I noticed this in an FT email this morning:
There is, apparently, 'no money',
The French government fell this week because it could not find the money it needed.
Trump took the US election because Biden could not get money to the people who needed it.
The neoliberals took over democracy. Then they told us there was no money left. As a result, they are selling out democracy to the far right.
And everything they are doing is based on ignorance.
Of course, there is money left. The government creates it. No one else can. Private sector banks only do so under licence from the government's central bank; they are merely its agents. So, of course, it is not possible to say that there is no money left.
The reality is that there is any amount of money we want - so long as we are then willing to tax it out of existence to end its impact on both consumer and asset price inflation.
We can have programmes that save democracy.
We can end poverty.
We can increase the real incomes of those in poverty.
No child or their parent needs to be hungry.
Money could be the instrument for change that we all expect it to be, but which neoliberals tell us it cannot be.
But first, we need to understand that government spending is what creates money.
And then we have to be willing to tax more to control inflation.
And we have to be willing to tell the wealthy that they can consume less of the stuff with which they are creating climate change.
And we have to be willing to tell them that the asset price gravy train that currently guarantees their separation from the rest of society is over,
And we have to care.
We could care.
But democracy is dying because we - or rather, our elected politicians - do not care enough to do these things.
And they are too stuck in their ways to understand what they can do about them.
As a result, democracy is dying, and our hopes with it.
And yes, I am angry about that.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
As our “leaders” look around at what is happening in other failing Western democracies, as what you accurately describe, harms ordinary people & prospers the far right, I wonder what THEY think is the “problem”, and what THEY think should be done?
Do they really believe there is no money?
Do they know what needs doing but lack the courage to do it?
Have they already abandoned any programme of government action, in favour of 4 years of rhetoric and electioneering, pledges, promises, missions, & milestones (made of ice cream)? (+ genocide)
It seems to me that they are focussed far more on clinging to power in 2029, than carrying out any programme of action in 2025.
How do I know this?
Because of their failure to use the power they DO have, & have now, with their large majority, and four more years in power to wield it, the government’s sovereign power to spend, and then to tax.
Instead, they say there has to be structural reform in Whitehall, and blame civil servants for blocking it.
The wrong diagnosis, the wrong scapegoat, and a complete lack of effective action.
F***g* is rubbing his hands with glee.
It is an incredibly dark situation. I have been reading and listening Richard Seymour being interviewed about his new book Disaster Nationalism: https://www.versobooks.com/en-gb/products/3147-disaster-nationalism?srsltid=AfmBOorpf31Rnj-7_XR19pnIP5n2wFvnuxXrnkjyHQvNCuOWUOB7bNcW
It charts the rise of the ‘not-yet fascist’ movements, from Gujarat in 2002 and the BJP where Modi started out as chief minister (and then on to become India’s PM in 2014), via Bolsonaro in Brazil and Duterte in the Philippines, all the way to Trump and the fascist riots in England and Farageism today. (A good overview is here on PoliticsJoe: https://www.youtube.com/watch?v=Bxq1HZ5IP7U)
Having watched clips of Farage on Question Time on Thursday, and the rise of Reform, coupled with Labour being so timid and weak (all trace of socialism ripped out of them via Labour Together and Morgan McSweeney – who always seem more interested in fighting the left within Labour, than fighting the Tories and Reform), we are indeed in a perilous situation.
A situation that could be effectively challenged (and defeated) by Labour and the left – only if the Tories and Farage were countered and not pandered to.
Thanks
As I sit reading these articles I find myself becoming more frustrated and more despondent. It is not so much the content , which in itself is challenging and informative and oh so welcome to hear “like” minds”. It is to be blunt , a recognition that with so many informed contributions I find myself asking “what are we doing about it”. It is not just here but also on various Youtube sites and independent publications that all I see and read are sounding boards. There is a great resonance and harmony in these ideas but few of them are reaching the greater public. We can moan about the right wing press and blame the system but are we really that mute? How do we coalesce these views into a meaningful political alternative? The current stale political party offerings are no longer acceptable and the far right are poised to take the helm of a nation exhausted through lack of trust and action when this lot fails. Where is that party? Where are those that can carry so many of the ideas published here and elsewhere and make them a reality?
Good questions
But until the ideas exist and are heard by enough people nothing happens.
This is stage 1.
“The reality is that there is any amount of money we want – so long as we are then willing to tax it out of existence to end its impact on both consumer and asset price inflation.”
OK, so if you want the government to be able to spend an extra £100bn say, how much extra would you have to raise in taxes?
And don’t you think that raising taxes might not forever be possible? Labour’s tax rises aren’t likely to generate as much as they would like as people change their behaviours, and the BoE is saying that those rises and the increased government spending are going to increase inflation….
The answer is roughly £100 billion.
The Taxing Wealth Report shows how to do that.
And have you not noticed changes in behaviour are what we want?
Please keep up.
First and foremost any system of taxation must be, and be seen to be, fair and just. When, for example, the likes of Rishi Sunak pay tax at a marginal rate of only 20 odd percent and the government subsidises higher earner pensions at twice the rate of lower earners then it’s little wonder that there is a general mood of unrest… prime territory for Reform.
A sound taxation system has to be a foundation stone of a sound society and has the potential to set the moral tone.
Agreed
“OK, so if you want the government to be able to spend an extra £100bn say, how much extra would you have to raise in taxes? ”
No “tax raising” needed.
The government spends the money first so that the economy is active, and it taxes nearly all of it out of existence later.
In this way you get things done, subject to the availability of the necessary resources.
I agree in the sense that existing taxes will collect more
But not £100bn more and you do want redistribution as well.
Brexit has already cost us 4% of GDP; at least £100Bn of economic activity completely lost, and without any chance of it being replaced. There is the place to begin thinking about the hapless self-inflicted reasons why we are in the mess we are in; not question begging guff about how much more can be raised in taxes. Neoliberalism has finally filleted and gutted Britain; and then plundered the decaying corpse. There is nothing left. The fact that 25% of the working age population are not in work creates a neoliberal demand that more return to work. The problem is not that they are not working, but that forty years of neoliberal conventional wisdom on work has created the problem, defeated hope, demolished aspiration and driven them to despair. You reap what you sow. The sense of Government and the functioning economy having abandoned the population is not only rife, but the consequences can be seen, and felt. Your absurd question assumes all that is left is for Britain is the life of parasitism, picking over the bones; and squabbling over the vestiges of rotting flesh. Start by asking questions that actually address the real problem.
Agree with everything. Which leaves the only question worth asking: what are the politicos elected in July – thinking?
Not what they say to Uk serfs, but what they think & what they discuss amongst themselves.
Continuing on this line of questioning: what do the people in the Uk finance ministry think/discuss? (Treasury implies there is something of value in it – the events of last 40 years suggest otherwise).
What is suggested in this blog (& most of ’em) is +/- reality coupled to unvarnished facts. Which leaves the above questions – given the reality/facts on display for all to see.
Yes. With you. Incensed in fact.
And its not even all about spending.
They won’t even do things which will cost govt little or nothing – such as banning ultra processed food, disallowing junk food outlets near schools, not subsidising private healthcare, not subsidising nuclear power, CCS , banning licences to explore for oil/gas .
This must be because they have been bribed by ‘donors’ – such as big food, pharma, oil/gas, private healthcare . Politics is corrupted from top to bottom by dark money.
It’s never really mentioned except maybe tangentially in comedy programmes.
And all this is facilitated by ‘public service ‘ media promoting ‘there is no money’ ignorance.
You are right to be angry Richard.
People are already being locked up for resisting all this.
Who knows?
They might come for me one day.
“They might come for me one day.”
That is hilarious..what you see yourself as a subversive force to lead the masses against big business? the gap between your perception of yourself and reality is immeasurable. This is beyond parody..
You come here?
Why?
If you did not think what I said was important and noted you would not bother, but you do actually believe both those things. You make my case.
James
You really don’t have to do very much at all for them to come after you. No doubt you will have seen in the recent mainstream news that the mother of a young activist was arrested at her home in Swansea and kept for 5 days in a filthy cell before being released without charge onto the streets of Newbury. It takes very little for any of us to become a target.
Agreed
“What are the politicos elected in July thinking?” They are probably thinking already that there is no way they will be reelected if Starmer is still the leader. There will be a lot of searching to find someone more acceptable to the voters. Reeves, no, Streeting not a chance. One of the other nonentities in the cabinet that no-one has heard of. It seems that they need to start looking now because it will be a long process.
Thanks, and yes I fully agree and also feel angry about the way things are going. By 2029 repairable damage will have been done to the vast majority of people living in the UK.
I cannot see a reasonable avenue of protest which adds insult to injury. Writing to my MP, a tory, (yes there are a few and unfortunately I live were one was elected) seems worse than useless.
Think you have problems with your MP, Rich?
Mine is now Imogen Walker, who is married to Morgan McSweeney!
She is also PPS to Rachel Reeves.
Wanna swop?
No thanks
I have a bland LibDem.
I too have Imogen Walker. I wrote to her on 23rd September and received a standard reply on 13th November only referring to winter fuel payment saying it was now delegated to Scottish Government and did not respond to my other points as my letter below.
Letter to Imogen Walker 23rd September 2024.
Congratulations on your recent election as our new MP.
I was a member of the Labour Party until very recently. I do not understand what message the Party is trying to send but to start your term with cutting the winter fuel payment suggests that you are continuing the cruel Conservative mantra to punish the poor. Ditto child poverty and the two child cap. Back in May Sir Kier Starmer challenged Rishi Sunak to commit to not cutting the winter fuel payment, at which time he said that the black hole was £46B! Interestingly Theresa May in 2017 considered scrapping the allowance but their research showed that it would kill around 3,850 old people and that was before the horrendous increases in the price of fuel so current estimates are considerably higher. Do you not care?
Where is the vision and policies for a bright future? Where is the balancing of taxing the vested interests, I.e. equalising capital gains to income tax, equalising tax relief on pension contributions, dividend taxation equalisation. There are tens of billions of gains to be made by just simplifying and making the tax system fairer to ORDINARY hard working people not the fund managers and oligarchs.
I do hope that Labour have not been captured by vested interests and graft. There is a desperate need to ban all vested interests from making payments or gifts to politicians or Political Parties. The State should provide funding proportional to their percentage of the vote with only other funding being membership fees.
I was a member of the Cooperative Labour Party but the total departure from the idea of the Common Good and lack of any coherent vision or strategy was the final straw.
Please have a look at ‘The Taxing Wealth Report’ written by professor Richard Murphy which very clearly shows how to fund a brighter future! I do hope that you will take the time to at least read the summary.
Thanks
I shae your anger and agree with the post.
On the monetary/fiscal side of the debate –
Yes, banks create money, but only temporarily; it has to be repaid. The overall effect of bank created money is probably mildly deflationary. Furthermore, there is limit to private borrowing because, even at zero interest rates, the capital has to be repaid.
By contrast, governments can create money permanently (because, if you like, they can sustain a permanent, infinite, overdraft with their central bank, which they own). It is only governments, through government spending, that can permanently create money. And yes, it is their refusal to do so which is gradually, perhaps not so gradually, destroying democracy – and I am angry too!
However, we should, perhaps, not subscribe too readily to the neoliberal trope that government spending always has to be recovered through taxation. Thinking that way leads people to think that, the “OK, you say that taxes don’t pay for government spending, but if you always have to quickly tax back what you spend, it amounts to the same thing”. That is not true. Governments can spend, and spend significantly, without equivalent taxation.
This has been noted here on this blog as recently as August:
https://www.taxresearch.org.uk/Blog/2024/08/20/the-government-can-never-run-out-of-money/#comment-981650
And I would add:
https://m.youtube.com/watch?v=eNUGj1o0Yvs,
in which: “Nobel Prize-winning economist Joseph Stiglitz debunks the argument that government spending drives up inflation”.
I’m not disagreeing with the general premise of the post; I agree. I just don’t want to fall, inadvertently, fall into neoliberal thinking.
Fair comment
I will always argue fur government created monetary growth in a growing economy or when mild inflation is required.
But most money created will need to be cancelled.
The key issue that critics do not understand is the activity funded by the spending need not be where the recovery comes from.
I suppose a good example is Covid when the Government could, and had to create money to give to people who couldn’t buy food or pay their rent. Obviously that money has to eventually be taxed out of the economy again. The problem is the ones on whom the Government originally spent the money, those short of food or housing, no longer have it, they then spent it on and it’s now with the big food companies and landlords. The trick is for the Government to show how they are going to tax it back from those people rather then the ordinary people who no longer have it.
You get it
Tim
Taxation is needed when printing money to cool off inflation. I have been convinced of this since being here and seeing it discussed. You cannot print without destroying, with out taking away. It has to be a constant process of creation and destruction; a cycle.
Destroying money – even just withdrawing it through taxation – is very hard for the man in the street to get their heads around. Telling them that taxes pay for things does not help. I think Richard has to tread two lines here, one a pure sort of MMT path (print and tax), the other accepting the flawed political world view that taxes pay for things and then looking at the money that could be raised if the bloody tax system did what it was supposed to do – and it probably gives more away than it collects from what I’ve seen anyway, especially for Governments who claim that there is no money.
It’s not easy – its a modern day Gordian knot of a problem but being Alexandrian about it may not be the answer. Some sort mass re-education is needed in my view.
PSR,
I don’t wish to be argumentative because we’re on the same side here. It is a difficult issue to get across. Education is definitely needed rather than the deliberate, or sometimes just ignorant, miss information that is constantly disseminated in the media. Hence I’m grateful to Richard as one of few people trying to explain the truth.
My point is that we have to be careful not to oversimplify. That risks leaving someone wondering about how money works with the same dissatisfaction as the “conventional” (incorrect) explanation.
For example, in broad brush, there is a constant cycle of creation (of money) and destruction. But it is a “leaky” cycle. More money needs to be created than is destroyed. Governments need to run a continuous “deficit”. There are several reasons, as Richard pointed out. If there is inflation then more money needs to be created to compensate. The BoE targets 2% inflation, as do many other central banks. So there needs to be 2% more money created per annum than is taxed. Then there is growth. Even with one percent growth you need more money created. And then, if people save and overall savings increase, then you need more money to compensate. Now, sure, this is a small percentage of the total money created. But unless it is acknowledged it would leave a reasonable, perspective, person to think that there is no functional difference between tax then spend, and its implicit requirement for a balanced budget, i.e. the neoliberal myth, and the truth (sometimes called MMT) about how money works.
The other issue is what government spends money on. As Richard again mentioned, if I understand him correctly, is that taxation may be levied on different things to which it is spent. For example one might tax sugar (which would be a good thing). But one might wish to spend on more doctors (another good thing). In general terms taxing sugar reduces “demand” which, so theory goes, can then be spent on something else such as doctors. Unfortunately the resources no longer needed in the sugar industry cannot be directly reapplied in the NHS. Sugar manufacturers are not trained as doctors. Not every resource is fungible. The point is that it is not sufficient simply to (nearly) balance money creation (government spending) and destruction (taxation). There needs to be careful consideration of what is taxed and what money is spent on.
Of course, over time, the economy will adjust. Demand in one part of the economy can be transferred to another part of the economy, but it doesn’t happen instantly. It needs to be planned.
It is important to understand that spending comes before taxation. Many thanks to Richard for his sterling efforts in this regard. But money creation and destruction is not quite as simple as perhaps it seems. I wouldn’t like people to become disillusioned because oversimplified explanations are all that are available.
This really isn’t helping either: Quantitative Easing followed by Quantitative Tightening means that many western governments ( including the UK, the USA and the EU) are turning the cost of dealing with over a decade’s worth of crises (far more than than governments could ever have realistically borrowed at the time) into real (rather than, let’s face it pretend) debts, meaning we’re stuffed for generations. And “Con-form”/fascist before 2030 (together with many other nations too). Sorry.
https://gezwinstanley.wordpress.com/2024/10/28/infrequently-asked-questions-about-quantitative-tightening-that-you-were-never-even-meant-to-ask/
We desperately need a national and international discussion about money.
The prevailing narrative is that it is created by Randian superheroes; a fundamental confusion reigns, a distinction need to be made between the goods, services and assets brought into existence by enterprising people and the social contract (money creation) that makes this possible.
Money exists only because society exists, when a society begins to fall apart so does the belief in the currency (hence the importance of gold and crypto to neoliberal philosophy). Those who have money see a need to maintain the neoliberal fiction; if you believe that you are wealthy only because you are the sole creator of your wealth then you implicitly see those without wealth as undeserving. As this fiction takes an increasing hold in a modern society the social structure begins to disintegrate.
How to have this discussion within a world dominated by the likes of Trump and Musk? A world of Sky News and LBC talk-shows?
Today, living on the edge of a red warning area, my new shed was destroyed by the wind. I have never known winds that strong.
As an individual there is little I can do.
We need more ‘action this day’ thinking from those in power to invest in the things we need. Tinkering and posturing to placate the tabloid owners (which seems to be Labour policy ) will not do it.
Sorry abouit your shed
Valuable things, sheds
It a thin metal one. Good value I thought and secured to a concrete base but pulled out by the wind. I have never experienced that force of wind.
It was too small to hide away in like the proverbial man in a shed !
My shed is on line.
And bad luck
Bear with me on this because it’s the last thing I want to see happen but at the same time I believe it’s almost inevitable .
Farage is merely a threat but a threat none the less right now and I’m convinced Labour aren’t treating that threat as seriously as they should .
I sense the whiff of arrogance coupled with many in the Labour government completely out of touch with millions of the electorate .
It may well take a far right government to come to power under Farage and the disaster that would be before the desperate change to the economic system comes to fruition .
History is clearly not Labour’s strong subject , the far right feast on governments such as Labour and history tells us it does .
Maybe things simply have to play out before we see economic change .
I got a DVD of Drop the Dead Donkey for my birthday and have had tremendous fun watching it. It’s from the 1990’s and you know what, the topics then are Tory sleaze, Labour vacillation, the state of the NHS, railways, social services, dictators, education. Has anything changed? Only the names of the guilty for sure. And there will be more of them. I mean, who could have anticipated a politician like Wes Streeting!?
Politics is dominated by a private sector managerial-ism that only uses investment to get control of assets to be stripped that can only ever extract value from processes and not actually deliver an end product to the user.
So we have public services denuded of money, or moving it around robbing Peter to pay Paul, returning budget cuts to the taxpayer as if they were stockholders. It’s the ‘New Public Management’ – NPM – or ‘No Performance Meant’.
We are currently in denial about about how bad things are, which also includes denying what the answers are. Deny, deny deny.
The history of these times have already been written in Tim Snyder’s ‘The Road to Unfreedom’ (2018).
It is unfortunately so easy to destroy something than make it. It is perhaps the human death-wish that philosophers have spoken about over the centuries that drives our negativity and our rampant short-termism
I have found a lot of solace in reading about Samuel Beckett – he realised that the world was driven by cruelty really that led to absurdities. His views could be seen as almost anti-human but he did not excuse himself, thinking that it had been best that he not had been born at all. No one gets a choice to be here do they? We arrive because of the wish or lack of caution of others. If we are lucky.
But the way he led his life – writing to express himself, enjoying the company of others, being generous with friends and strangers, not living extravagantly and even supporting a friend who became a victim of the fascists and being honest about life’s realities gives us all an opportunity to find succor and face up to these dark days. So, we just need to press on in my view observing the march of the Death Cult before us and bear effective witness to it. And who knows, we may yet play some role in its downfall.
What matters is that we do not give into Death Cult thinking. I don’t know what else I can say………………..
Drop the Dead Donkey was very good.
I went to see the stage show: ‘Drop the Dead Donkey – The Rebith’, when it came to Cambridge in March, and again when it came to Norwich in May.
It was brilliant (my absolute favourite comedy by miles!).
I’d second the Drop the Dead Donkey recommendation – wonderful to watch and amazingly relevant as PSR says.
Likewise anything written by Timothy Snyder. His podcasts on the history of Ukraine and Russia based on his Harvard lectures are essential listening to really understand that part of the world. And Muscovy’s history of colonialism and imperialism that continues today
Governments create money and taxation controls inflation.
If our politicians were prepared to increase taxes on the rich, would there be any other *economic* factors which would punish them?
I am not sure what you are asking. Might you refine the question? That is far too open ended.
Sorry. I’m not a specialist.
Is there anything else like, say, the borrowing costs, threat to pension funds or anything else financial or any punishment by the markets that would genuinely make a government hold back on spending. We know politicians fear the media but are there any financial / macroeconomic factors.
Hi
My suggestion is look at my Taxing Wealth Report
No money? Just look at the Monaco Yacht Show. Plenty of money there.
Are they too stuck in their ways to understand? Yes. But why? I suggest sociopolitical and economic conditioning and group think coupled with arrogance, personal ambition, timidity and just not really caring
Trump has made it very clear that he intends to unleash a trade war by imposing large US tariffs against the rest of the world, including China, the EU and the UK and also ending the tax dodging of major US companies in Ireland and other countries. Ireland’s days as a tax haven for US Tech and Pharma are probably numbered, with huge implications for government tax receipts and public spending.
The economist David McWilliams expects this to lead to neo-liberalism being replaced by what he labels National Capitalism, whereby most rich countries will increasingly force their savings institutions to divest from foreign countries and invest in their own country. Macron has already complained pubicly about the $300 billion that French instititions have invested in the USA, and in the budget last month Reeves took a further step in this direction, following on from a process initiated by Hammond in 2023. UK pension funds will be “encouraged” to hold a certain proportion of their investments in UK companies or other UK assets. The exact % is now out to consultation, but even if it starts off quite low (say 20%) once the principle is established it could obviously be increased in later years.
Around 30% of US Treasuries are held by foreigners, with both China and the UK being among the largest holders. If anything approaching that figure was sold off it would have major implications for the value of the dollar and what Giscard D’Estang called its “exorbitant privelege” as the world’s reserve currency. US interest rates would be forced upwards towards a level that would all but guarantee a recession. And that would be just the start.
Thar reminds me of how T⁹homas Pikkety in “Capital in the 21st Century”, points out how post WW2 Far Eastern new economies such as Japan & Korea grew by ignoring “free market” rules and imposing ptotectionist measures on for example, rice imports. Yet they were often held out as succcess stories of unbridled free market capitalism.
Protectionism has had a bad press in the age of neo-liberalism. As that age comes to an end, protectionism will seem more and more like common sense. As in looking after jobs and living standards in your own country rather than kow-towing to the creed of the City of London and the free-market zealots in the Tory Party.
The UK government will have a big decision to make within the next year. Will it follow the EU and the US in imposing 30% tariffs against heavily state-subsidised Chinese EVs, or will it allow the UK car industry to be wiped out within the next few years in the cause of net-zero. Starmer and Reeves and Miliband will have to pick a side.
People voting for different things than you’d like isn’t a failure of democracy, it is a success of democracy, given that you are in the minority.
Being in the minority and wanted to impose your views on the majority is a demonstration of facism.
Might you explain to me how a presidential coup to overthrow democracy might be considered democratic?
Or, how gerrymandering is democratic?
Or ensuring some opinions are never reflected is democratic?
Melanie, if you are going to accuse anyone of “imposing their views on the majority” then you will need to produce evidence, so that we can evaluate it.
It’s a serious allegation. But without evidence, it’s merely a smear.
Then there is the other matter of whether we are talking about “views” or verifiable facts. Again, you haven’t actually told us what you are objecting to or what you wish to assert in opposition to it.
I’m all ears…
Another right winger putting Dr Goebbels policy of ‘always accuse your opponents of doing what you yourself are doing’ into practice.
Rule by an arrogant minority whose policies only benefit a minority, put into place by a grossly unfair voting system? Britain 2010-2024.
Suppression of the right to protest by throwing enon violent climate change protesters into prison? Ditto.
Do you have any response to my or Richard’s points Melanie?
I doubt it.
‘The right to protest’ doesn’t include the right to disrupt the lives of tens of thousands of ordinary people trying to go about their daily lives – that’s the bit you are conveniently missing.
Never has done and never should do.
Funnily enough it’s always those totally unaffected by the disruption who don’t see the problem with it. Outside of the echo chamber, it’s fairly clear that the JSO nonsense turned off more people than became aligned too the cause and it was quite clear that for many of those involved it was just an anti capitalist rant rather than anything more meaningful.
You are wrong.
Very precisely democracy is utterly dependent on the right to protest in ac1ay that disrupts the lives of others.
That, as we declared post WW2 by helping create the UN Declaration on Human Rights is fundamental.
Your comment is pure fascism.
Is that why you are frightened to out you name to it?
Tim Kent
Thanks for you contribution, no argument perceived.
All I have to say is that the money creation process can be broken down into principles/strategies first and then further reduced down more to an operational level where further complexities take place.
The thing is, we don’t NEED taxes to pay for things. The government can print new money to provide these and make a budgetary commitment going forward as it would make such a commitment if we were going to war (money can always be found for war eh?). But if a government chooses to use its taxes (and the tax is the governments) then it could take that tax and use it for something else, in another sector of the economy if it wanted to. It would be destroying the money in one sector, but effectively creating money in another. That might be possible – but within the context of factual fiat money creation – why? Eventually, inflation and other unseen costs will erode whatever money is in circulation and you will need more new money to spend to keep things going. That even applies to the local level where my local authority will have to apply for affordable housing grant to add to the increased costs of building new homes from its housing revenue account. So, I do realise why it is important to use a fiat money system appropriately.
The lesson I got from the taxing wealth report – an amazing piece of work to be honest – was that government is under-taxing a rather well off segment of the population under the guise of a tax system. To me, what Richard revealed was almost a tax discount system, rewarding the rich for their ahem ‘hard work’ but really keen at recovering (say) a poxy £7.12 over payment on a housing benefit payment for a single mother or pensioner. It’s disgusting really.
I’m sure it has been done here before – I have a bad cold and I am really busy at work, so cannot remember but we need some sort of flow chart or process map about how a fiat money system works alongside other bits and pieces like the issuance of govt’ bonds and stuff like that and which also brings in the tax processes.
It is a hard nut to crack though. In 2010 as the scum bag Tories were harping on about a certain New Labour post-it note, the mantra ‘there is no money’ was rung like the church bells in the housing sector and local government. I fell out with people at the Chartered Institute of Housing whom I had got on with previously for constantly repeating this lie telling them what they should really say – that the government simply refuses to print the money – it’s a fiat system.
Every time these people repeated that lie, they reinforced it. Where has the fight back been?
I’ve sat in housing strategy meetings politely pointing out that housing services were not funded from the loanable funds of the private sector, urging people instead to read about money creation on the BoE’s own website or look up the Exchequer and Audit Departments Act 1866 and received funny looks or the room just goes silent. I’ve seen senior managers moaning about low budgets then moaning that their taxes will go up if they get the money they say they need!!! For these people they just sit there and moan that other departments have better budgets – that’s how small their world is.
I’ve never ever seen Andy Burnham or any leading local authority CEO mention that the government could print the money, that we are in a fiat money system and that 2008 is the reference point for that. That governments with sovereign currencies bailed out a private banking fiasco, but whose largess seems to stop at – what? – the ‘common good’ The poor? The cold? The ill? The elderly?
Tim – I’m a working class boy who blagged his way into university and has felt an imposter ever since, but even I can see that all this is simply absurd to the point sometimes of wanting nothing to do with it. It’s stupidity, it’s corruption, it’s lies, its confection.
But this is where we are – a wall of ignorance but also fear and control of the narrative which is squeezing out hope, and when human beings lose hope their last resort is to embrace – the end, or death – first of all the death of ideas – better ideas. That is really frightening.
So, I’m with you Tim I think.
Should I reproduce the charts in the TWR?
It is not for me to impose work on you.
But as we know, repetition works Richard.
Evil intent knows repetition works and good intent has no option but to play the same game but with a morally superior counter narrative.
In other words, why not? Yes.
I will…
Re: flow charts, Steph Kelton has some good animations in “Finding The Money” showing money flowing around, into & out of the economy via creation and taxes, and also includes subsidiary animations of commercial bank money creation & destruction, and its interaction with the gov’t money circulation. They also demonstrate what happens with too much/too little money circulating.
I found them helpful as one with nil economics background.
They run a bit fast though, and aren’t on screen for long enough. I’d like to see them as free standing video loops. I may do some editing to extract tthem for my own use as loops just to assist my learning process in my ageing brain.
If they can be remade they can be used….
I quote from the European Journal of Political Research “The idea that parties should fulfil their election promises, also called pledges, after an election, especially whenever they win a majority and form the government, is well established in the democratic theory and party representation literature. This principle ensures that the voters who elected this party get what they voted for and that parties can be held accountable for their promises, thus not becoming free agents without a binding contract (Schedler, 1998). There has been limited research into whether voters agree with this idea and attach any specific importance to promise keeping (Matthieß, 2020; Werner, 2019a, 2019b).” First published: 23 November 2022 https://doi.org/10.1111/1475-6765.12574 . The (Labour) MP for the area where I live is/was a wealthy London Lawyer (employment law) and apart from blaming everyone and everything for not keeping Labour’s election promises, seems unable to answer correspondence in a timely manner (if at all) and then with ‘copy and paste’. Is this democracy when those who voted for him and this government based on the election pledges are then served with an entirely different scenario? There seems to be a narrative of ‘I’m alright Jack’ coupled with the wealthy are used to their wealth and the poor are used to poverty.
Re: Flow charts, as were mentioned earlier.
What I would find extremely helpful would be a chart that shows how all the money which enters the economy by way of state spending flows *upwards* and mostly ends up in the accounts of the wealthy and big companies. I try to explain to people how it works (and that the wealthy are *not* their benefactors) but visuals are often so much easier to understand.
(I think that we could also do with some sort of flow chart that demonstrates the futility of the belief that taxation funds spending, but that’s a whole other ball game)
Not asking you to do it, Richard. I just wonder if it has been done by anyone or if there is anyone who could do it.
I am tired of being told in discussions that the wealthy are ‘wealth creators’, when it is plain that they are wealth *accumulators*. Yes, they might generate some jobs and economic activity, but surely the source of the income that pays for their workers, raw materials and profit is actually the consumer of their product, us…?
I may need to revisit this.
My list of retirement tasks is growing
Yes, two graphical slides required, please (sorry Richard):
1) How government creates ‘money’ by spending it into existence, then levies taxes, and why this is so
2) How this created money that is not taxed (if indeed that is the correct description…) ends up in possession of rich people and boosts asset prices.
Vital educational tools, for widespread sharing and explanations for the propaganda’d majority.
Most people voted for Brexit because of the many factors discussed above. The biggest factor was so we would be able to control our borders, that quite simply was a lie, and immigration has gotten worse. Apart from a change in government, responsibility is never taken by our elite, how do they keep getting away with it?
In the main, we can control our borders. We choose not to.
That is totally untrue.
The vast majority of migrants arrive on visas.
75% of those who arrive without them can prove a legal right to stay.
What are you talking about?
and maybe there is a third:
3) How 2) leads human civilisation down a path that undermines and eventually destroys the conditions on Earth that have enabled its own growth and continued existence.
With some apology for the pessimism…