People often ask me why the work we do on this channel and on the Funding the Future blog is so hard to follow. It is not because the economics is complicated. It is because what we say is counterintuitive.
We have all been taught a story about money. We are told governments must behave like households, must balance their books, must cut spending on public services and social security because “there is no money left”. That story feels familiar. It feels safe. And it is wrong.
In this video, I explain why good economics often feels uncomfortable. We are challenging ideas that politicians, journalists and economists have repeated for decades. When we explain that government is different because it issues money, that private saving requires government deficits, and that austerity is a political choice, people understandably hesitate. The problem is psychological, not technical.
That is why we repeat ourselves. New viewers arrive every day. Myths repeated for forty years do not disappear after one video. And if we want a politics of care and an economics of hope, based on proper accounting and honest debate about public services and social security, we have to keep telling the truth about money.
Bad economics has consequences. It leads to austerity, a failing NHS, broken local government and rising inequality. It pushes people towards the far right because they think nothing works. That is why this work matters, and why persistence matters.
If you value clear explanations of government finance, tax and the real economy, please subscribe to the channel, share this video and help spread the word. Change only happens when people challenge the myths they have been taught.
This is the audio version:
This is the transcript:
People often ask me why what we do on this channel and on my Funding the Future blog, which you should be reading, is so hard and I want to explain that because it isn't because the economics I talk about is so complicated. It's because what we say is so counterintuitive. We are challenging ideas people have been taught all their lives, and that I admit, makes what we say difficult.
Let me be clear. I know I can write, I know I can talk to camera, but that part is not difficult about what we do. What is difficult is this. We are saying that most people's understanding of government financing is wrong, and that is, of course, uncomfortable.
So what's the big misunderstanding?
People imagine the economy is made up of individual units, households, businesses, councils, and governments, and they think they all behave the same, but they don't. Government is fundamentally different from the rest.
Why is the government different? The government is different because it issues money. It taxes to control inflation. It never disappears, and its obligations carry on across generations and, in the history of the UK, it has never defaulted since, well, so long ago let's not bother about thinking about it because we're talking about a thousand years or more.
In the UK, we've had continuous government for that long.
We've had continuous national debt since the 1690s, and we've always paid it.
So the government cannot be analysed like a household because none of those things holds true, of course, for any household or any person you know; yet the myth of the household dominates politics and journalism.
So what I talk about is the accounting reality of our economy, and when doing so, I often talk about the hard bit of accounting, which is the balance sheet, which is the bit that most people have some difficulty in understanding, which just makes our task all the harder.
What that analysis shows is in our economy, if households and firms save, someone else must spend.
And if the private sector runs a surplus, the government has to run a deficit.
And by surplus, I mean saving, and therefore, private saving must equal a government deficit; otherwise, the equation doesn't balance because, in accounting, and this is important, credits and debits always match.
And so there must be for every saver, a borrower and every borrower a saver. This is accounting truth, but most of economics ignores it, and that's why we end up with the stupid myths that economists, politicians, and journalists all talk about.
What this means is that the government is the mirror image of the private sector. That is just basic accounting, but it overturns just about everything in mainstream economics.
So why is this so hard to accept after all? It's not technically difficult, but it is psychologically difficult, and that's because we have been taught the household analogy all our lives. Politicians repeat it. Journalists repeat it. Economists teach it, so when we challenge it, people think that people like me must be wrong, but we aren't. Of course, we're not.
What we challenge is the politics, which is convenient, which is based upon this myth, and we do so by explaining the accounting.
What we're proposing as a consequence is a new politics. A politics of care, a politics for people and an economics of hope. Basing these ideas on proper accounting and the economics of the real world, we can show that, well, austerity is a choice. Underfunded public services are always a choice, and cuts to social security are just something that politicians want to do, and not something that they have to do. Necessity does not come into it. And that threatens those in power who want to do these things and want to justify them by claiming they have no choice when the truth is that they have.
Taking all that into account, we as a team recently mapped 50 organisations talking about economics, modern monetary theory, politics, and other issues that we touch upon when we do our work. We looked at them to see how they organise themselves around these issues and what they try to do in creating narratives.
Now, what we discovered is that there are three things that we all share in common. We all vie for attention because we want people to watch our channels. We all vie for legitimacy because we want people to believe our explanations, and some of us tried to create hope. Most of the organisations we looked at did one or two of these things. We try to do all three. That is why what we do, we discover, is harder than that thing which most other organisations like us do, because most of them don't try to create hope.
If you look at most economics books, you'll see why this is the case. Most economics books are full of explanations of everything that has gone wrong and the theory around it, but very few of them include very much detail on how the world could be made a better place, and if they do, well, it's a few pages at the end.
At least half of our output is on what can make the world a better place, and that's why, apparently, what we are doing is harder than average.
And that's why perhaps you, the viewer, also might find it harder than average.
I know we're challenging you, but I think that's worthwhile, and let's just do a few comparisons.
For example, most think tanks offer technical reports, but little narrative about change. They seek attention and legitimacy, all right, but few of them offer hope, including even things like The New Economics Foundation, which you would think would do that, and yet it doesn't appear to do so.
There are other organisations we compared ourselves with, including those who advocate for MMT - modern monetary theory - but they do so based on technicalities, and very few of them actually touch upon the wider political economy issues that MMT can give rise to.
Whilst political channels talk about values, they generally lack fiscal expertise.
We try to combine rigorous analysis on these three topics: economics, accounting, and tax, and then we try to join the dots to create a political economy narrative. And from there, we offer a politics of care and an economics of hope. Now that is ambitious but necessary, and we are going where others won't.
Why then do we repeat ourselves so often? Because we need to, is the answer we've got.
In fact, we are being told that we don't repeat ourselves enough when doing our work, either here or on my blog. The reason why is that the things we talk about are hard to understand.
You don't get the household budget analogy myth the first time that you hear it.
You don't understand the way in which money is created the first time you hear it.
And we get new audiences every day anyway on these channels, and therefore we need to repeat ourselves.
So, apparently, we need to make more YouTube shorts, more Instagram reels or whatever they're called, more TikTok videos, and we need to do so on our core messages with increased clarity.
So if you begin to see more of our materials coming out in that way, this is why.
And this matters because the stakes are enormous, because bad economics leads to:
austerity,
a failing NHS,
broken local government, and
rising inequality.
It also leads people to the far right because they think nothing works.
And that is why, as I say, we think our message matters, and that's why we're going to repeat things, because people have to understand that there are better choices available, and that's, at its core, why I do this work, why I look into this camera so often, why I talk to you, why I write.
The real conclusion is that what we're trying to do is hard because we are challenging a story that protects power, and we want to challenge that power. And we have to persist.
We must do so because we have to repeat our challenge to core ideas.
We have to keep explaining what a politics of care is and explain government finance, honestly, because people don't understand it, whilst defending social security and public services and demanding democratic accountability.
So, I have a simple question for you: are you happy to hear me repeat myself?
Do you think we should be doing so?
Do you agree that this is important?
And this question is the most important of all in this whole video: will you help share these ideas?
Will you literally subscribe to this channel?
Will you tick the like button?
Will you share this video or this podcast if you are hearing it that way, because change only happens when people share the message?
My point is, the economics of hope does exist. We can talk about it. But it only exists if we tell the truth about money, government, and care. That is what this channel, that is what Funding the Future is all about, but sometimes delivering on that goal is hard. Your assistance will make it easier.
Please, will you lend a hand?
Will you literally share what we do?
There's a poll down below. Let us know. We'd love to know what you want from us and whether you are willing to help.
Poll
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I think it is absolutely right that something that challenges a deeply embedded but incorrect understanding is repeated, for all the reasons you say. For those of us that are regular readers, it’s also beneficial that our understanding is enhanced and endorsed each time. We need this if we are to help challenge the myths and share the correct description of what really happens. Because in trying to do this, we will face challenge back at us and need a sufficient understanding to reply. As far as possible, I want to see the whole reality of the economy and money as it affects political choices. It doesn’t need to be all the details, but it does need to be enough that I can see the whole and the main parts. I’m quite a visual thinker, so would even want to be able to draw it, say, as a systems diagram if that’s possible. I don’t want descriptions of parts of the elephant, so to speak; I want to see the whole. So the more you explain, the better. In my experience, you are the best communicator and teacher of this subject.
Incidentally, I was at your brilliant event in Cambridge yesterday and when we briefly met at the coffee machine, I asked whether it would be reasonable to ask, if this all makes sense to me (an extremist according to our PM), why our politicians and governments don’t act as if they understand. You agreed that it would be a good question to raise, but there were so many interesting questions during the Q&A session that I didn’t get a chance to raise this. I suspect you have given enough material to answer that question, though it’s still something I ponder.
It was good to meet you, even if briefly by the coffee machine, and your question was an important one. I am sorry we did not get to it. The number of hands up was extrordinary.
You point is, if these ideas are coherent and evidence-based, why don’t politicians act as if they understand them?
The short answer is power and narrative. Most politicians operate inside an economic story that is decades old: the household budget myth, the idea that markets discipline governments, and the belief that ‘there is no money left’. That story is reinforced every day by media commentary, civil service convention, lobbying by vested interests, and academic training that still teaches neoclassical assumptions as fact. It is safer politically to repeat the script than to challenge it.
There is also fear. A government that openly admits it can fund public investment in money terms must then explain choices about tax, inflation and distribution honestly. That threatens powerful interests and entrenched ideologies.
So the issue is not that politicians cannot understand. It is that the incentives of politics reward conformity to the prevailing narrative.
That is why our task matters. When enough people understand how money really works, the Overton window shifts. Politicians follow public understanding, not the other way round.
Does that make sense?
Your answer to my question entirely makes sense. As ever, I am amazed at the diligence and energy you have applied to answering the questions, especially straight after what would have been a very tiring day in Cambridge. Thank you.
Thanks
Making a fairly obvious point, I have been reading this blog for a long time so of course you will have to repeat yourself because a lot of your audience will not have heard the points I already have.
And of course you will be on new mediums – You Tube, Tik Tok etc where the story will have to start again
Cognitive dissonance.
I recalled having learnt a little about economics, I had taken the time to do so. So I knew it, at least so I thought.
And what I had learnt, was confirmed from several different sources: textbooks, the message from TV and politicians.
Maybe one of them was wrong, but surely not all of them.
And the counter argument wasn’t from credible sources: social media, influencers.
And then I discovered The Deficit Myth by Stephanie Kelton, a professor no less.
https://amzn.eu/d/hO2C0A9
🙂
I remember reading or hearing something Stephanie Kelton wrote or said.
When she first heard about MMT from Mosler, she felt it must be wrong and it took a time until the penny dropped.
So if you thought or have thought that it felt wrong, you are not alone. In fact in good company.
Yes to everything. Repeatedly.
Thanks
I’ve noticed the recent changes:
Repetition
Shorts
Simple language
Alternative framing
Emphasis on solutions not just analysis
The focus on hope
I am excited by it.
Something I am thinking more about is how many new ways to have conversations, and what are good questions to ask people – I prefer to ask and listen, because then they can guide me into the right territory for an answer that helps THEM – and if THEY provide the answer, they are more likely to believe it.
That’s not possible for you because you have to launch your content into the void without the face to face interaction, but these recent changes show your output IS responsive and it IS cutting through. The time spent outside your comfort zone is paying dividends.
This video made me think about a series of questions, framed around, “Where does ***** get their money from?”.
(***** = your interlocutor, or a household, a hospital, a charity, a local authority, a government agency like the Post Office or Ordnance Survey, and of course, finally, the Treasury/the Chancellor, who has to do the budget and make the sums add up).
“What do they do with it?”
Then, for each of those,
“what happens when they run out of money?”
In this conversation, I don’t intend to give the “a gov can’t run out of money” answer, but elicit it from the person I am talking to.
Then hopefully we move on to where that money comes from and a discussion about taxes.
The whole approach is framed around getting the answers from them, my job is to ask the right questions at the right level.
Your material provides the raw material for my questions.
I don’t know anyone who is interested in economics, but everyone I talk to, is interested in money, especially why it is so unfairly distributed.
Two provocative questions to illustrate the point…
Do we need to spend more on defence?
If yes, where will we get it from?
And two more:
If Rachel Reeves has a £30bn “surplus”,
– where did it come from?
– where is it now?
“Hope provides the energy we need to put solutions into practice” (RobertJ 1/3/2026)
(Inspired by Romans 5.3-5 https://www.biblegateway.com/passage/?search=Romans%205.3-5&version=CEV )
Thank you.
That is hugely encouraging, and you have understood exactly what I am trying to do.
The most powerful conversations are not lectures. They are questions that help people see the answer for themselves. When someone realises, on their own terms, that government money is different from household money, the myth collapses quietly and permanently.
Your approach is spot on. Ask:
• Where does this organisation get its money?
• What does it do with it?
• What happens if it runs short?
And then add the key step people usually miss: who is always on the other side of the entry? For government, it is us. The state’s spending becomes our income. That is why the household analogy fails.
This matters because, as you say, people are not interested in “economics”, but they care deeply about fairness, jobs, housing and social security. If we start there, the monetary story makes sense.
So please keep doing exactly this. Share the videos, talk to friends, ask questions in local meetings, trade unions and community groups. Ideas spread in conversations, not broadcasts.
And you are right about hope. Hope is not optimism. It is the belief that understanding gives us the power to act together.
It’s not that any one idea is hard, it’s the whole coherent collection of ideas. I’ve been following this blog for over 8 years. I agree that govts are not like households, and keep repeating it to friends. But I still have difficulty in forgetting phrase “taxpayers’ money” and integrating it. Partly because I think it gives people an idea that by paying tax they are involved in the system and might have some responsibility? I don’t think government action “tax to control inflation” has same emotional charge. Perhaps one of the other reasons for tax — should promote equality, eg — might have more of emotional buy-in?
Noted
I don’t like voting based on one element above when I think a number are in play. The middle two are certainly in play for me
I’ve been ‘lending a hand’ for some time and its hard. I am surrounded by some very well off people when I am compared to them and their credibility comes from that wealth (in terms of their assets and lifestyle) whereas I live in an ex-council house and buy second hand cars.
The current system in other words has worked well for these people and because of that I believe that it affects their ability to question the dogma they are fed. Think about it. If you have done comparatively well out of something, how likely are you to delve into it and think (instead) ‘ Well, I must be rather clever’.
What makes me laugh is that many of those I know detest Thatcher; yet I have lost count of how many family get togethers and dinners we have had where they have supped from her poisoned chalice called ‘tax payers money’.
From the discipline of knowledge management, the biggest problem we face is ignorance. Neo-liberalism seems to rely on implicit knowledge transfer among people because people are using tropes such as ‘tax payers money’ ‘maxing out the credit card’ in everyday usage (you know what the other tropes are). There is a cunning use of these tropes dropped into society by bad actors that those using them are simply unaware of which is very cynical and destructive.
The knowledge management discipline cuts across such matters as language/linguistics / explicit/implicit knowledge etc.
I think that any ‘movement’ for change must have a ‘knowledge management’ strategy. How to ‘dis-embed’ these tropes from the discourse used by people and politicians should be part of the way forward and part of the way of being just as cunning as the lying bastards calling the shots now.
Thanks
Richard, while listening to the first few lines of this video the phrase “The politics of truth” flashed through my brain. I don’t know if you could use it – sounds a bit too fundamentalist? Just thought I’d mention it.
I will think about it.
realise I night be unusual but, I I never really bought into the household budget myth etc even as a kid. It never really made sense to me.
When i came across MMT some years ago it was a relief to realise that my concerns had been justified all along.
What MMT, your work and that of others has done has given me the confidence and the vocabulary to challenge these myths when repeated by others.
Thank you.
Me neither.
I reached the basic conclusions of MMT as a result without ever knowing it existed.
Great video Richard.
Culture change requires a constant input of energy for it to take hold and grow.
In this instance (re. Good economics), repetition of the message is part of that energy.
Many thanks
Thanks
Thanks for this video. Anything that spreads these messages as far and wide as possible – even if it means the modern short form videos (grrrr) – is worthwhile.
And on that note:
**The Together Alliance**
Are you guys at Funding the Future familiar with this? I’m part of a steering group for the Alliance. We’re trying to pull together as many organisations, celebrities, thinkers, MPs, etc to spread alternative messages against those the far right are offering. We are organising a mass mobilisation of people to come together in London on 28/03.
I think there is a real need to tie in alternative economic narratives to this. It’s a bit of a black hole, for want of a better phrase! Is this something you would like to be involved in and if so how best can I make contact to discuss it further?
People are mobilising against the far right, against racism, against division, against discrimination, etc. And the real reasons underpinning such things are almost always economic. So that needs to be a big part of the picture and currently it’s lacking.
Hope to hear from someone and thanks for listening.
Max
Many thanks for this comment.
I agree with you, the alternative economic narrative self few and far between, and we need to build them urgently in ways that people understand. We have just begun to work with The Canary on this, but there is more that could be done.
Unfortunately, I cannot do 28th of March. I am aware that I am going to spend much of that day on the A1. But, if there are people who want to talk about this, or you do, please be in touch.
Richard
Many thanks for the reply…
Great news re The Canary…
And apologies in advance for any traffic issues on 28/03!
Yes, I’d love to talk further about the Together Alliance more generally and how we might be able to do things – well – together 🙂
Is there an email address I can contact someone on to discuss further?
richard.murphy [at] taxresearch.org.uk
“I think there is a real need to tie in alternative economic narratives to this.”
Check out https://rethinkeconomics.org/ the “global network of students and organisers fighting for a new way of teaching and practising economics so that it truly helps us deal with the real-world challenges we all face today like climate collapse and inequality.”
The problem is the media is not noticing
I voted for the ideas being hard because they are counterintuitive. In conversations with people who haven’t had the benefit of you clear elucidation, I’ve found that the response to the statement that government expenditure creates money is often something like “No, that can’t be right!” or “That doesn’t make sense.”
I can vouch for the value of frequent repetition. Several years of your repeated exposition in various ways of the essential concepts of money and tax have resulted in my having a better understanding of the basics. I’m now comfortable with the idea that money is just debt and that what I used to think of as the money I have in the bank is just the amount that the bank owes me. Thank you. But there are still gaps in my understanding; So, please, continue to repeat your message. I’m still not clear whether the Government has an account with the Bank of England recording the net value of its expenditure and receipts over a given period, and I have yet to get my head round the detailed use of central bank reserve accounts within the payment system.
Thanks, and that confusion is very common, because the system is not explained clearly.
Yes, the UK government does have an account at the Bank of England. It is the Consolidated Fund and related accounts used by HM Treasury. Taxes are paid into these accounts and government payments are made from them.
But here is the key point: this is not like a household bank account. The Bank of England is part of the state. When government spends, the Bank credits commercial bank reserve accounts and those banks credit private deposits. When taxes are paid, reserves are reduced. The Treasury account records these flows, but it does not constrain spending in the way a household account would.
Central bank reserves are simply the settlement balances commercial banks hold at the Bank of England to clear payments between themselves. They are the plumbing of the payment system.
So the government’s account records what has happened, but it is not the source of money in the way people imagine. The state issues the currency, and its spending and taxation change the level of reserves in the banking system accordingly.
Richard, I have been thinking that it might help referring to the fact that before credit cards etc all money was printed by the royal mint, owned by the government and this was clearly stated on the notes. Now a days of course this information is missing. This might help the old fogies like my self to understand that money comes from the government and not from taxes.
I understand why that sounds helpful, but it is not quite right, and clarity matters.
Most money has never been printed by the Royal Mint. Coins come from the Mint and banknotes from the Bank of England, but they have always been only a tiny share of the money in use. For centuries the majority of money has been bank deposits created when banks make loans. That was true long before credit cards.
What matters is not who prints notes. It is who defines the currency. The state does that. Government decides the unit of account, requires taxes to be paid in it, regulates banks that create deposits in it, and guarantees the payment system. That is why sterling exists.
So taxes do not “fund” government in the household sense. They create demand for the currency and help control inflation. Government spending puts money into the economy; tax withdraws some of it.
You are right about one thing, though: we need better explanations. The household story is simple but wrong. The truth is a little more subtle — but once understood, it makes much more sense of how the modern monetary system actually works.
David Graeber’s “Debt: The First 5,000 Years” is long and detailed but a fascinating read covering the various forms of debt/credit instruments, relationships and manifestations over time. It also explores debt more broadly in its moral sense, from current debt obligations to bankers and the likes of the IMF, to existential debts to nature and Gods for our very existence.
On my poll choice above. I reckon it’s the top three options in concert, but I think the blame lies with the politicians for not telling the truth (either for political advantage or because of their ignorance).
It is the responsibility of politicians to understand what they are doing and to do it honestly. Too many simply are not doing their job properly.
Perhaps understanding depends on one’s age and upbringing.
As I have said before in the Comments, at the age of 5 or 6 in the late 1950s, I used to listen to my father and his brother debating politics – all from their own Socialist, or maybe Marxist-communist, upbringing. As clear as a bell I can still hear my father asking,
“The government spends on stuff, but has to get it back from our taxes. Where do you think they should collect the tax?”
I have always understood, therefore, that oh-so-basic description of our economy.
Answering your poll is difficult – too many people to point a finger at. But I guess it all began with Thatcher (and the near-accident I had when I first heard her talk of “taxpayers’ money” on my way to work one day).
Keep on keeping on about the reality. New insights on story-telling really help.
Thank you for them.
Thanks
In response to the above, I say persist and repeat the message in as many verbal variations as possible. It’s important that people understand the money function. If I knew of a way of assisting, other than forwarding to friends and family, I would. I did check the like box.
I’ve been reading around for decades to no avail but eventually determined that “subsidy” would be permanently required to have a healthy society since bank loan money could not cover the fundaments of education, health and infrastructure, (no immediate profit). Then I read Kelton (and Mosler, wray, etc.). A lightbulb moment but 60 watts at first like having to re-ink type several times and reprinting the page until the message stood clear. so persistence and enthusiastic teammates. By the way, with weeks of white surfaces yet to endure on the Canadian prairie we envy you your new years eve signets (I think it was).
🙂
They will be heading for the tundra again soon.
We will miss them then.