It seems worth sharing this again today. The data is a little out of date. The ideas are not.
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Money creation from nothing does not seem to be a new idea. While I was trying to source some mulbury bark paper for calligraphy, I came across the following passage where Marco Polo describes its use in the creation of paper money at the court of Kublai Khan, the grandson of Genghis Khan:
“All these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver; and on every piece a variety of officials, whose duty it is, have to write their names, and to put their seals. And when all is prepared duly, the chief officer deputed by the Khan smears the seal entrusted to him with vermilion, and impresses it on the paper, so that the form of the seal remains imprinted upon it in red; the money is then authentic. Anyone forging it would be punished with death. And the Khan causes every year to be made such a vast quantity of this money, which costs him nothing, that it must equal in amount all the treasure of the world.”
Interestingly the Kublai Khan adopted the Chinese surname Yuan (Khan is not a surname it is a Mongolian word meaning “leader”) which would have been the most prominent character on his official seal. The word is still used today for the basic unit of the Chinese currency.
Thanks
The more I think about it, the problem is not that we can’t print money because we are but in the wrong way (credit) and for the wrong reasons (speculation and unsustainable consumption).
The problem is making sure that money is distributed equally around the planet and dealing with those who think that only they are entitled to it.
These people want the power of money all to themselves. They want exclusive rights to a public good.
This problem has to be tackled head on and only a courageous Government can do this using tax as a balancing agent in the economy.
Money belongs to everyone and we have the right to as much as we need and we need to be protected from those who wish to take it from us – such as asset stripping financiers to pensions actuaries and their too narrowly defined brief to maximise pension returns.
And if the private sector can’t produce enough jobs and decent wages, the owner of the sovereign money in a country (the Government) has the right and the duty to print enough of the f****r so that everyone (all its citizens) gets a fair deal.
That is what political economy SHOULD be delivering – a win/win for everyone.
We cannot go on living in a world where the rich are get richer and the poor and even middle classes are getting less. That is a failed system right there.
It’s not even worthy of the name ‘capitalism’.
It is however worthy of the label ‘theft’.
I believe you have stated it correctly.
All money creation must be democratically allocated by ‘The People’.
The banks that create money have democratic permission to profit from it?
It is a better economic stimulus to create #newmoney in the accts of those that need it,
than let private banks inflate asset prices.
The quikquid, payday loans scam dies.
It is systemic coercion otherwise.
And sanctions have to go. Starving out the voters?
Presumably much of the “capture” of the money supply by the super rich is the result of commercial banks lending money to buy assets such as property or shares instead of for more socially useful things.
History sjows that revolution by the lower classes happens when the middle classes are motivated to lead them.
Middle class jobs are now threatened by AI knowledge systems. Everybody is subject to slave driving management.
At some point there is likely to be a reckoning. Historically the RBritish state as been good at aeeing of revolution by cedeing enough to satisfy enough people. I think we sre losing that. The £20 UC clawback, the impending VAT rise. No sction on energy bills vs Norway.
I’m sfraid we may live in interesting times.
You should note the widening influence of MMT. Larry Elliott of the Guardian states today, “Boris Johnson sometimes gives the impression he is a fan of Modern Monetary Theory…” Well, there we are, Richard. One more push and you’ve won over the Government! Mind you, Elliott is even more unusually confused today. There’s no magic money tree, of course, but the government has got everything wrong. Suddenly, raising NI is inflationary whether employers choose to sack workers or pass on the costs! However, he states, very gently of course, that it is becoming increasingly difficult to justify taxing capital gains more lightly than income! Never let it be said that our Larry gets too histrionic about basic social justice. In the end, however, these more or less vaguely well meaning individuals are trapped on the end of the monetarist pole fending off MMT and never, ever using that filthy, disgusting phrase, “multiplier effect”.
I can assure you, because I know him quite well, that Larry understands all those things
Thank you for reposting your video, Richard.
You seem to have cleared up a detail for me about QE that has niggled at me for some time.
Discussions I have seen always seem to imply that the BoE bought the gilts from the existing bond market. Which has never made sense because a) would gilts to that value even be available for sale, and b) if there weren’t enough available the BoE couldn’t force the current holders to sell them to the Bank, could they? And if they did do that it wouldn’t be ‘borrowing’, would it? It would be ‘repaying’ the people/institutions that (in govt. terminology) ‘lent’ them the money in the first place, and, the new money the Bank had created to repurchase the gilts wouldn’t go anywhere near where it was actually needed.
So, to clarify. You are saying that what the BoE bought was gilts *newly created* by the Treasury that have never been anywhere near the bond market. Am I right?
Is there any compelling reason why the BoE has to go through this rigmarole? Why can’t it just pay the bills or credit bank reserve accounts directly?
It makes me so cross that the ‘household economy’ myth is so universally accepted by the public . Do you think that the government (Treasury and Chancellor) really believes it or is it just a convenient way to reward our kleptocracy without any real anger on the part of the public…
Every bond bought is bought from the bond market
None are issued direct to the BoE
They are bought by auction and can always be found – they bid the price up until enough are available
Still a bit confused!
So, the Treasury issues new bonds, they go on the bond market and the BoE buys them? Then puts the money into the commercial banks’ reserve accounts?
Sorry to be a bit stupid about this, but if I can’t get the procedure straight in my mind I can’t explain it to anyone, or argue the toss..
I am working on a new explanation of this. Might you wait for it? I hope it will be this week