Theresa May wants to go to war. All prime ministers seem to succumb eventually. It ends well for very few. It will be no surprise to anyone that I am opposed to the idea. This can only result in meaningless loss of life.
That, however, is not my reason for noting this impending error. Instead I want to note that the traditional demand of ‘How are you going to pay for it?' Is always suspended on these occasions. Instead it is assumed that the money for war can always be found.
Which is true. The money for war can always be found. After all, money is just a promise to pay. And what the government does when committing to pay for war is to promise to pay for it. To indicate that fact it issues promissory notes - that is, notes and coin or, rather more likely, credits in bank accounts. And then it taxes at a later date and accepts the cash it has created in payment: the promise is therefore fulfilled.
It is then money creation that pays for war. Nothing more, and nothing less. That, and the fact that the government can tax to fulfil the promise.
We never question this when it comes to war. That's because war has always been fought in this way. No monarch, state or warlord has saved up to go to war: they go to war and promise to pay later. The creditor hopes they have backed the winning side.
Paying for other services happens in the same way. It's just that the creditor has less risk if the funds created are used to pay for housing, the NHS, education and fair pensions (those things that we enjoyed half a century ago that we cannot apparently have now). And yet the creditor will apparently unquestioningly fund a war and not feel the same way about money creation (which is all about extending credit) to fund anything else.
The question is, why not?
And why isn't May being asked 'How will you pay for it?' now?
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I think you have written this tongue-in-cheek, Richard, and you will know the answer as well as I do. When the agenda of the military-industrial complex, supported by the international bankers, is being followed, the question of funding will not surface.
The countries which are constantly being challenged are those which do not comply with the agenda of the Bank for International Settlements.
“And why isn’t May being asked ‘How will you pay for it?’ now?”
Because if somebody was asking the question who had the power to DEMAND it be answered, the government would have to admit that it is entirely au fait with the mechanisms of a fiat currency and their entire economic house of cards would be revealed to be constructed on a tissue of lies. (?)
MSM is of course complicit, and has as always a vested interest in ‘good’ copy.
Andy Crow says:”MSM is of course complicit, and has as always a vested interest in ‘good’ copy.”
A near complete answer to why Labour can’t do as you ask in http://www.taxresearch.org.uk/Blog/2018/04/11/why-isnt-labour-still-talking-peoples-quantitative-easing/
Trying to cram a a lesson against at least a generation’s poisonous nonsense about “like a household” and “Labour will bankrupt the economy again, by overspending, and bumping up taxes to obscene levels”, in the space of a mere 6 weeks – with a mendacious and hostile MSM?
No way! If Corbyn and McDonnell came out with a “we’re going to create all the money we need to fulfil our manifesto, and tax it back to stop the economy overheating – it’s spend and tax, not tax and spend” – well, it wouldn’t be “triples all round” for the MSM, in Private Eye’s terminology; it would be wagonloads of vintage champagne and rubbing their hands together with so much glee they give themselves blisters, and partying throughout the campaign, as the Tories coasted to a majority of 150+
I’m still not convinced
I think people would lap it up
And the MSM opposing it might improve Labour’s chances
Richard, your question goes to the very heart of this governments total mismanagement of the economy. Failures of governance on all fronts is threatening election setback. A winning strategy must be found. Falling poll ratings must be reversed. What better way than to beat the drums of war. No matter that all wars are prefaced on lies, they can be hidden in the fog of war.
To ask the question ‘how are you going to pay for it’ is to display disloyalty akin to treason. Only the very brave would try. The government know full well where to get the money to kill and maim. After all the necessity for Austerity is only a lie to confuse the feeble minded. Many of our MP’s are feeble minded. The call to war should be a push over.
Exactly – there could be no clearer proof of how the monetary system works. It’s extraordinary (but not surprising) that it’s not a headline topic.
I don’t know the numbers for the UK (too lazy to look them up) but the amount the US government spends on its military is, of course, eye-wateringly immoral. Yet both Republicans and Democrats still peddle the necessity to balance the budget – http://watson.brown.edu/costsofwar/military-spending-2018.
“War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious …. It is the only one in which the profits are reckoned in dollars and the losses in lives.” Major General Smedley Butler (1935).
I think I might know what their answer might: do I hear “tighten”, “belt” , ……
I agree the question should be asked though.
Where are you Andrew Neil?
“The money for war can always be found. After all, money is just a promise to pay.”
Money is also a “claim on caregiving” (George Simmel “The Philosophy of Money”) and nothing brings into stark relief the need for for collective caregiving than the threat of attack by an internal faction, nation or pact of nations!
http://neweconomicperspectives.org/2013/08/mobilization-and-money.html#more-6200
Exactly. Re: the wealth of caregiving, a related example is how the elite’s control of market rules does not allow an appropriate assignment of value. Consider the question, who would you rather have with you if you are taken hostage, a nurse or an accountant?
Ow!
My first thought was investment banker, but may be I should have put, nurse, accountant or Physics professor:)
🙂
I recently read that, at the beginning of World War 1 and in order to pay for it, the government raised a load of money through what ‘was essentially a War Loan, free of interest, for an unlimited period, and, as such, was a highly profitable expedient from the point of view of the Government’ by the issue of Treasury notes (in £1 and 10/- denominations) – printed, IIRC, by Waterlow’s on stamp paper, during the extended August Bank Holiday of 1914. (See The Financiers And The Nation Chapter VI — Usury On The Great War at https://archive.sustecweb.co.uk/past/sustec12-6/extract_from_the_financiers_and.htm )
A couple of months later, the financiers got at the Chancellor, and insisted that future loans were more conventional, from them and interest bearing.
Read the history of the Bradbury pound
The public were quite OK with them
Bankers weren’t
If the policy had continued there would have been a great deal less war debt – and George Osborne would not have needed to supoosedly pay the last off a couple of years ago
The Russian embassy twitter account might ask….
From my understanding I believe the Putin regime undertook a period of substantive rearmament in the last few years which, given the lack of spending on any other area of government, would more or less constitute saving up for war…
Schofield – Very many thanks for the link to this beautifully clear explanation of the workings of ‘money’ in the practical situation of war.
When the Romans went to war a couple of the ways they paid for it was through the collection of booty and prisoners which they sold into slavery. Commanders, Caesar for eg, were often in dept to their patrons (at least initially), so waging war also helped to clear debts. Has much changed?
Yes, it is laughable, and and at the same time sickening, that when it comes to war, the whole ‘tax then spend’ narrative is forgotten. Rather like the £1billion + paid to the DUP to prop up the current government; I haven’t heard any mention of what other budgets are being reduced to pay for that.
Still, as John Adams notes, a war is always a great way to distract from domestic policy disasters. ‘Patriotism is the last refuge of a scoundrel’; one of the truest statements about politics ever made. Entirely apposite for a government composed of liars and idiots, who are using the bogus ‘tax and spend ‘ narrative to destroy public services.
And thank you Jeremy and John Schofield for those illuminating links re MMT and the greed of the bankers. I particularly liked this:
“The machinations of the organized Money Power during the stress of war surely provide the most convincing of evidence that the nation must be the sole creator of money, and the guardian and banker of the savings and thrift of its citizens, if well-being and security are ever to be the common lot of men.”
Regarding the first world war there is also an account that the first issue of war loan was hopelessly under-subscribed and that the Bank of England subscribed itself. A sort of QE 100 years ago
https://bankunderground.co.uk/2017/08/08/your-country-needs-funds-the-extraordinary-story-of-britains-early-efforts-to-finance-the-first-world-war/
Another Angry Voice (AAV) has posted on Facebook about this https://m.facebook.com/story.php?story_fbid=1940992535940650&id=185180654855189 and one of his comments is a link to one of his articles about MMT from last year https://anotherangryvoice.blogspot.co.uk/2017/06/how-to-spot-economic-idiot-fodder.html?m=1