I will be on the Jeremy Vine Show on BBC Radio 2 today at about 12.30, discussing Rachel Reeves' supposed economic crisis.
I will be up against the need to play a record by Abba, Jeremy Vine - who is paranoid about debt, and someone from Tufton Street, I suspect.
The points I will try to make are:
- We have a debt crisis, but so does the USA. This is not a UK crisis and not a Labour crisis. It is a crisis caused by Trump and the insecurity he is creating.
- Paying excess interest matters -it increases inequality in the UK
- There is, though, no crisis. The UK can always pay its debts.
- But that said, Rachel Reeves should be taking action. She should tell the Bank of England to:
- Suspend quantitative tightening
- Lower bank base rates
- Stop, or massively cut, the rate of interest paid on the majority of the central bank reserve account balances held by commercial banks with the Bank of England, bringing us into l9ibe with the Eurozone and Japan.
- If Reeves does not take these actions, then this crisis is her responsibility - and she will have to pay the price for her inaction.
I offer no promises that I will get those points across.
The after-broadcast comment:
- I got most of those points
- The IFS (Karl Emerson) made clear what is happening is small beer
- The IEA (Julien Jessop) made clear that the BoE could cut interest on central bank reserve accounts - we agreed
- The IEA did not mention quantitative tightening - and Jeremy tried to close me down
- The IEA talked drivel about growth, and I was not given time to respond and should have been - I did complain.
- Worth doing, but as usual, too rushed to really inform debate.
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Please don’t embarrass yourself by saying cutting rates wont impact sterling..
It will, for a day or two
Better tell Jeremy Vine he is making his arguments because you can guarantee he doesn’t understand how money is created. Of course, he will say he does which gives you the chance to ask him to explain it. At which point if he deigns to respond you can point out his errors.
There is never time for such discussion
Records from Abba do have to be played
(Modern) Money Money Mone(tar)y (Theory) perhaps.
It took me a while to get that…
Good luck Richard
Good luck to you.
Take deep breaths.
Pour your passion and outrage your into scalpel-like counter argument you are known for.
Take the ball not the man.
You know, avoid the stuff that I tend to do……………
🙂
I shall listen with great interest Richard. Great to hear your ideas getting exposure on air in contrast to the usual City commentators and ‘experts’.
Their consensus is that sluggish UK growth and high interest rates, which they never question the news for, mean that tax revenues won’t grow and government borrowing costs will be high so Reeves will have to raise taxes or cut spending, and it’ll probably be the latter.
So yet more austerity even as on the same news programs a few minutes later the homeless crisis or NHS crisis or criminal justice system crisis often comes up.
Best of luck in showing this rubbish up Richard.
Let’s see what happens
A good delivery, if I may say Richard; calm, clear and concise. Knock me over with a feather, Julian Jessop (IEA) had little to argue with; and even accepted the LDI disaster and argued the BoE was behind the last blunder () as you said from the beginning. Then he wandered off the point into irrelevance (presumable because he was not in his comfort zone, and didn’t know to what kind of forbidden fruit you may lead him).
There is purchase and traction in turning this whole ‘crisis’ from Reeves to the BoE; the relationship of the BoE and Treasury, and the methods of of the BoE, who have a free pass to redirect the economy at will, and against the Treasury is a conflict that can undermine the economy, and cannot stand (along with the independence of the BoE, at least on current terms). Your interview was an example of the distorted confusion created by an economy currently with three independent monetary masters (Treasury, BoE and The Market).
This is a crisis made in Threadneedle Street, as was that attributed to Liz Truss.
Completely agree; but the disaster had one (albeit expensive) silver lining. Truss was removed in short order, and that rude shuffle offstage helped evacuate the Conservatives from office at the first electoral opportunity.
The truth is, there is not a single British political party that is fit to govern anyone.
(Alarums and Excursions. Scotland leaves, stage left)
The IEA person surprisingly agreed with you on BoE paying interest etc, whereas the IFS chap was blinkered as IFS is paid to be
Agreed
why is it that ‘they’ close everything down before proper debate? I think it started slightly late to allow for whatever music takes priority – anyway, you did get good points over – thank you – but will your complaint be heard?
Only by the producer – who i do know.
Just listened to your Vine R2 slot. V Good!
My takeaways are:
You got the best out of the horrible format that was possible.
You got important points over about interest rates paid by BoE on commercial bank deposits being unnecessarily high cf. Japan & EU.
Two of you agreed in challenging the “Lix Truss crashed…” trope.
You were v clear about your “Musk moment” point.
You mentioned role of money creation in 2008 & 2021, so gold star there.
Okay, Vine began to whimper a bit when bonds were mentioned, and he clearly has a debt obsession, but I heard economic orthodoxy challenged on the BBC, and that’s a good and rare thing.
I’m thrilled Liz Truss is threatening to sue Keir Starmer, and hope she tskes a long time making her mind up re filing suit, so it doesn’t go sub judice, and therefore gives you opportunities to talk about what DID affect the economy, when she was PM (and before), and how government REALLY finances its spending, but won’t admit it.
My frustration, as an MMT novice layman, is that the narrative about gov debt (public savings), tax rises and spending cuts, repeated ad nauseam by Vine, went unchallenged because Vine controls the microphone.
I wonder at what point you can be disruptive (with a smile in your voice!) and say, at the beginning, “Jeremy, you keep worrying about debt, and saying that when it rises, a Chancellor has to balance the books by cutting spending (can we cope with more austerity?) or raise taxes, but that’s not how it works. She could, if she chose,……. (as quick as possible here because he will shut you down!).
Thanks. & well done.
Thanks
Liz Truss’s ‘cease and desist’ letter to Starmer seems to agree with your analysis that she didnt crash the economy.
She didn’t.
But she was incompetent.
There will be a blog on this in the morning.
They make you sound like a crank
https://order-order.com/2025/01/09/corbynomics-guru-richard-murphy-gilt-crisis-is-musks-fault/
Oh dear.
Guido does not know the gilt market is not free. Nor do you. Basic error.
Unfortunately, I was unable to listen to your radio appearance because, only receiving your blog at 6pm, I never get to know in time. Sorry to have missed it. Is there any solution to this?
Bbc Sounds could provide it on replay.
Sorry Richard. What I was really asking in my rather obtuse way was, is there any possibility of receiving your emails earlier than 6pm? Maybe you have no control over that, and if that’s the case, I apologise for asking the question in the first place. Your blogs are welcome at whatever time they arrive.
We decided 6 was best, overall.
Of course, you can visit the site all day. Most come out by 9 in the morning.