13 Responses

1. Paul Jeffery says:

   August 20 2020 at 8:52 am

   Thanks Richard. I’m I iinterested in the bit about governmementd controlling money supply.
   What if, all the pounds which have been whisked away to tax havens like Jersey, Isle of man etc, and stored in vast amounts, came back to chase goods, eg property.
   Would this create a situation which is out of the government’s control?

   I’m intrigued at this. And many thanks for responding the other day. Best wishes
   • Richard Murphy says:

     August 20 2020 at 4:15 pm

     There are no pounds in tax havens

     There are only ledgers recording flows of pounds though tax havens

     Remember, first, that there is no tangible thing called money

     So, when money is shifted to a tax haven account all that happens is that the bank that previously promised to repay it ha simply relocated the place where it records that promise to pay

     And, then and second, note that to record that relocation the tax haven branch that is now making the promise to pay to the customer balances its promise with a promise from the UK bank (or wherever)

     But, and I cannot stress the point strongly enough, there is no money in a tax haven. There’s just some double entry book-keeping designed to prevent the account holder’s creditors (their spouse, tax authority or people to whom they really owe money) getting their hands on what is really due to them
     • Paul Jeffery says:

       August 20 2020 at 11:23 pm

       Wow!
       That’s a bit of an eye opener and didn’t see that coming.
       Need a while to read it through a few times in order to digest it!!!

       Thanks very much. Best wishes!
     • Damien Rice says:

       August 21 2020 at 11:02 am

       “designed to prevent the account holder’s creditors (their spouse, tax authority or people to whom they really owe money) getting their hands on what is really due to them”

       So that’s all you have to do to avoid paying money to people you owe it to? Transfer the money abroad? I never knew it was so easy.

       If someone took out a loan and then transferred that sum abroad they couldn’t be chased for the debt? Does it have to be to a tax haven or would that work with any overseas bank account?
     • Richard Murphy says:

       August 21 2020 at 12:54 pm

       I think you know you are deliberately missing the point I made
2. anrigaut says:

   August 20 2020 at 9:03 am

   Oops! I presume you meant to write you are worried about the risk of DEflation.
   • Richard Murphy says:

     August 20 2020 at 11:52 am

     No, both
3. mro says:

   August 20 2020 at 10:49 am

   Richard vid will not load.
   • Richard Murphy says:

     August 20 2020 at 11:48 am

     Apologies – but I cannot rep[rdocue the problem i.e. it loads for me
4. Contrary says:

   August 21 2020 at 6:38 am

   Thanks Richard, that’s actually what I understood inflation to do be – drop in value of money causing goods to increase in price (because their value doesn’t change) – but I usually avoid any discussions on the subject because I’m never certain of the reasons for it happening, or how it actually effects things – I know there will be a lot more to it than you can fit into a short video, but that was clearly explained and it’s enough for one sitting to let my brain digest it.

   I would argue, however, that wages don’t necessarily go up just because the cost of living goes up – that’s my lesson from austerity. Inflation shouldn’t matter if everything balances out, but long term austerity policies from government do matter and can cause some serious personal deflation. Austerity also has the effect of cutting public services – and I think you’ve had it much worse down in England so I shouldn’t really moan too much about it – so not only do goods cost more but normally ‘free’ services suddenly cost money that’s worth less than it was. I’ve suggested numerous times to my employer that I’d like more money to match what it’s worth, but apparently profit margins are more important. The word greed, at other’s expense, comes to mind.
5. john Boxall says:

   August 21 2020 at 8:57 am

   Its worth pointing out that inflation represents a transfer of wealth from creditors to debtors, hence the anti inflation rhetoric from politicians

   As a ‘for example’I bought my first house in 1986, the Mortgage was about 2.5x my salary.

   Had I stayed in the same job, by the time I sold it in 1999 the original balance would only have been about 1.5x my salary and very much more affordable, a great deal for me but less so for the lender
6. Peter Crowley says:

   August 23 2020 at 5:09 am

   How do you account for the “weird economic times” (7.16)? Interest rates were sub 1% long before Brexit. Ditto the slow (sometimes not so slow) fall in the forward curve – like the life ebbing out of a dying man.

   My only contribution is – people (esp businesses) don’t trust banks anymore – and won’t borrow – jolly old supply and demand.

   Swap misselling casts a long shadow…..
   • Richard Murphy says:

     August 23 2020 at 9:28 am

     QE

     And the discovery that money creation, gilts and even shirt term rates via control of central bank reserves are all under government control and that there is no ‘player’ big enough to challenge that

     The world changed when governments realised they were only creators after all

     But don’t tell the opponents of MMT – they won’t like it