We can,
when this
is all
over, make
all the
money we
need to
get back
to living
great lives
And when
I say
'make all
the money
we need'
I don't
mean by
stacking high
the profits
that come
from abusing
our planet
I mean
we can
make it
Money is
made by
governments
Look at
any bank
note and
ask who
made it?
Not who
earned it?
Or who
spent it?
But who
made it?
A government
made it
And you
use it
That's what
all money
is for
To make
things happen
And we
need things
to happen
right now
So we
need money
And no
one is
going to
make much
income or
profit now
And the
banks aren't
going to
lend money
to almost
anyone at
the moment
because they
think we
can't repay
our loans
So the
government has
got to
make the
money now
And it
can do
just that
It gets
its bank
which is
in fact
our bank -
The Bank
Of England
(sorry, Scotland
Wales and
Northern Ireland) -
to lend
it the
money that
we all
need to
be spent
right now
And the
Bank of
England will
make the
loan to
the government
because the
government can't
go bust
because it
can always
tell its
Bank - which
is our
bank - to
lend it
a bit
more if
it really
has to
And unless
we hate
our own
money (and
you can
send me
yours if
you do)
that's a
good thing
because right
now more
money will
mean more
good things
happen for
us all
And there
is no
debt because
of doing
this because
all there
is will
be more
money and
the great
things it
will make
happen, none
of which
could have
happened if
the money
had not
been made
And we
won't need
to repay
anyone anything
because the
government will
only owe
itself what
is due
And it's
either pretty
hard or
it's pretty
easy to
repay yourself
I mean,
it's like
taking money
out of
your right
pocket and
putting it
in your
left one,
isn't it?
So ignore
those who
will say
‘There is
no money'
because they
are wrong
There is
all the
money we
need to
do everything
we can
Not maybe
everything we
want but
at least
everything that
we can
But there
are people
who don't
want us
to be
safe or
healthy or
educated or
working or
even just
retired when
we're older
And they
don't want
us to
be green
or sustainable
or organic
or to
have hope
that we
might survive
the coming
climate crisis
So they
will try
to stop
the money
flowing to
us because
they will
claim it
is their
money as
they will
say “we
pay all
the taxes”
But that's
not true
because when
taxes are
paid they
become the
government's money
So there
is no
such thing
as taxpayer's
money anyway
And anyway
tax doesn't
provide the
money we
need to
spend right
now, or
at any
other time
The government
always makes
the money:
it says
so on
the note
Tax just
reclaims that
money from
us so
that we
don't get
inflation that
would wipe
out wealth
So the
wealthy should
be celebrating
tax because
it's mainly
for them,
after all
And we
have to
say all
this time
after time
after time
until we're
blue or
red or
yellow or
green or
whatever colour
in the
face from
doing so
Because we
must have
the money
we need
now, however
much it
is, to
build our
hope in
the future
No one
must shatter
our dreams
for the
sake of
refusing to
make the
money that
it costs
the government
nothing to
make with
a few
entries in
the computers
of the
Treasury and
The Bank
Of England
Our hopes
our dreams
our futures
our lives
together, wherever
we are
and who
we are
and what
we are
and who
we believe
in and
who we
love, or
maybe not;
they're all
dependent on
those very
few keystrokes
that make
everything possible
By making
the money
that unlocks
our dreams
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
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You need to reformat this post.
It was
meant to
be just
like that
That’s how
I wanted
it to
be when
I thought
of it
Hello Richard
I appreciated hearing you talk in Edinburgh last year. Thanks for all your efforts!
I’d be grateful if you could comment on Mosler’s suggestion for Greece leaving the Euro repurposed as a proposal for Scotland leaving the UK: Scotland issues its own currency and all Scot taxes and Scot state payments are thereafter made in Scot Pounds. Crucially, Pounds Sterling are NOT converted to ScotPounds so that both currencies run in parallel. There will be a demand for ScotPounds to pay taxes, and this will create a strong new currency and an income of Pounds Sterling for the Scot government.
I note that you will often talk about state borrowing even though a currency issuer cannot ‘borrow’ in any normal sense of the word. When you talk about borrowing do you mean that the state offers securities in order to maintain a base interest rate? Could you comment on Mosler’s suggestion that the base rate should be set to zero and stay there.
Thanks again
JC
Might I suggest Tim Rideout’s work on the currency? I think people would convert from sterling very quickly. Requiring that tax be paid in Scottish Pounds would require it
See discussion by Clive Parry in savings today. The state fundamentally borrows to provide a secure savings system
Re interest rates, state ‘bowwowing’, QE and central bank reserves enforce a low interest rate
I approve of very low rates. Interest is a rent activity to be minimised – an ancient and still true insight
…and ‘Whoosh’!, as they say below the line in The Graun. Some people need to read a little more e.e.cummings!
Fine piece, Richard, and beautifully rendered …(and finer put-down!)
Thanks Richard
You said: “See discussion by Clive Parry in savings today. ”
Do you have a reference handy – I can’t find this, sorry. Ta.
Cheers
JC
Use ctrl F and search his name…
No he doesn’t….!
It’s Sunday…..
What society has been doing for far too long is extracting wealth from others, rather than creating new money as you suggest, and creating real new wealth. It’s been about moving wealth around unfairly.
This is one of those posts where you technocratic side comes together with your poetic and spiritual side rather beautifully.
Nice work Richard, nice work.
It occurred to me last night
I just wrote it down when I woke
Format is great; a money making poem. Will retweet and keep calling for news programmes to invite you in
Shouldn’t it be rather titled:
“I don’t understand what money is”
By Richard Murphy, 13 and a half.
Go on then
Elucidate
Shouldn’t your post be captioned from Isai aged three and half?
No – you’ve got the wrong bloke mate – it’s Rishi Sunak who is 13 and a half and does not understand what money is.
I’m telling you………………………..
Excellent Sir – put it to music!
I’ll happily post it to the many who struggle to understand that the money is the states creation to collect its taxes in – that is why it has the Queens face on it. And when she demands it back it’s not for anyone to say it is theirs.
To paraphrase an original MMT quote from a nearly a couple of thousand years ago now
‘Give unto Caesar (HMQ) what has Caesars gob on it!
PS any idea what the total number of people were tested by the government in their lates claim? I make it 34,000 instead of 79,000 if removing the tests ‘sent out’ from the follwing report in today’s Grauniad. Certainly not 100k people as promised.
‘Around 39,000 had been sent out to households and satellite testing locations, with no guarantee of the timescale for their completion, but were still included in the count.
The figure marked a significant rise on Thursday’s total of 81,611 tests, and comfortably exceeded the 100,000 daily target. The latest figure of 122,000 tests were carried out on 73,000 people, with the remainder being retests.’
Dissembling much, the msm?
I think the technical term is CRAp
Completely Rubbish Approximation to the truth
I’m curious Richard,
you were unwell a few weeks ago and suspected it might be the dreaded corona,
by my understanding you self isolated and rode it out yourself,
have you in any way been offered a test, either to confirm the presence of the virus whilst ill or the presence of antibodies since recovering?
it’s very hard to tell where we stand these days when we’re all treated like mushrooms!
No hint if such things being available
The more I read the more I am sure I have had it though
There’s a little more to writing poetry than simply writing prose on different lines. William McGonagall has a rival. Or as you might put it:
William
McGonagal has
a
rival
I didn’t claim it was poetry
You gave it that name
I was simply framing the way I wrote something so that it could be viewed in a different way
You can call that what you like
Off this topic but before I make a donation, can you confirm the tax treatment in your hands of any donation made?
Thanks
Jon
I will be treating it as taxable income although it can be, within tax law, argued that it is not and that may we’ll be right
But I will not be taking that line
So are you now admitting that (contrary to what some of your posts from a few months ago were saying) that Positive Money was right all along to say government and its central bank can create and spend as much money as it likes so as to effect stimulus?
That is what MMT day
It is not what Positive Money said until they began to copy the MMT line
On the contrary, it’s what Positive Money have been saying more or less since the day it was founded. E.g. see Chapters 6 & 7 of Ben Dyson’s book “Modernising Money” (published in 2012) or the submission made by Positive Money and others to the Vickers commission (about a year earlier), pages 10 to 12 in particular. See:
http://b.3cdn.net/nefoundation/3a4f0c195967cb202b_p2m6beqpy.pdf
But which was made impossible by their support for full reserve banking – which would deliver austerity on steroids
Since they now follow the MMT line because Dyson has, thankfully, gone the point no longer really matters though
Why on Earth would full reserve make money creation by government and its central bank “impossible”????
Second, full reserve has been supported by several Nobel economists – James Tobin, Milton Friedman, Maurice Allais and Merton Miller. I rather doubt they’d have made the mistake of advocating something guaranteed to lead to austerity. Then there are the other economists who support full reserve, e.g. Lawrence Kotlikoff, Irving Fisher, Felix Martin, Martin Wolf (chief economics commentator at the Financial Times).
I suppose they’re all equally deluded, are they?
Yes
Steve Porter: in a market you can target the quantity of something produced, or the price – not both (unless you’re talking out and out totalitarianism). Full reserve banking targets the quantity of money produced, and thus will be forced to accept the price, rather than set the price – hence, interest rates will be completely out of the control of the central bank/government. Unless (until?) they realise that this is kind of a major political problem, and they change back to targeting the price and letting demand determine the quantity.
Simon Fowler, Full reserve does not necessarily involve abandoning the use of interest rate adjustments: in a full reserve system, what would there be to stop a central bank upping interest rates in the usual way, i.e. selling government debt into the market? Nothing that I can see.
But as it happens, the authors of the above mentioned submission to Vickers (Positive Money, New Economics Foundation and Richard Werner) do criticise interest rate adjustments as a means of adjusting demand, thus if a full reserve system did abandon interest rate adjustments, nothing much would be lost, if those authors are any guide.
Also, isn’t Richard Murphy in a bit of bind here, in that MMTers (certainly Warren Mosler) also advocate the abandonment of interest rate adjustments: i.e. they advocate a permanent or more or less permanent zero interest rate system, an idea I support.
I advocate low permanent interest rates
The point is bond issuing is the mechanism for achieving that
You do rather (where rather tend to entirely) miss the point on that
I advocate tax / fiscal policy to control inflation
And if you want to control the quantity and price of money what are you not going to control? Ah, it’s velocity….the state of the economy
Hence my suggestion that you deliver austerity with this idea…
But what is clear is that you are here to point score and that’s very tedious
As is having not read what I say before suggesting I have said something else entirely
In other words, come in good faith or please don’t bother
Richard, First I take it you have accepted by original point that Positive Money did not copy MMT’s “create money and spend” idea, but rather that that’s been part of PM’s philosophy since it was founded. (Indeed MMT could be accused of copying that idea from Keynes, a criticism which I as an MMT supporter admit has some force.)
Second, I am still waiting for your explanation as to why the “create and spend” idea (with a view to countering any demand reducing effects of full reserve) won’t work. “Create and spend” has been used in astronomic and unprecedented amounts in reaction both to the 2007/8 crisis and the Corvid crisis. Do the Bank of England’s £10 note printing presses suddenly stop working when a full reserve bill gains royal assent, or what?
Third, I am much amused by your claim that I am engaged in “point scoring”. Presumably when I question someone else’s views (yours in particular) that equals “point scoring”, whereas when anyone else (you in particular) do the same, that’s isn’t point scoring. I’ll try in future to avoid ever disagreeing with anyone so as to avoid the heinous “point scoring” sin.
You continue too play the point scoring game
It’s really not appealing
So settle for this
https://www.taxresearch.org.uk/Blog/2018/05/06/why-positive-money-is-wrong/
When you come back to debate and not point score you will be welcome
The point is that inflation is the balance point of the economy not the size of the deficit. The latter does not matter provided inflation is under control.
So a govt can’t exactly spend as much as it likes but it can spend subject to the constraint of inflation. The difference can open up an important policy space.
And if this is widely understood, it makes it much harder for the right to pursue their semi-feudal project of taking wealth from those who have worked to earn it to give to those who have not.
That’s why I was very careful in my choice of language
We can do everything we can
Not want
Indeed.
If you understand it, then six words are enough.
For me it just creates more questions!
How does, the government borrowing it’s own money control interest rates and why would the government want to control them in the first place? And how does the mechanics of the borrowing actually work?
I have tried to read some stuff on overnight interest rates on reserves and believe me, for a Joe Bloggs like me, it is devilishly complicated!!!!!!
I AM NOT EXPECTING YOU TO EXPLAIN IT TO ME RICHARD. I UNDERSTAND I HAVE TAKEN FAR TO MUCH OF YOUR TIME ALREADY.
I’m just making the point that it is very difficult to understand and that is the Achilles heel of any attempt to educate the population. Your adversaries have a much simpler narrative, even if theirs is wrong!
I am thinking about how to address this
Simon Fowler.
Thanks for explaining that. It gives me more to ponder but very useful.
In a near future world where climate breakdown causes market forces breakdown, we may indeed have a government that does have to set both the quantity and price of money. We might not see it as totalitarian though. We may be glad of the stability/security that it brings!?
Very good Richard. I like it.
To counter the “household budget” narrative, the explanation has to be easy to understand.
“If the government creates the money , then why does it have to “borrow” its own money back and from whom?”
“If the government “borrows” its own money back, then can this really be called a “debt”. Especially if it owes the money ultimately to itself?
Perhaps another way of looking at tax is to say
“Tax removes (government spent) money from the economy which then creates the “space” for more (government) money to be created and put into the economy.”
“The government “puts” the money into the economy by paying nurses, doctors, teachers etc and building hospitals and school”
It borrows to control interest rates
That’s it in six words
Richard, that explanation is true (“they borrow to control interest rates”), but it’s not an explanation that you can give on its own – you need to elaborate on how interest rates are actually set, how they /can/ be managed, how they /are/ managed, and the implications of all that. You also need to elaborate on what bonds /aren’t/ (a source of finance for government spending), and why, and also I think elaborate on why bonds are the current preferred solution for controlling interest rates (which, as far as I can tell, is mostly historical – bonds were/are meaningful under a currency peg arrangement or gold standard, as a mechanism to control the availability of high powered money that represents a direct claim against the central bank’s exchange reserves, but once the peg went away their function as a means of controlling interest rates took over with the same institutional mechanisms retained).
I think we need a library of accurate but concise answers to each of these kinds of questions targeted at laypeople, with references to more detailed information from academic literature or academic blogs. Ideally something like a wiki that would allow it to be collectively improved, updated and expanded.
Do you know of a source of those kinds of explanations? Or do you think it’d need to be something starting from scratch? This is a project I’m seriously considering making a start on, though I’m not sure I’d have the spare capacity to do it justice.
But it a project the assembled skill soon this blog might address…
Is it worth asking?
And what would you ask for explanation of?
Yes, but that just makes things more cloudy for most people. (Well, me anyway!). It doesn’t help in trying to simplify the debate about government spending, borrowing and debt.
That’s OK
I thought of it
I tried it
It may work for someone
That’s enough
Nothing every works for everyone
Another question to try and debunk the “household budget” analogy would be to ask
“In 2008, who did the government “borrow” the money from to bail out the banks?
It can’t have been the financial sector, because it was them, the government was giving the money to!?
I don’t remember the government writing to me asking for a loan.”
“It obviously created the money itself and gave it to the banks.”
“It then removed money from other parts of the economy by reducing government expenditure on public services.”
“Alternatively, it could have removed money by taxing those with the most excess money!!??”
Another debunk is that my household budget is not like the government’s because,
I can’t tax people, change interest rates, issue bonds, or print cash to fund and I Can’t issue my own currency.
On the website revamp. The tick box to get other comments on threads I have commented on, sent to my email seems have gone?
I am musing on how to address all your questions
What I’d like you to do is frame them in a series
If you wanted a primer on MMT / economics in general, what are the headings for the chapters and main topics within it that you would want addressed?
This is a serious question….
In reply to Richard’s question to Vinnie about an MMT/economics primer, I’d love to have a small book (or perhaps some online format) with the following chapters/questions, that I can give/send to people I know:
– Why everything you thought you knew about economics is wrong
– Why we don’t need austerity
– Why the government does not need to balance the budget
– Why we can’t afford the rich
– How we save money by not destroying the planet
– Why the government can never be short of money
– Why most economists are wrong
– Why most newspapers and news programmes are wrong about economics
– Why we need not fear hyperinflation
– Why we can and should have zero unemployment
– Why there is no National Debt
– Who stands to gain from the way economics is presented today?
– Why nobody tells you any of this
– Why the market is rarely right
– Why privatization often puts prices up
Other things I’m not sure about:
– Why we don’t need the stock market
– Why we don’t need private banks
Hi Richard.
Thanks. I will do that but it might take a couple of days to get back to you.
I’ve decided to read back through some of the previous stuff to recap.
I’ve tied myself up in knot’s and am not even sure what it is I think and which bits I am struggling with!!!!!
See the blog just out…
The government can spend as much as it likes, as long as there are under-employed recources, particularly labour. The constraint on spending is the productive capacity of the economy. When there is too much money “chasing” too little productive capacity this leads to inflation, at that point (2%+) the money supply should be controlled by taxation.
Precisely
From the interest/comments generated perhaps all blogging should from now on should be in poetic form?
Another aspect of MMT that needs to be more widely understood is the relationship between borrower and lender. If I borrow money from the bank I am “in debt” to the bank. Our whole language and culture surrounding this emphasises that I, the borrower, am “enslaved” to the bank. We think of borrowing as “bad” and lending (saving) as “good” and this has been ingrained over at thousands of years.
With the (relatively recent) arrival of fiat money this has changed but our attitudes have not. Government issuance of debt does not enslave it to the buyers of that debt. On the contrary, the government, through issuance of debt is providing a long term safe opportunity to save. What we really need is a different word for Government “debt” to distinguish it from private debt – Government Savings Certificates ?? ….. but I won’t hold my breath. But, until people see Government “debt” NOT as debt, we will have an uphill struggle.
Singapore has over the years generally run a budget surplus so (despite not subscribing explicitly to MMT) it has no real need to issue bonds…. but they do. They recognise the needs of savers and the benefits of having a “benchmark” yield curve against which private debt can be compared.
Issuing Government bonds is a service to the public. Our Government is failing in providing this service. Why do we know this? Because 50 year gilts yield 0.35% in a world where inflation is targeted at 2%…… and trades at 2%-ish. (Inflation expectations are embedded in the Index Linked Gilt market and the Inflation swap market).
This service of being borrower of lady resort is little understood but is absolutely vital
Best thread (including the formatting) in a while on money, tax end the role of Government.
Thanks
Doh!
Sorry. Posted last moment in wrong place on the thread!
I’ve just been watching Tom Foolery’s The Great Realisation video
https://www.youtube.com/watch?v=Nw5KQMXDiM4
and it struck me that your piece above could also work in such a format, not so much the fairy tale style, but just with visuals accompanying / depicting each stanza. That could look really powerful. Video seems the medium of choice right now for spreading new ideas.
I posted the video – you were the second person to send it to me in an hour
If anyone wants to make a video, I’m happy!
On getting the MMT message through, I don’t know if you have seen this Richard, but a UK based variant would be nice:
https://i2.wp.com/amptoons.com/blog/wp-content/uploads/2013/08/federal-vs-famiily-budget.png?w=590
I agreee
I have a couple of questions please to add to the list ….
1. We were told recently that the government had only just finished paying off the debt accrued in ww2. What, in terms of MMT , does that actually mean?
2. If the government can always create more money, why does it matter that some people/businesses avoid or evade tax?
Thank you
The first one means nothing: it’s economic gibberish
The second does matter
See here
https://www.taxresearch.org.uk/Blog/2020/04/11/tax-abuse-tax-havens-and-modern-monetary-theory/
I love
the new format
it made me smile
but now
my scrolling finger
is very tired
is this
an attempt
to prevent
speed
reading?
rather,
for people
to linger
longer
on what
you say?
The purpose was exactly what you think
To slow done
To think
To muse on it just a little longer
And to help reframe the debate, just one little (very little) bit
It looks like you did
So it worked
[…] Simon Fowler said on the […]