen porters, waiters etc. Then you have council rates, water charges, myriad regulatory service contracts for eg:grease traps, extraction system cleaning, emergency lighting and fire suppression, pest control to name a few; then there’s multiple breakages & upkeep/renewal of ovens, dishwashers, fridges, coffee machines, mixers, stoves, fryers, chargrills, salamanders, hot passes….Im exhausted even writing about it.

@Patrice Ahern: Accounting lesson incoming.. Let’s say your sales are €100000 for the two month VAT period. 9% VAT you pay €9000, 13.5% you pay €13500. Thats an extra €4500 or 50% differential. So in an environment where all costs have increased drastically this 50% jump in tax on your sales revenue is a killer, hence all the closures.

@eoin fitzpatrick: yeah, I’m sick of listening to kids singing “let it go” at karaoke.

@kevin rock: Genuine question, what is the point of a comment like this? I’d say I know town fairly well but I couldn’t name every single restaurant or bar I pass on every street and just because I haven’t personally heard of one doesn’t mean it isn’t popular with others.