I am giving a keynote address to the Political Studies Association conference in Brighton this evening on Politics and the Good Life. These are the speaking notes. The usual rules apply: click on the image and then click on the resulting page on that page to get a large, readable, image:
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Hope it goes well, Richard. The PSA’s annual conference was a regular stomping ground of mine in the days when I could legitimately call myself a political scientist. Enjoy!
And Happy Birthday, too.
Thanks
I admit I had a fun evening
I really enjoyed it, especially some of Richard’s responses to comments from the audience! He’s just as good live!
Thanks Kathy
And unlike the audience I had not had a drink
In the past the PSA was as much about the drink as it was the papers, Richard. I dare say it’s a bit tamer now (or not). Anyway, I’ll have a report from my ex Trent comrades in a week or two so look forward to hearing their views on Prof. Murphy. Glad to hear you enjoyed it.
We did have one or two….
Richard,
Happy Birthday. I also really enjoyed your talk, and unlike you I did have a drink in my hand. As you were talking, I was thinking of a question, which I think you more or less answered.
If banks can create money out of thin air, how can they ever go bust?
I am way behind you, but I can see three answers
(a) Obviously, a loan can go bad, so that the credit in the bank’s accounts to match the debit disappears. If the bank does not have enough performing loans, which are worth more than their corresponding debit, the bank is in trouble.
(b) Unlike Governments, banks can’t raise taxes to remedy the situation.
(c) Surely there is a perverse incentive to banks to make even more loans when they are in trouble, because the new loans have a 100% book value, and the proportion of bad loans on their books goes down. Does this describe 2008?
Explain thin air money is difficult, but the corollary is much easier. Creating money is not the problem, the important question is how usefully the money is spent.
There is a perfect neoliberal absurdity. On the one hand, the Government is believed to spend too much money (small state). On the other hand, money the Government receives is thought to disappear int a black hole (crowding out). They can’t both be true. In fact, the Government does exactly what should be done with money, it moves it through the system. If it goes to useful investment (training, infrastructure, PQE, GQE etc.) we all benefit. If money goes to those who need it most, it is spent immediately, and goes straight back into stimulating the wider economy. If it is spent foolishly, or not collected, it is the equivalent of a bank’s bad loan.
Michael
Apologies for my tardiness – I gave been teaching
Banks can go bust because they can make too many bad loans and then confidence in their credibility and so credit fails
At that point the market refuses to accept the money they make and it is game over. Regukation has to exist to prevent this happening. Reserves are required for this reason
And the difference with gov’t can create money for its own use, banks effectivly only for others use. Big difference
The rest is spot on
Richard