From my twitter account this morning, best read from the bottom up:
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Richard
Slightly off topic but much has been made of the UK/Japan trade deal this morning. However my understanding is that it is only an ‘agreement in principle’ and that there some points outstanding with the Japanese trade delegation according to the Financial Times reporting. I don’t want to talk this down but surely we should be more cautious before waving the bunting. Do you agree with my assessment?
Yes
Gordon Brown was interviewed on the today programme this morning and was asked about this amongst other things. He must have been reading your blog Richard because he was advocating government taking equity in companies as per your recommendation and also spoke about a national investment bank and the Green New Deal.
Obviously he was scathing about breaking the WA agreement.
Why would a Government help people using its sovereignty to print money only to ask for it back later without considering the return of the circumstances that led to it putting its hands in its pockets in the first place?
Of course – the answer is the closed loop orthodox thinking created by the concept of Government debt.
To me it is all about p.142 of Kelton’s book – the concept of currency as an expression of true sovereignty. The Government not only has the power to print money but it also has the power absorb and carry ‘debt’ in the national interest (like it does when it goes to war for example).
What is so different about Covid and a war?
The issue to me is about power or the concept of power.
Who is making the Government worry about debt? Why should they as a democratic power worry about a debt? Why are some forces intent on negating that power?
Again, I ask ‘Who governs’? Who has the absolute authority regarding our currency? The markets or those elected? Who is holding our Government to ransom?
Not only is it plainly stupid to ask for it back (when we get well do we get asked to give our drugs back?) but it also shows us the faulty basis on which the Government helped in the first place – that Covid would just ‘blow over’ and all would be right with the world again.
At the root of all this though is that strange attitude to money we have regarding its utility.
Money is to be collected and kept it seems – hoarded – because it gives huge power and prestige to those who hoard it to the point where its true utility as an enabling device for anything from curing cancer to cleaning up the environment.
It seems to me that the hoarders have it all their own way at the moment and MMT must scare them to death.
Agreed
I contend that under its sovereignty, only a currency producing Government MAKES real (base/fiat/original/new) money.
This should be money with no strings attached except to which part of the economy it is aimed to stimulate something for its citizens – all of them (economic stimulation for growth or for need).
It is the banks and finance sectors that issue debt (with all its negative connotations) as well as simply moving all the debt money, existing money and new money around – and not fairly or productively either.
Moving money around is not ‘making money’ folks. It is a total misnomer.
This is what I believe people should know. As Richard has always said, the Government owns the currency we use and it is about time the markets were put in their place.
Slicing right the whole of these money creation arguments is the question why does the UK allow any deficit spending at all because that surely is what the private banks are doing when they make loans and if them why not government particularly as they have to play a Lender of Last Resort role when reckless private bank created bubbles burst from time to time!