The Telegraph is deeply confused about People's QE. In an article out this morning it notes:
Economists warned that [PQE] would have disastrous consequences. Tony Yates, a former Bank economist and now a professor at the University of Birmingham, said: “Down that road leads monetary policy ruin.”
Poor Tony: perhaps he has not noticed that monetary policy has effectively ceased to exist for the last six years or so as interest rates at or near zero have gutted it as an instrument of policy and given what is happening in China it is unlikely to see a revival for many more to come.
Then they quote Mark Carney, the Bank's Governor, who they report:
has said that he could “not envision any circumstance” in which an advanced economy central bank should finance government deficits.
It seems Mr Carney should look at what happened before he got here. From 2009 to 2012 HM Treasury borrowed (as I recall, but I think I am right) £426 billion and over the same period the Bank of England repurchased £375 billion of gilts. If that was not the Bank funding the deficit what was it Mark? Please tell?
And then they say:
Mr Corbyn's proposals would clash with Article 123 of the Lisbon Treaty, which forbids central banks from printing money to finance government spending. Lawyers warned that a lengthy fight with the EU would be a certainty, and could mean that infrastructure projects end up incomplete.
So that's why the Bank of England was allowed to buy £375 billion of government bonds, the ECB is now buying €1 trillion of bonds in an operation that looks very like PQE and people like Adair Turner and Martin Wolf can mention helicopter money and not once is section 123 mentioned.
The challenge won't happen. I have bothered to establish that this is legal. Mario Draghi and Mark Carney have both made clear this is the case.
So, in the past resort Tony Yates mentions Zimbabwe. You know they're desperate when they get to that point. It's not even worth responding to someone who has so run out of arguments that they have to stoop to such levels.
And what is really odd is Peter Spence spoke to me and I cleared all these points with him. There is not a mention of that, I note.
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Private Eye has charted the decline of the Torygraph both in terms of sales of newspapers and journalistic standards. The article reflects the latter. I see something very similar in the way the newspaper covers both climate change (not happening) and renewables (unsightly and too expensive). Perhaps it could rename it self “The Tandy” (T repacing D) and market itself as a comic.
I don’t agree with you Richard.
The Telegraph is just deeply evil – supporting policies and ideas that hurt the most vulnerable in society and those with out the money to effect change and therefore helping the status quo to remain in place.
You give them too much credit because you are a decent human being so I’ll say it if you won’t.
Looks to me like the Telegraph aren’t confused at all.
Traditional QE doesn’t cancel Gilts, and isn’t overt monetary financing of government. If you look at the Bank of England balance sheet, or the government balance sheet you can see that those QE bought bonds still sit there as a liability.
PQE is overt monetary financing. Or printing money, just as Zimbabwe did. Ruse or no ruse, article 123 or no article.
That link you post with Mario Draghi talking has him specifically saying the ECB cannot engage in monetary financing. So not legal. I don’t think your argument on that blog with John stands up to much either – a ruse because Maastricht got it wrong.
You are putting words in Mark Carney’s mouth as well. He said that the range of assets purchased by traditional QE *could* be widened. At which point Caroline Lucas said a Green investment bank should be allowed to issue bonds which the Bank of England would then buy. It’s then your claim that this debt can simply be cancelled – which is not how QE works. A green investment bank would still owe the Bank of England money in this case, and the debt can’t be cancelled.
Unless of course you simply print more, Zimbabwe style. Which Mark Carney seems to think is a rather bad idea unless “not envision any circumstance” means something completely different.
I’m sorry but I think I’ll take Carney and Yates’ word over yours. PQE is just printing money and every single one of the 56 instances of hyperinflation on the Hanke-Cruz table were started by the central bank printing money.
I have looked at the government’s accounts (which is what matters)
They are not there as a liability: they have gone even if technically still in existence
All else is wrong too
Nor am I saying these bonds need be cancelled: they too (or replacements) can sit there in eternity
So you are just making things up, to be polite
I’ve also had a look at both the government accounts and those of the Bank of England. The debt bought through QE is still there. As a liability.
Carney has specifically said that monetisation of debt is a bad idea. Draghi says it is illegal under EU law. Yet you are saying it can be done (it can’t legally) and are insinuating they both agree with the idea.
Moreover, you are also saying that through PQE debt can be cancelled. Again, this is a falsehood. What you are really saying is that new money can simply be printed, which is a very different kettle of fish. It’s not a new idea, has been tried before and has ended in disaster every single time.
Essentially you are saying that with PQE we can:
* Issue new debt at zero cost, then simply cancel it
* have lots of new money
* spend that money on a huge range of new assets
* never have to pay for those new assets
* there will be no negative consequences of doing this, on inflation or otherwise
Apart from the fact that if it were this easy it would have been tried before, don’t you see that this is dreamworld economics and finance? Have everything we ever want, at no cost with no drawbacks?
Back in the real world, as opposed to dream world, either PQE doesn’t work as you say it does, or it will drive inflation higher and make us poorer through that mechanism – and that cost will offset any gain from the new assets bought through PQE.
“So you are just making things up, to be polite”
As opposed to what you have done? Your PQE is simply printing money, and you are making false promises about what it is and the massive inherent drawbacks of it.
I have not said the debt need be cancelled
Carney and Draghi say it is possible
And it is not on the government balance sheet: sorry, but what left is there to argue with?
Don’t come back with the same unreferenced claims again
And all I am saying is that the BoE can make money out of thin air and use it for more than bailing out banks, which is what, as a matter of fact it has done
OK I’ll reference for you.
“I have not said the debt need be cancelled”
http://www.taxresearch.org.uk/Blog/2015/08/03/chris-leslie-has-got-corbynomics-wrong/
Fourth, to suggest that people’s quantitative easing will increase the government’s debt burden is wrong, as it is also wrong to suggest that it will increase its debt servicing obligation. If the government buys its own debt then it cancels it.
“Carney and Draghi say it is possible”
Carney: No is the short answer. I can’t envision any circumstance
where I think an advanced economy central bank, should
pursue helicopter money – a cancellation in effect of
government debt, because that’s what it ultimately means –
the inability to then bring back the reserves that had been
put out into the banking system. If you think about the
hundreds and hundreds of billions of additional central bank
reserves that we have put into the banking system in order to
fund the Asset Purchase Facility, well ultimately we want to
be able to take those back. And we need an asset to sell in
order to do that.
If we cancel that asset on top of that, which is what you need
to do for this, how are we going to pay the interest on those
reserves? Are we just going to issue more reserves to pay
the interest on the reserves and compound and compound
and compound? I mean, you can very quickly see how this
doesn’t hold together.
Of course on top of all that, the reason why one doesn’t even
start on this conversation is the removal of any discipline on
fiscal policy that comes from that, or would almost certainly
arrive from it. And so, no, I can’t see any circumstances
where I would advocate, including in the eurozone – forget
about it being absolutely prohibited under the Maastricht
Treaty – just from as a sense of sound policy, to undertake
that in order to achieve.
http://www.bankofengland.co.uk/publications/Documents/inflationreport/2014/conf121114.pdf
Draghi: On your second point, a quick answer to your question is the following. The ECB is a rule-based institution. It’s not a political institution. One of the rules that we comply with is contained in the Treaty, and it’s Article 123, and it’s the prohibition of monetary financing. Monetary financing is when the central bank of a country prints money to buy the government bonds in the primary market of that country, and it could be either direct or indirect, when banks bring collateral to the ECB in order to be financed in order to buy the sovereign debt of that country, and we are prohibited from doing that.
“And it is not on the government balance sheet”
Bank of England: http://www.bankofengland.co.uk/markets/Pages/balancesheet/default.aspx#qe
QE is on the bank of England Balance sheet.
Government: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/419973/PU1786_WGA_2013-14_Accounts.pdf
See pages 20-25.
“Financial liabilities have increased by £447 billion since the financial crisis, which is mainly a consequence of the Bank of England’s quantitative easing programme.”
I.e. the government is accounting for the bonds purchased by the Bank of England as “other financial liabilties” rather than “Gilts” but it is still there as a liability. SO not cancelled.
“And all I am saying is that the BoE can make money out of thin air and use it for more than bailing out banks, which is what, as a matter of fact it has done”
QE wasn’t designed to bail out banks. The banks sold their assets (Gilts) to the Bank of England and got cash in exchange. Doing this lowered interest rates. Hence the “easing” part of QE. If that is what you think the Bank of ENgland did, you are horribly misguided. What you are really suggesting with PQE is simply printing money. There is nothing “QE” about it.
You obviously do not understand the impact of consolidation: that is the cancellation I refer to
Read MMT
Carney was talking helicopter money. I am not. PQE is designed to be Art 123 compliant. It will be sold in to the market, and they could keep it. Indeed, I argue pension funds should keep some of it: it would be an ideal asset. I am not saying it must be bought back
Carnet is wrong re interest on reserves: as Adair Turner has pointed out, this is entirely at the option of the Bank
It is not on the balance sheet as debt: it is reserves. That is something quite different. The gilt has gone in accounting terms
You really aren’t winning this
If you consolidate debt between different arms of government (as you seem to call the Bank of England) you have to consolidate the cash as well. Which you seem to forget, which puts a huge hole in PQE.
PQE is not Article 123 compliant. As various articles have already pointed out, the “ruse” you suggest is so blatant the whole thing will be wrapped up in court for years, before PQE loses as 123 prevents overt monetary financing of governments.
If the debt is sold in the market, it’s just normal debt. So no PQE there either then.
QE is on the Bank of England balance sheet as Gilts (assets) and reserves (liabilties). No cancellation there. On the government balance sheet some debt has been moved while staying in the liabilities column from “Gilts” to “Other Financial Liabilties”. There is no net reduction of liabilities on the government balance sheet of 375bn though.
It’s there and plain to see for anyone who can read. Why are you trying to claim anything different? It makes you look pretty foolish.
You say I am losing this argument? Because you say so? Seems to be a theme for your work and your blog. The impenetrable wisdom of Richard Murphy is never known to be wrong, and anyone who disagrees with him is a neoliberal or worse! It must be a shame then that the internet is full of articles pointing out the flaws in your work.
The debt will be sold in the market
The cash liability is reserves. I have made clear interest need not be paid on them
And the BoE balance sheet is just that of a subsidiary – never a true and fair view
Sorry: debate over
Technicalities aside, is PQE too good to be true, in the sense that it gives us new infrastructure (and so on) at no cost?
Look at it this way: we have a need for affordable homes, green energy, better transport, etc; and we have millions of people unemployed or underemployed. Putting these people to work at building the homes, etc, will start solving both these problems. Is that something for nothing? Or is it the reward for the work of millions of people, and having policy-makers with a little imagination?
The main point that MMT tells us (Bill Mitchell’s blog is a good place to get an idea of it) is that a government such as the UK (i.e. a government which controls its own currency) is never constrained by lack of money, only by real resource limits. Currently we have real resources going to waste: millions of unemployed and underemployed people. Making use of those resources will not create inflation. You only get inflation when aggregate demand exceeds the capacity of the economy, i.e. when you have reached full employment and try to spend beyond the capacity of the ecomomy. At that point, demand would need to be reduced, and there would be a choice: cut back on government spending (the PQE bit, or other bits), or raise taxes sufficiently to reduce private-sector spending. It would be great to be faced with that choice, because it will only happen when the economy is doing much better than it is now.
PQE creates cash
All cash is costless
But cash can be used to liberate productivity previously unused
So it is not costless – people are paid
They pay taxes in return
Return is the key word: the labour return from using unproductive assets better and getting a tax return is what pays for these assets
PQE is something from hard work liberated by costlessly created money – which has no value in itself baring what it makes happen
Esther:
1. money printing may be necessary for hyperinflation. You seem simply to assume that it is also sufficient, without setting out an argument. MMTers (and possibly Richard too) would maintain that hyperinflation always results from a gross excess of AD over AS, whether from a huge impairment of productive capacity – as in wartime, occupation of the Ruhr, expulsion of Zimbabwean famers – or a collapse or unwillingness of a government to levy taxes sufficient to manage down AD (eg Confederate South). Money-printing has, in such episodes, been more of a result of increasing inflation than a cause.
As long as the govt retains its ability to put a brake on purchasing power with VAT or any other tax, we needn’t fear inflation.
2. you do realise that the BoE is owned and controlled by the Treasury? Look at the Bank of England Act 1998 s19 “The Treasury, after consultation with the Governor of the Bank, may by order give the Bank directions with respect to monetary policy if they are satisfied that the directions are required in the public interest and by extreme economic circumstances”
Best wishes
Thanks Anders
you are wrong. The gilts in the Asset Purchase Facility are retiring and being cancelled. The bank buys up the coupons as they retire buying up new debt form private sector banks.
See in the BoE accounts that £32bn of govt debt cancelled in last 18 months. see http://t.co/BNuBaEmWKk Anything bought after 31/10/12 is a rollover.
Government debt bought by QE is being cancelled and is being used to fund government deficit spending. This process does no harm whatsoever. Recall that governments that issue debt in a currency they control are never resource constrained. They are inflation constrained but that isn’t a factor when we are nowhere near full employment and have. Balance of payment crisis.
I would cite the example of what the US Federal Reserve has done with mortgage QE as an example of people’s QE. Here’s how I would characterized the US GSE market – It is the equivalent of a ‘Residential Infrastructure Bank’ with its own origination arms (Fannie/Freddie) which goes out and raises funds in the TBA market by providing a quasi-government guarantee on the mortgages, and charges for the credit guarantee through a fee embedded in the rates that borrowers pay.
When times are fine, the private sector lines up to buy these safe liquid assets and no central bank balance sheet activity is required. When the economy hits a rough patch, and the central banks want to nudge aggregate demand up, they buy these assets in the open market.
What Mr. Corbyn is referring to, in principle and outline, is very similar to what has already occurred. The debate should be on the structure and functioning of the state sponsored infrastructure bank, not whether it’s financing of deficits through money creation. That is pure and simply a red herring. This is not to say that the debate around governance of state sponsored entities is likely to be an easy one, as is well illustrated by what happened to the GSEs.
But the democratic process should allow political structures to marshall spending on a collective basis for good long-term projects, taking advantage of the excess of savings, and when the private sector is curled up under its desk sucking the proverbial baby’s thumb! Having such a structure in place will simply allow QE to be more effective than the roundabout, indirect wealth trickle down effect its current based on.
You get it
Gyan’s explanation is the best I’ve read.
The problem with his comparison is that federal assistance was misused to support overpriced private property. Equally, the problem with conventional qe is that it has been used to support the value of inflated securities, but that won’t justify misuse of pqe money.
I have to say that while I am still agnostic on `people’s` qe, I have some advice for the evangelists.
Firstly, come up with a better name – `British qe` would sound less like something out of Comintern.
secondly, you’ll need to reassure sceptics that it won’t be used to build airports no one wants to use, museums no one wants to visit, libraries with no books, and cod `ed balls` type `investments` like nhs and education running costs.
On your side is the fact that current policy has no future, so apart from the caveats listed above, what is there to lose by pursuing pqe.
.
End PFI
Build social houses
And transport and other infrastructure to service them
Make our existing buildings energy efficient
That is my list
Many thanks for this explanation. There is negligible understanding in the UK and Europe of the extent to which public policy advances and protects collective action in the public interest in the US. Part of this is due to institutional differences (full separation of executive, legislative and judicial powers in the US and parliamentary democracy with the government in and of parliament (often dominating it excessively) coupled with some separation of the judiciary in Europe); some is due to being divided by a common language; but much is due to a wilful attempt by those exercising power and influence in the UK and Europe to ensure there is little if any consideration of these processes in the US.
We used to hear much about the evils of Anglo-Saxon capitalism (as a shorthand for US and UK capitalism), and this appears to have been replaced by ‘neoliberalism’. This has discouraged progressives in the UK and Europe from learning about and seeking to replicate long-standing collective action processes developed in the US. There’s a lot of learning to be done.
However, I will have difficulty getting your image of “the private sector .. curled up under its desk sucking the proverbial baby’s thumb” out of my head! An overfed, sulky, tantrum-prone toddler viciously protecting its ‘treasure’ and refusing to engage with others.
Paul:
The tragedy for modern western democracies is that neo-liberal thought has sunk its tentacles so deep into political discourse that the GSE and GNMA markets would never be allowed to get off the ground in this day and age. It’s only because they work so well in their intended purpose (once properly managed under a PUBLIC conservatorship rather than the bastardizes private version) that the republican’s haven’t been able to get rid of them.
This is the challenge that modern day progressives face – actually conceptualizing, implementing, and effectively running institutions that allow excess savings to be mopped up and used for making the sorts of projects that the private sector can never really take on.
Now, instead of bold statements like DARPA (under whose sponsorship the internet was developed), the best that the political system can do is stealth support using tax-subsidies that de facto mask the support the public provides. This works against the impression that collective public action can and does work in creating these ‘big idea’ projects.
Look at the sorry state of affairs as far as transit infrastructure between New Jersey and NYC is concerned, with a well conceived tunnel project strangled in its cradle by a republican governor more interested in pandering to his base rather than serving the interests of his voters. The public didn’t complain when he did it a few years ago, but now the crisis is acute – and guess who’ll get the blame in the minds of the public, the transit authority of course!
This task is made doubly hard by a neo-liberal elite where the left of center has allowed government to wither away through benign neglect and the conservatives, libertarians, and right of center are actively working to ensure the public’s perception of government is one of waste and inefficiency.
To some extent, my hunch is that the panic in labor (and to some extent in conservative) ranks is that they are afraid not of the chaos Jeremy Corbyn would bring, but the fact that he could be successful in what he says he wants to achieve!
BoE takes assets in exchange for money.
Businesses or the state use that money to create hard assets like infrastructure, housing, skilled manufacturing jobs.
Businesses or the state pay back the loan interest free or with small rate of interest.
Money is drawn out of the economy by taxation much the same way as it was in the days of the tally stick.
The money is backed by hard assets, a liability that will eventually be paid off and taxation pulls excess funds out of the economy.
So where does the hyperinflation come in?
I call that Godwins Law (Economic Collary).
“As an online economic discussion grows longer, the probability of a comparison involving Zimbabwe, Weimar or Argentina approaches 1”
Very good
Goodwins Law of Economics
Will blog
Isn’t the normally austere ECB having their own PQE programme by up public national debt of Euro countries? And I don’t see why having PQE programme means abandoning inflationary targets.These articles are essentially political rather than economic.
This one in the Maily Torygraph hinges on the phrase “if implemented unchecked” http://www.telegraph.co.uk/news/politics/Jeremy_Corbyn/11814767/Jeremy-Corbyns-plan-to-turn-Britain-into-Zimbabwe.html
Its up to Jeremy to cover his ground to make sure there are safeguards that allows voters to trust the scheme.
That’s why there would be a National Investment Bank
With a Board
And protections
You haven’t missed Jeremy Warner’s thoughts on Corbynomics in the Telegraph today have you?
Godwin’s Law of Economics was in action
Pure drivel
And what with Robert Penton losing his grip on reality on his log last week and…
Gosh, there’s a lot of people who seem not to want to agree with you. Why do you think all these very educated people are behaving this way?
Because they really do not want to take the banks out of the equation?
Because, like Peston, they think social housing is a white elephant?
Because the current system suits them very nicely thank you and sod the rest?
Top marks – 3 out of 3 in my opinion!!
‘very educated people’-if what these people evince is education you have an odd idea of it-why not call it tunnel vision?
Wow, those are severe suggestions Richard! If all of these people are reacting the same way (throw in Dan Hodge’s who, like Warner has called your idea bonkers and all the candidates standing against Jeremy Corbyn and…) and for these reasons then neoliberal conspiracy must be…vast.
Amongst the 1%, yes
I have never said anything else
And as for calling in Dan Hodge’s as support – that is just laughable
Time you resumed your normal status, I think
So is your pal Larry Elliott part of this vast neoliberal conspiracy too? As according to you he’s got QE wrong too.
I think there is something pretty weird going on at the Guardian
There clearly is ‘something weird’ going on at the Grauniad at present-plenty of those in the comments section expressing dismay at the anti-Corbyn voices early on in the campaign followed by a slight increase in supportive ones. I think the idea that we have, for the first time a stemming of the ghastly Thatcher- halitosis seems inconceivable to the ‘Street of Shame’ and it’s hacks (amongst whom I now include Toynbee)
Re.The Guardian
Toynebee and Elliott are variously unsympathetic (polite word). From what I can tell, most of the others love Jeremy Corbyn and so do the readers, well, commenters at least and they’re a reasonably good guide.
Toynbee has hitched her wagon to Yvette Cooper and claims the Nuremberg defence of “electability” as her reason (as in – no its not me its just all those moderate voters that I’m worried about).
Elliot probably has an undeclared connection to at least one of Corbyn’s rivals. He also seems to be hedging his bets a bit. Not surprising really, Labour is big and other Labour members were bound to have friends at The Guardian.
Re. the hysteria or, shall we say, disproportionate hostility of Esther Vey and others like her.
Its primarily motivated by the frightening feasibility of Peoples QE and the unexpected popularity of Corbyn – this wasn’t expected by people like them and now – they’re suddenly confronted by the alarming fact that these ideas are now part of the national discourse.
It freaks them out and makes them say stupid things about inflation (in a country with negative inflation). Its almost embarassing to watch.
Re. Your response.
In this round I’d wait for most of these idiots to almost exhaust themselves before hitting them with a wave of contrary opinion from qualified supporters – which you have.
That may not be entirely necessary though as Corbyn’s popularity seems to be enhanced rather than diminished by the hostility of establishment figures.
The key thing with the QE debt is what happens when it matures.
Normally you would have to refund the bondholder the nominal value of the bond.
So then they would issue a load more bonds to cover that.
Do you think the government are going to issue additional bonds in order to repay the Boe so that the BOe can then give the money back to the government. Not even Osborne is that stupid.
This mechanism is in place now
Another reason why EU 123 does not apply
Money creation at its purest is virtually costless to create and this is as it should be because it’s an abstract representation of “effort”, the effort used by human beings to transform natural resources and utilise other human beings to provide the goods and services we all need.
Neil Wilson wins the thread. But the war against bad ideas goes on.
The lines between ‘spending’ and ‘investment’ are becoming very blurred on this blog. People with capital are very willing to invest in projects that return a few % interest a year, and if it were possible to make that return in the conventional sense from social housing, transport etc then they would be in there already.
What is being advocated on this blog is really infrastructure ‘spending’ whose only return in theory is that the UK is a nicer place.
And what is missing from this blog is thoughts on the mechanism for hypothecating the money, who sits on the committees deciding how the money is spent, and what the criteria are, because details like this are going to matter.
Simply untrue
Coordinated social housing of a decent standard has never been provided by the market, for example
That is not ‘nicer’. That is essential
But yes, I agree detail is needed. But I am not the politician
What is coordinated social housing?
A policy that ensures housing is built to suit a mix of needs and that at the same time all the necessary support services are made available if, as is likely, some of these developments will be of some size (although not all will be)
It’s really not rocket science
Call it town planning if you like
Coordinated social housing is pretty much self-defined as something that can only be provided by your Courageous State.
My first point though was a different one which is that you have labelled this as ‘investment’ pumping it up to be something it isn’t, and implying through politician’s rather than an economist’s language that there is an expected return, when there is none. It should be called spending.
There is a return
It may be hard to measure
It may not be direct
But I think it is wholly appropriate to look for a return or why do it?
Bye bye Richard
A bunch of bananas (its time they put up or shut up.)
Richard,
In an earlier post I drew your attention to an enlightening statement from one of your current critics, Liam Halligan.
http://www.taxresearch.org.uk/Blog/2015/08/11/peoplws-qe-the-opposite-of-an-economic-policy-based-on-crossing-your-fingers-and-hoping/comment-page-1/#comment-731479
In 2010 he predicted that a combination of budget deficit and the BofE’s QE would lead to excessive inflation. He actually said “if that’s not inflationary I am a banana”.
To Halligan’s credit he actually stuck his neck out. Unfortunately he hasn’t learnt from his mistake.
Your current critics, in the media (& this blog) have two things in common: a propensity for exaggeration and a complete lack of commitment. They don’t stick their necks out. Their outrageous claims and comparisons are not only unquantified, they are quietly attached to sly contingencies.
One will say that your proposal would be disastrous if left unchecked, another will say it may cause problems if this or that occurs. Their musings often rest on the assumption that Osborne’s forecasts are fact (or some other unlikely pretext). Others abstract by commenting on another critic’s comments.
It is high time that the ifs, ‘coulds, maybe’s and assumptions were put to rest. You should issue a loud public challenge to these critics. You have quantified your own estimate of PQE impact. So should they.
You could (for example) challenge them to make their own numerically specified estimate of what would occur under your stated plan under stated conditions (eg. zero inflation — or whatever, as long as the conditions and indicators are appropriate and explained). Then see how they respond.
If they don’t accept, they have no credibility or commitment, if they do, their estimate will be open to general scrutiny. The debate will move from wild commentary to real issues and numbers.
Those who haven’t accepted should be reminded of that fact whenever they see fit to offer further criticism. As with Halligan, their past record of prediction should also be considered if and when appropriate.
I think this idea has merit, I’ll leave it with you.
I’ll certainly think about it
But, despite all that people claim, I am not really into the personal and am positive, not negative in approach
I think there are some serious articles questioning the validity of MMT.
eg http://www.pragcap.com/modern-monetary-theory-mmt-critique/
For the sake of argument, let’s assume I am in the “Pop Larkin” frame of mind (I have pretty much all I need (and some excess to barter, and as I don’t make a profit, then there is no tax to pay).
Whilst MMT may well be technically correct (perhaps from an accountants perspective, sectoral balances, flow of money, etc), I think it raises many questions about the credibility of a currency, and I fail to see why the owners of Genuine Productivity would embrace it. If these issues have already been covered, then please provide citation to the discussion, or raise them on Friday with the MMT experts.
I absolutely agree there may be an on-going case for some kind of “OMT” whilst at the zero-interest bound (pushing on a string), and, should the zero-interest bound (or indeed deflation) still be an issue in 2020, then the austerity experiment can be considered an utter failure (changes in government spending notwithstanding).
The flip side of capitalism is that the un-creditworthy need means to buy the stuff produced by the owners of the machines. Government absolutely has a part to play – I see it as more of a balance between individualism and socialism, as opposed to capitalism vs socialism.
It simply will not be credible to ignore criticism of MMT variants, and not engage owners of production (who have, by means fair and foul) become all powerful.
Otherwise all this enthusiasm and debate becomes merely a sophisticated diatribe of the dispossessed.
In my view MMT describes the functioning of money well
I do not think it explains the dynamics of the economy and so how change takes place within it as well
MMT is a part of an explanation, not a whole explanation in other words