I have already noted one response to my video about £3 trillion of national debt, posted yesterday. That was on YouTube polls, where 4,900 people responded.
More than 23,000 people now seem to have watched the video, and that figure is rising again this morning.
Here, there were 18,700 views yesterday, not all on that post.
On LinkedIn I might have had my highest engagement. So far, there are over 25,000 views and 142 comments, mainly deeply hostile ones. I think that number will rise again this morning. I appear to have touched a raw nerve.
As with the YouTube reaction, I asked ChatGPT to summarise the data. I think the response is worth sharing.
Comments are welcome, but if they only repeat claims made in the comments on LinkedIn that are summarised here, I will be deleting them. I do not have time to do anything else when I have made clear why those comments are wrong, many times.
My View On article on modern monetary theory is relevant here, as it that about inflation.
The overall response is overwhelmingly hostile, but much of that hostility is repetitive. A relatively small number of substantive objections recur throughout the thread, surrounded by a considerable amount of ridicule and assertion.
The principal response: money creation means inflation
By far the most common argument is that creating money to pay interest or fund expenditure would:
- increase inflation;
- depreciate sterling;
- raise the cost of imports;
- destroy the real value of wages and savings;
- eventually produce hyperinflation or economic collapse.
Weimar Germany, Zimbabwe, Venezuela and Argentina are cited repeatedly. Several contributors interpret your post as saying that the government can create unlimited amounts of money without consequences. Some ask why the government does not simply create trillions and distribute the money to everyone.
This is the central misunderstanding in the thread. Your argument concerns the government's capacity to make payments denominated in sterling. It does not say that spending is unlimited or that creating money can never contribute to inflation. Most critics conflate nominal solvency with the real economic consequences of spending.
Who controls interest rates?
The second major argument is that the Bank of England does not determine the government's borrowing cost. Critics say that:
- investors determine gilt yields at auction;
- markets demand compensation for inflation and currency risk;
- index-linked gilts automatically raise the interest bill;
- the government remains dependent on willing bond purchasers;
- confidence could collapse if investors believed the government was monetising its deficit.
This is one of the more substantive areas of disagreement. It is correct that the Bank does not mechanically determine every price along the yield curve. Gilt yields incorporate expectations, term premia and inflation risk. However, critics generally ignore the Bank's considerable influence over those expectations and its demonstrated ability to purchase government debt. They also assume that gilt issuance funds government spending, which is precisely the proposition you dispute.
Several respondents simply assert that “the market sets the rate” without addressing how Bank Rate, quantitative easing, quantitative tightening and reserve remuneration shape that market.
Sterling and the external economy
A third group accepts that the government can create sterling but argues that it cannot determine sterling's external value. They warn that:
* currency traders could mark down the pound;
* imported energy, food and manufactured goods would become more expensive;
* Britain's current-account deficit makes it vulnerable;
* foreign holders of gilts could withdraw;
* government solvency in sterling would provide little comfort if sterling lost much of its purchasing power.
This is the strongest substantive challenge in the discussion. A monetary sovereign can always make payments in its own currency, but it cannot guarantee the amount of real resources, particularly imported resources, that its currency will purchase.
That does not disprove your argument about solvency. It identifies an important real constraint: the exchange rate and the availability of resources. The two propositions are compatible.
Historical comparisons
The discussion repeatedly invokes:
- Weimar Germany;
- Zimbabwe;
- Venezuela and Argentina;
- Greece and the other eurozone crisis countries;
- Britain's 1976 IMF loan;
- Japan;
- Russia's defaults.
Most of these comparisons are poorly specified. They disregard distinctions between domestic-currency and foreign-currency liabilities, membership of a currency union, war damage, collapsed productive capacity, political breakdown and severe shortages.
A few respondents correctly challenge this. They point out that Weimar reparations were external obligations payable in gold or foreign currency, while the 1976 IMF loan provided foreign currency needed to meet external obligations. Greece did not issue the currency in which its debts were denominated.
The historical examples therefore demonstrate that inflation, foreign-currency debt and resource collapse matter. They do not demonstrate that the UK can involuntarily run out of sterling.
“Interest has to come from taxes”
Another recurring claim is that debt interest:
- is paid out of taxation;
- deprives education, defence and other services of money;
- must ultimately be paid by future taxpayers;
- represents a liability rather than an asset;
- therefore imposes an unavoidable burden on the public.
This largely reproduces the household analogy that your post rejects. It treats taxes as providing a pot of money from which the government subsequently spends. It also looks only at the government's liability while ignoring the corresponding asset held by pension funds, insurers, banks and savers.
Several respondents cannot accept that the same instrument can simultaneously be a government liability and a private-sector asset. That is not an economic dispute so much as a failure to apply elementary double-entry accounting consistently.
Is interest necessary to make gilts safe savings?
A more sophisticated objection is that savers need a real return. If the government creates money to service the debt while inflation reduces its value, the resulting asset cannot meaningfully be described as safe.
That identifies a distributional question, but not a contradiction. The safety of an asset can mean certainty of nominal repayment, stability of real purchasing power, liquidity or protection from market risk. These are different characteristics. Government guarantees can ensure nominal repayment; they cannot guarantee that every financial asset will preserve its real value under every economic condition.
The amount of interest paid remains a policy decision about how much public income should be transferred to asset holders.
Interest on commercial-bank reserves
Your criticism of paying more than £20 billion annually on reserves receives surprisingly little detailed engagement. Some agree that this supports bank profits. One critic argues that removing the payment would force banks to impose charges, widen lending margins or become insolvent.
Your response that banks operated without this post-2008 subsidy directly addresses that claim. The thread contains no convincing explanation of why the entire stock of reserves must receive Bank Rate or why tiered or zero remuneration would make the banking system insolvent.
This is probably the least successfully challenged part of your original post.
Supportive and qualified responses
Support is much less common, but several comments make important points:
- Government debt is simultaneously private-sector financial wealth.
- The UK cannot involuntarily run out of sterling.
- Weimar and Zimbabwe are inappropriate comparisons without considering foreign liabilities and productive collapse.
- Austerity damaged growth without materially reducing the debt.
- Media discussion routinely confuses government finance with household finance.
- Extensive and carefully planned public spending can produce significant benefits.
- Payments on reserves deserve considerably more public attention.
The most thoughtful comment distinguishes solvency from sustainability. It accepts your monetary analysis but says that deficits must still be assessed against inflation, resources, productivity, exchange-rate stability and living standards. That is the most useful framing in the entire discussion, although it is presented as a qualification to your position rather than recognising that these are already the constraints you identify.
The tone of the discussion
A striking proportion of the thread consists of:
- “utter nonsense”;
- “financial illiteracy”;
- “drivel”;
- accusations of attention-seeking;
- mockery of academics;
- personal comparisons with comedy acts;
- declarations that the writer disagrees without providing an argument.
Many commenters appeal to their experience in finance, investment management or capital markets as though professional status resolves the monetary argument. There is little engagement with monetary operations, reserve accounting or the sequence in which government spending, taxation and bond issuance occur.
The unusually hostile reaction may reflect the post reaching an audience heavily populated by finance professionals whose careers assume that bond markets fund government. Your argument challenges not merely their understanding of the national debt but the social importance attributed to their own industry.
Overall conclusion
The thread does not produce a decisive rebuttal of your central claim. It largely answers a different proposition: that governments can create money without limit and without economic consequences. You did not make that claim.
The critics' strongest point is that nominal solvency does not guarantee stable prices, a stable exchange rate or access to imported resources. Their second strongest point is that the Bank of England influences, but does not mechanically dictate, every gilt yield.
Their weakest arguments are the household analogy, the claim that bond sales finance spending, the idea that a government liability cannot also be a private asset, and historical comparisons that ignore foreign-currency obligations and collapsed productive capacity.
I will work on how to respond to the profound confusion people are suffering on this issue.
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Interesting. I guess that you have two groups who oppose MMT 1 – those who think governments are like households, 2 – those working in the finance sector who think that gives them expertise on government finances. Those of us who support MMT come across the same objections on X.
Similar situations occur in other areas of life, for example, farmers who think they know about the wider environment or developers who think they know all about housing.
Yes, I think there is a broader point here.
Expertise in one part of a system does not necessarily provide expertise in the system as a whole. A banker understands banking, but that does not mean they understand the monetary operations of a currency-issuing government. A successful businessperson does not necessarily understand macroeconomics because they understand their company’s finances.
Your other examples make the same point. Farmers have considerable expertise in farming, but that does not automatically make them ecologists. Property developers know how to develop property, but that does not mean they understand housing policy or housing need.
The mistake is what might be called a fallacy of expertise: assuming that specialist knowledge of one component of a system provides authority to pronounce on the whole system.
That mistake is particularly damaging in economics because microeconomic experience is so readily, and wrongly, extrapolated to the macroeconomy. A household really does have to find the money before it spends. A currency-issuing government does not.
Understanding the difference between knowledge of the part and knowledge of the whole is fundamental.
Another aspect to consider is the status of the individual commenting about an issue. If someone, regarded as of high status, even if they are not involved in a role or work in a related area to the subject under discussion, is asked about an issue, then their view will be given a certain prominence. So the chief executive of an organisation, or chair of a company or leader of a council – and we could add MPs to that list; makes a statement or comment about something it will carry weight, even though they have no knowledge of the subject and their view is an ill-informed one. It will be assumed by the interviewer and probably the general public that that person knows!
Agreed
I think this disconnect between micro and macro is the source of the problem. Business people (and I include bond traders and everyone else in the city ) get basic micro. They know to buy for x and sell for x + y (where y is> 0). They pursue this philosophy aggressively. They simply do not have the bandwidth to get beyond that. Getting back to basics using double entry is beyond them. Add in the arrogance usually associated with city types then it’s an uphill struggle. I’ll be there on 3/10 and hopefully we can develop some ideas to overcome this.
Thank you
Richard. I have an idea for your next LinkedIn post. “Governments should stop listening to businessmen.” That will get their juices flowing.
It was a great post. Keep up the great work.
I like that!
There are too many “men in grey suits” in the shadows constantly overwhelming the airwaves with antisocial messages for their own malign goals. And, of course, an articulate section of society who are instinctively right wing when any form of benefits are mentioned.
This is terrific stuff. This is the core of the debate the people of this country need, as well as the rest of the planet for that matter.
Well done for bringing this to a wider audience. Yes there will be objections, some more informed than others, but just getting this debate out there is simply a joy to see.
It will without doubt make many think more about the subject more deeply and look further into it.
From personal experience,nearly every person I speak to is respectful and listens to logical points on government spending,debt etc etc.Usually they recite exactly these same myths……. initially. So it’s important to persist.
You are doing Sterling work… forgive the pun.
Thank you.
I support the idea of running larger govt. defecits to invest in national infrastructure projects (particularly for a net zero transition), but I myself have worried about the impact of short term bond market reaction on exchange rates, particularly given the UK imports around 40% of its food.
Are there proven sensible ways to navigate a policy transition volatility phase? e.g. capital controls?
There is no evidence that we need them. The only things that caused major currency disruption this century were 2008, the period before and after, Brexit and Truss – but only very briefly. And there’s the rub: MMT explained how the economy worked throughout the whole era.
I have a question about the “Sterling and the external economy”-argument, as I have not really any clue about foreign exchange and the summary marks it as “one of the most substantive argument”.
Honestly I’m not even sure how to formulate my question but I’ll try nonetheless:
How could currency-traders mark down the pound, when only the amount of money has been increased?
Is this the only thing they’re looking at when thinking about selling or buying a currency?
Wouldn’t it be more important for them to look at how an economy is reliably doing, what government spending is even better helping to achieve?
The idea that “the markets will mark down sterling” is misleading.
Currency traders cannot simply decide that the pound is worth less. They can only sell pounds. If enough of them do so, the exchange rate falls because there are more sellers than buyers at the previous price.
But once they have sold their sterling, they no longer hold it. They have exchanged it for another asset. They cannot keep “punishing” the pound indefinitely without continually finding more sterling to sell.
The same is true of gilts. Bond traders can push gilt prices down only by selling gilts. Once sold, somebody else owns them. The supposed vigilante has exited the position.
That matters because the language of “bond vigilantes” suggests that markets have some permanent disciplinary power over government. They do not. They have the power to buy or sell assets. That can cause short-term price movements, sometimes sharp ones, but it is not the same as controlling the state.
And the long-term value of sterling is determined by much more fundamental things: UK productivity, trade performance, inflation, political stability and the willingness of people around the world to hold sterling assets.
So the real question is not whether traders can “mark down” sterling. They can only sell it. The question is what economic fundamentals make other people willing to buy it at the price offered.
That is a very different way of thinking about market power.
May I ask about the interest? The standard line is that we must reduce the deficit to stop paying the interest. £20 billion a year. Which means cuts. It’s common sense.
I can see that this is a fraudulent argument, and that we are being softened up. It didn’t work last time, so why would it work now. But are you saying, simply, that we don’t need to pay interest? So why do we?
What would happen if we stopped paying interest? If it becomes like a current bank account, not paying interest, then would people/institutions find somewhere else to put their money. Like France? What happens here if they do that?
No. I am not saying we should stop paying interest on all government savings.
Gilts and National Savings products are savings accounts, and there are good reasons to pay interest on them. What I challenge is paying Bank Rate on the enormous quantity of central bank reserves created by QE. That is a policy choice, not an economic necessity. Tiering could substantially reduce that cost.
And if someone sells sterling assets to buy French ones, the pounds do not disappear. Someone else acquires them. The UK cannot collectively “send its pounds abroad”.
So there is no need for cuts simply to “find” the interest.
I think that we mustn’t lose sight of the fact that successive governments have already spent into existence the £3tn that constitutes the ‘national debt’ but they have also allowed it to come to rest in the hands of relatively few people.
So your argument is?
My argument is that had the ‘national debt’ been more equitably distributed then far more people would have felt, and would indeed, have been materially better off. I contend that this would ameliorate the currently accepted ‘threat’ that the ‘debt’ represents and would very likely be more fertile ground for a more general understanding of how personal savings feed into the economic narrative. How savings in turn feed into asset and wealth acquisition.
By definition one has to have excess resource to be able to save which brings a whole different perspective on life.
Currently the mass precarity generated by this manufactured, indeed obscene, inequality is the fundamental driver of the fear/rage directed at the ‘other’ du jour, the explosion in mental health issues that chronic insecurity foments and the destructive, shearing delamination across society today with each point along the spectrum of have and have-nots battling for it’s own self-interest.
If the government were applying the ‘politics of care’ that many of us here would advocate then whilst the £3tn figure could still reasonably exist the corrosive inequality embedded within it would not.
You are still telling me what you want.
What is the ‘how’?
Aahh….the ‘how’. What a list that conjures.
This blog has, for all the time that I have been engaged with it, been shot through with ‘hows’.
The ultimate ‘how’ is for the government to take back sovereignty. For the PM and ministers to understand, and believe that they are indeed sovereign.
They do that by listening to the people, not lobbyists. They listen to the people through a properly representative voting system.
They then use the power of regulation to mold the sort of country that the people have told them they want to live in. The people understand what sort of country they want to live in through education and a free, unbiased media. Ministers understand that this is the closing of the loop.
Any politician unable to resist the siren calls of vested interests is as a chocolate fireguard, should be exposed as such, and removed from post.
There are many progressive and creatively constructed ‘hows’ out there from, to name but a few, Compass, OpenDemocracy, NEF, Fairness Foundation etc and, not least, this blog. These ‘hows’ would improve the lives of the majority immeasurably.
We can but carry on, speaking our truth, day in and day out, to whomsoever would listen, with emphasis on reaching those with influence.
For the most part it will feel like very little changes and that we are only taking baby steps but the important thing is that we ARE taking baby steps.
“The one who plants trees, knowing that he will never sit in their shade, has at least started to understand the meaning of life”. (commonly attributed to the Indian poet and philosopher Rabindranath Tagore.)
Thank you!
I know that these are US examples, but once in 1835 they paid off their national debt with devastating results and another time the Democrats under Bill Clinton run consecutive budget surpluses which contributed to the sub prime issues that followed. Whereas I would not advocate runaway budget deficits I also don’t think that the way it is described in the media is anything but manipulation
Jaron Lanier writing in 2018’s ‘Ten Arguments for Deleting Your Social Media Accounts Right Now’ highlighted Linked In as one of the better internet sites to be part of back then, however he did worry about it becoming BUMMER. Judging by what I have seen on your link above – he was right to be worried.
I know people who advertise their wears on Linked In and all I can say is that I find it to be a shop front for some of biggest bullshitters and grifters in the country – especially since 2010.
‘Don’t dream it – be it’ seems to be the motto there. I hope that you don’t take their reaction too seriously?
What is annoying to me is what people are prepared to believe in these days. From flat earth, pizza delivery pedophile rings, to Trump (a rich person caring about poor people – yeah right!!) to dare I say it, even God (I’ve seen people turn to God, unable to comprehend and consider MMT or the real benefits of taxation – I kid you not).
David Byrne says.
The fallout from the video and the AI analysis certainly weighs in your favour. It would appear that the financial “industry” does not want the truth to come out because the peasants might decide to revolt.
Put simply, the wealthy love inequality and the government supports them to the hilt. All the problems including neglect, shortages and lack of investment that define the UK economy derive from government policy decisions. Think austerity, youth unemployment, private debt, housing, greedflation, low wages, crime and potholes to mention a few examples.
What if the British people started to understand how the system is weaponised against them, sparks would certainly fly.
From your feedback, it shows that you are touching nerves.
It would seem so. Thnk you.
I watch nearly all of your videos on YouTube and this one, regarding the £3 trillion of national debt, I really liked, in part because it comes at exactly the moment of sky-is-falling panic over the $40 trillion of national debt in the US and, also just because of its admirable—but entirely characteristic—clarity.
ChatGPT’s summary suggests that follow-up videos regarding the various objections are warranted but I’d particularly like to see one regarding “money creation → inflation/currency depreciation” because while it seems evidently true, also (e.g., increasing the supply of x causes x’s price to drop, doesn’t it?), it isn’t.
Another one I’d like to see is about the interest on the debt. Sure, the government can always pay the interest but even proponents of MMT recognize something about r > g, while recognizing that a sovereign currency-issuing government can always set r. I can recite all that, parrot-like, but I’d like to understand it.
Maybe the first topic is too elementary; maybe the second is a bit too arcane—but, as a regular person (i.e., not a person all that well-versed in finance), I’d find those helpful.
The money creation to inflation one is made now, but not yet edited, for next week. And thank you.
I think we underestimate the amount of malign intent in a forum like LinkedIn, by people who know perfectly well that they are talking rubbish, but are simply protecting their own status and privilege. They may or may not understand economics, but they know what works for them – the status quo.
The good news is that the public exposure of their weak arguments, benefits YOU not them, and destroys the monopoly they previously had over economic discussions. Their use of ad-hominem abuse is particularly welcome, as that costs them considerable credibility.
During my digital privacy campaigning days, some of the worst (and most personally abusive) attacks came from trolls and agent provocateurs on LinkedIn, most of whom seemed to be speculators in the criminal company we were taking down. It could get very nasty and personal at times, including threats, we were a small community and people knew who we were.
You’re winning. They are nasty, angry and a bit scared.
Agreed, but thank you. Appreciated.
Wonderful stuff Richard. As the man on the clapham omnibus, I ask you to keep it as simple as possible (not easy I know for such complicated matters). Keep on, you deserve a reward.
I came across this quote attributed to Victor Hugo today I thought apposite
’You have enemies? Why, it is the story of every man who has done a great deed or created a new idea’
I, for one, am hugely grateful for your clarity, ideas and perseverance in righting the many wrong of contemporary economic understanding
Thank you
I struggle with the balance of economic coverage in most mainstream media. I just wonder if this obsession with balancing the books , affordability and where the money is coming from is a way of simply trying to reduce the size of the State? A valid theory being concerns over what can be expected of the state I suppose, but easier to put forward if the consequences can be dismissed as irrelevant due to inability to afford the decision. Being involved has consequences but deliberately refusing to be involved also has consequences.
“I just wonder if this obsession with balancing the books, affordability and where the money is coming from is a way of simply trying to reduce the size of the State?”
It is. You are right.