I posted this short thread on Twitter this morning and forgot to share it here until now:
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But it does not have an unlimited propensity to print money like you suggest without negative consequences namely inflation and sterling weakening especially against the dollar. There are many factors contributing to inflation and one of those is the supply of money.
No one has ever suggested any such thing
But as Martin Wolf says in the FT today, the pretence there is a need for a smaller state is what is crushing our economy
That requires the government spend more, and also tax more
It also means it commands a greater share of our resources
Those are real issues. I have never said printing money endlessly is in the remotest way sensible
Onoy you appear to have said that
‘an unlimited propensity to print money’?
Alan – tell me which Government in this country has done that? I’m 56 years old, and I’ve never seen a Government do that. All I’ve seen many of them do is take money away from me and others. And where have you been since 2010 – La La Land?
I did see the government print billions of pounds into private banking sector however from 2008 after unprecedented levels of criminality and greed and saw no one go to court and many keep their riches. Oh yeah – I saw that all right, as most of us did.
Mr Shoulder,
Are you by any chance trying to resuscitate the long dead corpse of Friedmanism? If so, how quaint; do please provide an exposition..
For ‘more’ it would be reasonable to say ‘even more’. The demand is the same of course but the better phrasing at least acknowledges that the amounts we are starting with, if starting today, are the highest ever.
Your point being?
Oh dear oh dear oh dear Thomas………………
The highest ever what?
After what? 12 years plus of austerity, with BREXIT on top?
What do you think is actually happening Thomas, eh?
All that’s happening is stupid Government policy is coming home to roost.
All the money it chose not print in to the economy from 2010 until Covid, and then the retarding effects of BREXIT compounded by 44 days of the most thick Tory administration ever are all now presenting themselves as increased costs and needs.
It was simple. All the Tories had to do in 2010 was service the economy that was still reeling from 2008 privately induced depression. Instead it did the opposite, and instead of making anything better, it has just stored up problems and made them worse..
Pay now or pay later? Pay up or face the consequences. Well, the Tories are still choosing to not pay at all when they can do exactly what they backed before and print the money needed as they did with the credit crunch. Instead, we’ll be made to pay with our lives, our jobs and our futures.
I know about this now, but am curious if it’s possible for the Welsh government to create a ‘Bank of Wales’ and do as the Bank of England does.
Not yet: it has no currency to manage and no right to create one
But presumably when the Welsh hold a referendum and vote for independence they ought to create the Bank of Wales with a Welsh currency.
Emphatically so
I was in Wales last week
The Sunday Express headlines (read in shop while waiting to pay ) says ‘Thatcherism to rescue UK- PM follows the Iron Lady’s recession playbook of tax hikes and spending cuts.’
I was reminded of the 364 economists who wrote to the Times saying it was the wrong policy. Checking it out the IEA still claim the 364 were wrong and Thatcher was right. Two of her economists were Tim Congdon and Patrick Minford ( of Brexit infamy ).
I suspect that the arrival of North Sea oil revenues gave her the extra cash for later tax cuts. and to pay unemployment benefits. Unemployment increased from just over 9% to nearer 12 % in the next two years. Much of that was in the north and among the young. That caused a lot of wage stagnation and fall in price rises. But those who had assets saw them increase in value and certain occupations got good wage rises. The victory in the Falklands saw her popularity climb. There were many factors at work in the early 80s-Volker’s interest hikes in the US, the rise in the value of the pound due to the oil, trade union reform and later defeat of the miners and so on. We are not in the 1980s but I don’t see ‘Thatcherism coming to the rescue.
After watching Rachel Reeves’ interview with Laura Kuessenberg today there is little or no hope that economic policy will be substantially different under Labour. Reeves talked about working for the Bank of England (perhaps, as Shadow Chancellor, it would have been better that she hadn’t) and the constraints we face. Kuessenberg also framed the argument in terms of taxing before spending, although she did allude to some economists that held a different view. However, it is time those that hold to orthodox view were challenged directly and account for their position.
I tweeted my despair on hearing that reply this morning
Reeves appears to be trying, like Starmer not to “rock the boat” steady hand and all that – as other governments fearful of the finance sector.
There could be no fear – only relief at my Eco-Fit proposal – £40bn p.a. by end of next year only a trickle to start with at £40k each on “Thorough Enveloping (and Solar) of the Working Poor’s Housing.” The sector with the worst accomodation. Landlord/owner could be required only to pay £50.00 per month. Entirely affordable and non-inflationary. Way better than a stupid couple of hundred tax cut. Directed Money for special purposes.. DIRECTED MONEY not CONSUMERIST MONEY.
Basically we have a stupidly inefficient system grown up benefiting the rather few most. Why not credit creation charge on COMMERCIALLY-Created MONEY, start the charge with a small start by GreenER Deal ’20-Year money at 1.5% with a ONE-THIRD CHARGE [the 0.5%] to bring in the ONE-THIRD CHARGE PRINCIPLE (then extend to mortgage money – and Show it on the mortgage statements, people ca then see the Contribution they’d be making towards Re-Educating the planet (for Instance).
[sorry to harp on]
I sent the following to (A) my local MP Ian Mearns, with (B) a copy to Rachel Reeves. Auto-replies were received, & a formal reply from the office of (A). I am waiting for a formal reply from (B). I cited your quote about Sunak, & some of my language was unashamedly pinched from one of your bloggers from a few years back.
Sent: Monday, October 31, 2022 at 3:53 PM
From: “Alan Peyton”
To: rachel.reeves.mp@parliament.uk
Cc: ian.mearns.mp@parliament.uk
Subject: money creation & the erroneous term “National Debt”
“Two submissions in the last week or so sent to the Labour Party (on their website) have not even been acknowledged let alone replied to. Copy is appended below the main text. Additional material supplied is copied here: http://itsthepeoplesmoney.blogspot.com/2014/03/money-myths.html just one short example from USA – there are hundreds of such prognostications in a similar vein…
https://www.taxresearch.org.uk/Blog/2022/10/24/sunak-will-be-terrible-and-unless-labour-changes-tack-he-could-win-despite-that/
Are there ANY Labour Party members, activists, and/or officials out there who are prepared to engage? I have today sent a third message on their website, as follows:
(1) why is the Labour Party subscribing to the outmoded economic nonsense that money can only be created as debt when the central bank [i.e. Bank of England – BoE] is a publicly owned institution? When it creates money out of electronic thin air for public spending which is EXACTLY what it does, why is this classified as “borrowing” & from whom is it borrowed?…To whom is it being repaid?
(2) there is no need to issue bonds (government debt instruments) at all! Savings/investment accounts could easily be offered (& even more easily with digital currency issuance) on EXACTLY THE SAME TERMS & CONDITIONS that apply to bonds – this “definancialisation” would stop this nonsense of markets dictating/controlling government policy…..governments do of course need to take account of market reaction but market forces dictating governance is the hallmark of the worst excesses of neoliberalism……Stop issuing bonds & the ludicrous narrative of national “debt” can be consigned to the dustbin of economic history – austerity can then be seen for what it actually is – an ideological decision masquerading as economic necessity.
(3) from Richard Murphy’s Tax Research output: “Sunak is a pure neoliberal. He is going to unleash its power to destroy more than any other prime minister to date. But we have an opposition too frightened to use the government’s power to create money to unleash the potential in our economy for public good.”
I would appreciate a sensible reply.”
Ian Mearns office reply:
“Dear Mr Peyton, Thanks for your email to which Ian has asked me to reply, apologies for the short delay. Ian is familiar and supportive of the work of Richard Murphy, David Blanchflower and other similarly minded economists who offer evidence based alternatives to the present situation. While economics can be complicated, it seems clear to Ian that the decisions taken and the rhetoric around the national debt are misleading and unhelpful – most notably the conversation about the ‘country credit card’ and paying back debt. The issues you have raised are probably best answered by colleagues on the front bench in terms of formal Labour Party policy. Have you received a reply to date from the Labour Party directly?
Best wishes
Kris
Office of Ian Mearns MP Member of Parliament for Gateshead
Encouraging? When (IF?) I get a reply from RR I will copy to you.
Very encouraging
Keep us posted
I agree that Hunt is lying – knowlingly.
The puzzling thing is – given that the railways are living proof that privatisation does not work, oh hang on, “living proof that getting other state owned rail operators to run UK railways does not work”………one wonders why the tories think privatised health and education will work. It is almost as if they want sicker and more poorly educated UK serfs……..oh hang on a sec….I see the outlines of a plan. If this is correct, then Hunt is biblically evil. Evil like Putin and others. He is happy to see others suffer while dressing it up with the usual tory blather & bullshit.
I recall some years ago a BBC presenter calling him Mr C…t – the wonders of the subconscious.
The Guardian reported that Sir Gavin’s former deputy when he was chief whip, Anne Milton, described on Channel 4 how Williamson threatened to use knowledge of MPs’ personal woes as leverage “if the need arose”. After arranging an emergency bailout for one MP in financial difficulties, Williamson reportedly told Milton to make sure that “he knows that I now own him”.
Is it possible that MPs as elevated as Jeremy Hunt have received political contributions from ruthless operators who now ‘own’ them – and that the owner’s wishes must be fulfilled?
https://www.theguardian.com/commentisfree/2022/nov/11/gavin-williamson-dark-arts-whips-office-over
This is who owns Jeremy Hunt.
https://www.theyworkforyou.com/regmem/?p=11859
A government could issue as much money as it wants, (although there might be consequences).
But a government can’t use as much resources as it might want, if they don’t exist.
Employment and physical resources (energy, materials etc) are all in limited supply.
It is the limited supply of resources that may cause inflation (as we are seeing with gas and petrol supply, and recently with toilet paper).
Issuing money may respond to inflation, but it generally does not cause it.
Just a pity BBC – and particularly L Kuenssberg doesn’t really challenge governemnt (Hunt) on the existence of the ‘black hole’ or the ‘maxed out card’ – even though BBC’s own Ben Chu and Andy Verity have done – along with many other economists
(https://www.bbc.co.uk/news/business-63573989)
I hope to have more on this n the morning
Mr Broadbent,
Tim Pitt, a Neoliberal economist who worked under Hammond provided the kernel of the Conservative defence against the new attack on the credibility of the ‘black hole’ argument in this self-revealing statement from your link: “During these challenging times our number one priority is economic stability and restoring confidence that the United Kingdom is a country that pays its way.”
We can deconstruct that statement to extract its underlying meaning. Note that the key words are “stability” and “restoring confidence”. You may think that Pitt is referring to confidence in Britain. No, he isn’t. Confidence is no longer in Pitt’s gift, or even the Government’s gift, anymore. That ship sailed, lost propulsion long ago, foundered and finally sank like a stone, on the rocks of the not-so-mini-Budget.
Confidence in Britain cannot be restored by this Government. The Conservatives are demonstrably neither professional, nor trustworthy – to anyone. Confidence in Britain can be restored, by electing a trustworthy and reasonably professional Government ;but from another source. The Conservative Government and politicians are irredeemable; offering in quick succession a permutating, ever changing rolling stock of literally dozens of failed, hapless ministers, Chancellors and PMs, perpetually jettisoned, only to be re-emerge unconvincingly recycled, as fresh stock. The conseequence of Government failure compounded by obvious chaos, is that Conservatives have made such a dog’s breakfast of the economy and the nation’s finances, that nobody in the BofE or the Financial Markets can offer (or even fake) any trust whatsoever in any of their politicians, or the Conservative Party itself, any more. The Conservative Party is not a credible, saleable political or financial management commodity, with anyone.
Policies that are calculated sharply to reduce economic activity in the middle of a very severe recession is not what ‘markets’ expect from rational Government, at least since the 1930s; but the ‘markets’ know the Conservatives are not rational, and demonstrably not competent. They probably suspected that character flaw in Conservatism, following Brexit. It is now decisively proved. What we see with the Sunak-Hunt Budget is a Government that is now scared witless of both the Financial Markets and the BofE, and so will execute whatever stringent policies they (delusively and in desperation for the Government’s survival), think will appease particularly the Financial Markets, at whatever price to be paid by the British people; in the somewhat vain hope that they can sacrifice the British people in order to save the Conservative Party, at least from imminent annihilation. The Conservative Party has only ever had one aim, the survival in power of the Conservative Party; no matter what. You are all about to pay the price of servicing their ambition.
Definitely not interested in saving the British people. 330,000+ excess deaths in the last round of austerity. How many do they think acceptable from now on?
Well said John.
You sound like a leader of a decent opposition – Starmer please note.
I know this is a grown up blog, but increasingly it seems that we are the victims of some sort of cover up with both politicians and media conspiring to mislead us.
I’m sure that the likes of Kuenssberg and Evan Davis etc., will get their rewards for being blind, deaf and dumb and be absorbed into the Establishment.
George Osborne 2.0
I came across an alternative view, at https://new-wayland.com/blog/how-the-governments-super-platinum-credit-card-works : that the government does have a credit card: but it’s a super-duper Black Platinum Card, with no credit limit, no minimum monthly payment, 0% interest and (eventually, through the tax system) 100% cashback.
The sort of card Elon Musk can only dream about: it would be useful when he wants to buy an apple (yes, the incorporated one – as well as Facebook and Google, to go with Twitter!).
I think it is just to cause pain now that will be relieved in time for the next election when that ‘credit card’ will be used aplenty and interest rates will drop because by some miracle the year on year inflation will have dropped in a year’s time. Magic!
Inflation will fall significantly next year
And, the government will claim credit. That’s why they are called the [expletive deleted] Con++++ Party.