I had a conversation last evening during which I was reminded that the claim that a government with its own currency might run out money is as ridiculous as the suggestion from a road engineer that they might run out of miles. Or that football might run out of goals. Or cricket out of runs, come to that.
None of those things is possible.
We should laugh at all such suggestions.
Our Chancellor quite ludicrously suggests one might be true.
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Alas, the last Labour Treasury Secretary, the “ineffable” Liam Byrne, seems to share this delusion, along with, if I’m not mistaken, Yvette Cooper, who tasked Jeremy Corbyn with the impossibility, or at least difficulty, of “paying back” the moneys involved in his plan for People’s Quantitative Easing!
You are quite right
The scoreboard metaphor has been used frequently over the years by Warren Mosler and it’s a good way of getting across the reality of a currency issuer’s scope for combating recession and under use of a society’s real resources.
The perpetrators of the ‘money shortage myth’ are not only ignorant they are also (consciously or unconsciously) trying to preserve vested interests and asset bubbles. The notion of money scarcity hides the real scope of Government and the ability of the citizen to appreciate that lack of social services and useful employment is a CHOICE that is not underpinned by some sort of metaphysical ‘truth’ about money. The myths are a pretence that we are not in a fiat system and that currencies are pegged or backed by gold.
Doffing cap to Simon above for referencing Warren Mosler, whose ‘The 7 Deadly Innocent Frauds of Economic Policy’ is well worth a read.
Fraud No.1 ‘…government spending is limited by its ability to tax or borrow…’
‘There is no ‘solvency risk’. The government can always make any and all payments in its own currency, no matter how large the deficit is, or how few taxes it collects’
It follows of course that everything this government has done and espoused is quite simply ‘wrong’, and what ‘s deeply depressing is that the Opposition have failed to get this point publicly debated, and more importantly ‘understood’ . Until they do, Osborne will continue to bamboozle ‘us’ with the family budget/ ‘maxed out credit card’ narrative.
The first hurdle would appear to be that the Opposition prefer to adopt the fraudulent narrative rather than challenge it…which is why Milliband and Balls lost the last election. Dispiriting and depressing!
(Apologies for the font…typing on an iPad and it insists on ‘very small’!
Indeed, Alan, though I’m not sure people would believe it if told which is why Sanders couldn’t say things like this even though he has an advisor who is on the same page as Mosler!
The Government being Hamstrung by this myth goes back a long way with Labour and Healey/Callaghan in 1976.
Until people realise that the underuse of human capital is a Government choice then we’re still in the dark ages.
I prefer a scoreboard running out of points 🙂
It is Byrne’s post it note about there being ‘no more money’ that has helped keep the Tories in power since 2010.
He should be barred from the Labour party and made to attend your classes Richard until he learns some real facts about the ecology money.
Is this post-it note real?
Any more real than the “list” of how supportive Labour MP’s were of Jeremy Corbin – which had all the hallmarks of a spoof – perfectly timed as it was to distract people from some other story going on at the time.
Funny how in the midst of Austerity there is plenty of money for expensive missiles! Hypocrites the lot of them.
Judging by Channel 4 News’ reporting this evening, the Government were certainly not short of money to break the rules regarding election funding in a number of marginal seats in the last election.
This is very dodgy indeed and anyone bemoaning the lack of democracy in Europe should be aware of throwing stones when they themselves live in glass houses.
It’s our own so-called democracy at home that needs sorting out let alone that of the EU.
Nor should America – which has often sent former President Carter abroad to “minitor” elections – not if the alleged shenanigans on the Democrat side of the Primaries process are to be believed.
See:https://www.change.org/p/bernie-sanders-bernie-sanders-must-contest-arizona-election-results-and-address-systemic-election-rigging?tk=CpYMcExNXs4Mlc7NnUGBJz6J4PM7OVErFYaO9LL845o&utm_medium=email&utm_source=signature_receipt&utm_campaign=new_signature
Unfortunately due to EU straightjacket rules on deficit spending, direct monetisation of bonds and the abolition of the Ways & Means BofE overdraft facility, yes, the Government can actually run out of money.
Sovereigns cannot run out of money. The UK is not a sovereign. Bankers rule.
QE proves it cannot
Evidently the neoliberal regime is unconcerned by state interventions to raise asset prices. Odd that.
Granted, it is said that publicly beneficial variants of QE will not violate EU rules.
So, how about QE to buy out NHS PFI contracts, or re-nationalise the railways – no brainers both. I think a Government attempting that would have the lawyers all over it for years.
Sadiq Khan wants to buy out PFI
I’d love to advise on it
1. Quite exactly does QE prove that?
2. We can have all the GBP in the world by printing it, but if GBP is worthless then that’s basically the same as running out of money, given the need to buy things from overseas.
GBP can’t be worthless if we have to pay tax in it
First tax cancels the printing – and let’s not be silly about the scale of printing needed (although it was more than 25% of national debt by 2012)
Second, if you have to pay tax in the currency then you have to use it to trade
It can’t be worthless
I suggest you go and learn about money because you clearly have not a clue right now
You could start with the Joy of Tax
(Yikes! I think I’ve just seen you speaking in the audience on Question Time being told by the Labour panelist that you should be working in the Exchequer!!… sorry, off topic. )
I was not near QT, I assure you
Worthless or next to worthless is basically the same things.
If the only thing I can do with GBP is to pay tax, but I can’t import any of the things I need to survive, that seems pretty worthless to me!
You clearly have not a clue
Please do not waste my time
Failing to answer the question is not a sign of someone that is confident of their opinions…
Go and read my book
I have no duty to rewrite it for you
£373 billion of QE, and far from inflation, the economy is teetering dangerously near to deflation.
Alas, it would appear that someone has been reading some “standard” (ie dangerously unobservant of the real world) economic text books and not looking out of the window to see what is really happening.
If the government can never run out of money, why bother with tax (and most importantly your obsession with the tax gap)?
An issue I again address in the JoT
And the tax gap issue is about fair competitiuon and equality
I have publicly addressed all these issues many times
You are wasting my time on a daqy when I have little to spare
More of this nonsense will be deleted
Iceland, it seems, is considering stopping private banks issuing money. If that happens we can hope it will be widely reported (?!) and lead to a discussion on money in general and banks in particular http://csglobe.com/revenge-vikings-iceland-will-create-money/
It will be a disaster
Money is credit
To fix the amount of credit available in an economy centrally is to artifically constrain what can be done and kill the ecnomy
This, like Positive Money’s approach to this issue, may be more destructive than the gold standard ever was
And that says something