Saturday was a good thread-writing day on Twitter. Here is another excellent one, from Andrew Levi, who is well worth following if you are on Twitter:
In summary, now is the time for more money creation.
I agree.
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Also worth noting from Professor Steve Keen. An elegant and succinct rebuttal to the monetarism fetishists:
https://www.keenforthesenate.com/money-creation/
His description of the “unwinnable arms race” is so apt.
“It goes without saying that we all want to be in positive equity – even if your cash flow lets you service a negative equity position, no-one likes adding up their assets and liabilities and finding that the sum is negative. But since it is impossible for everyone to achieve this in the aggregate, it sets off an impossible struggle – which I believe explains our attraction to speculating on the value of non-financial assets, especially houses and shares but also now crypto-currencies. Since we buy these non-financial assets with money, we set up the system for crises like the Great Depression, the Great Recession, etc.
The only way that this unwinnable arms race can be avoided is if one party is capable of maintaining negative equity, and willingly does so. In a mixed credit-fiat money system, that party is the government. Then the negative equity of the government sector ensures the positive equity of the non-government sector.”
Thanks
Love Andrew’s characterisation of the present incumbents as “the Hayekian-Friedmanite mini-me Thatcher tribute act”
I totally agree that now is the time for targeted money creation – for God’s sake lets just not give it to the private banks again.
That’s all I would add.
“The curiosity here is that with fiat pounds the BoE could just create new money and pay off the investors and eliminate all the debt.
So why doesn’t it?”
I think the answer is very simple. If they did then the game would be up for them. They like to complicate our relationship with money yet present it in the most simplistic terms possible. The mantra of “taxpayers money”. The myth of “balancing the books”. When has a Tory Government ever done that? Or any Government? Then you have the modern era Thatcher myth of comparing the running of the economy and Government to the humble housewife managing the household budget. They want people to feel that money is complicated and has some mystique to it, but that it belongs to the people, i.e. taxpayers money and that Government are the custodians of it. They are all in it so deep that I don’t think they could ever tell the truth about money and in any way retain any credibility. So they won’t.
Wow.
Is this the beginning of a change in thinking or just a blip? I hope the former.
Richard, I think you’ve previously advocated QE ‘until we have full employment’ because QE + full employment would drive inflation. We must now be close to full employment but you still want QE. What am I missing?
That we are very far from full employment
We have mass under employment and significant bogus self-employment and far too many l9ngbterm sick
So qE could do a lot