So in fact tax due is not an individual’s property extorted from them: it is money they hold in trust for its rightful owner.
So in fact tax due is not an individual’s property extorted from them: it is money they hold in trust for its rightful owner.
Just 1.44 per cent of the website’s lusty users were women who actually attempted to interact with other people via the site, it seems. All the rest created an account, and then walked away unfulfilled, it appears. Perhaps they were never real in the first place. This explains why so many people believed the website was awash with fake profiles.
That’s for accounts created between January 2002 and mid-2015 when the databases were siphoned off by Impact Team. If we take just the accounts active in 2014 as a snapshot, 375 out of 946,919 women checked their website inboxes at least once out of 9,438,298 total profiles. By active, we mean users who updated their profile in some way.
Journalist Annalee Newitz also crunched through the data, and claims about 12,000 women were real active users on the adultery website versus 20 million men.
You say that debt can be cancelled on consolidation. As others have already mentioned, if you consolidate between the bank of england and government accounts, you also have to consolidate the cash which also gets cancelled. Which means to work PQE either needs to be printing money or the bank of england balance sheet ends up with a massive hole where it’s assets are supposed to be.
Government 1bn bonds for 1bn cash. Now has assets of 1bn in cash, liabilities of 1bn bonds.
Bank of england buys those bonds using QE. Now has assets of 1bn bonds and liabilities of 1bn cash.
This is where regular QE stops. The action of buying those bonds by the bank of england lowers interest rates.
PQE you say now consolidates the balance sheet of the bank of england with the government. Lets assume you can do this with no legal problems.
You add the assets and liabilities of both sides up. You can’t pick and choose what to consolidate. It has to be everything or nothing – you can’t trick people by only doing one side.
So lets consolidate. Assets now look like +1 cash at government and +1 bonds at bank of england. Liabilties look like -1 cash at bank, -1 bonds at government.
Consolidate and it adds to zero.
So no new money is available for the government to spend.
Unless of course, you are phyiscally printing money outside this process.
Regular QE doesn’t print money in the way you are suggesting. Bonds are purchased by “new” money, but it really just swaps assets and liabilities around. QE works by lowering interest rates.
Regardless, PQE will not be happening in Europe as it is strictly verboten, by law and through treaty. it is silly to suggest that is what they are talking about as it would require treaty change.
Old Coppernose – Quantitative easing, the medieval way
December 19, 2012 by James Owen
In 1526 and Henry VIII was King. He needed money to pay for the wars against Scotland and France.
His Chancellor, Cardinal Wolsey, decided to debase the coinage (mix the precious metals of silver and gold with cheaper ones) so that he could make more coins for the same amount of precious metal and therefore mint more money at less cost.
Face value currency
Before debasing began, the face value of coinage was practically the same as its bullion value. As Henry increased the copper content of his silver coins, they eventually contained more copper than silver. By the end of Henry VIII’s reign the bullion value of his coins was around 25% of their face value.
Henry VIII’s nickname – ‘Old Coppernose’
Debasing caused prices to go up to compensate for the fact that money was worth less. People began to hoard older coins for their higher precious metal content. Foreign bankers and merchants became reluctant to accept coins and requested payment in gold only. The thin layer of silver on coins often wore off where the King’s nose appeared, revealing the cheaper copper beneath. This prompted Henry’s subject to give him the less than complimentary nickname of ‘Old Coppernose’.
A Golden Age
It was not until the reign of Elizabeth I that debasing finally stopped. Within a year of her becoming Queen in 1560, the debased coins had been collected, melted down and new coins issued containing the correct amount of precious metals.
With trust restored for merchants at home and abroad, the economy began to recover and there was a massive expansion in trade and industry. This marked the beginning of a truly Golden Age.
Even the Royal Mint knows about it. So why is it that Richie doesn’t?
So, Ritchie’s Peoples’ Pension Plan. I don’t in fact know what the outcome of this calculation would be. And I know it would take me a long time to get it wrong. So, instead, I know we’ve an actuary or two reading here. Could one or more of them do this number crunching for us?
Let’s just take Ritchie’s idea seriously for a moment. Everyone invests in bonds for their pensions. And we’ll give him decent numbers too. He’s suggested that these bonds building schools etc should carry interest rates of maybe 5%. And we’ll assume, to be kind, that inflation is on target at 2%.
So, the bonds pay 3% real.
A 40 year working life to fund a 20 year retirement. Reasonable enough, yes? Obviously, if there’s no real return on any investment then you need to save 33% of your income to fund that twenty years in retirement….assuming you want your retirement consumption to be the same as your working life consumption (ie, from income of 100 you consume 66 each working year and then get 66 each retirement year). Adding in real returns to the savings quite clearly changes this.
So, to get proper income smoothing over the lifetime, we can calculate two numbers.
1) How much of your income must you save during the working years at Ritchie’s suggested real return?
2) Alternatively, say we peg savings at 10% of income, what’s the real return those bonds must pay?
Assume that retirement fund is exhausted at time of death. I have a feeling that those numbers just don’t add up. Either 3% return means some unfeasible portion of income must be saved, or a reasonable portion saved means returns must be significantly higher.
But, as I say, I don’t actually know the result. Can someone tell us?
The difficulty in all this is multifold. First, cash saving is essentially a negative act. In times of low inflation it is a safe act and, with deposit guarantees, broadly secure but it yields next to nothing and, as importantly, does nothing for the economy. Saving in cash effectively takes money out of active use. It is a loan to a bank that then forms part of its capital (it no longer remains your money: it does belong to the bank once deposited and all you own is a loan recorded in a bank statement) but what we now know is that banks do not then lend this money on: all the loans they create are made out of new money created for the purpose. They do not therefore, effectively, need deposits to make loans.
That’s just fascinating, isn’t it? So no bank can ever suffer a run, can never go bust, can never have a mismatch between deposits and loans. It’s a wonder that Northern Rock ever went under actually.
Or, alternatively, Northern Rock did go under because it needed deposits to fund its loan book and couldn’t do so. And thus banks do need deposits and Ritchie is wrong.
Tough one to decide over really, isn’t it?
Gilts are a surprisingly hard to access savings mechanism for the average person
Really? You fill out a form and send off a letter. And payment, of course.
But why are we doing that? This stock market trading is almost entirely about redundant money: almost as useless as cash in its economic impact. When you buy a share it is almost invariably a second hand piece of paper you are acquiring: someone else sold a property right in a company to you and (although many people seem to think otherwise) the company that created the share that has been sold gains or loses not a penny in the process. In the case of many companies it is also many years since they created any new shares: the stock market in shares is now rarely used as a mechanism for raising money for investment, which is a process undertaken almost entirely through corporate bonds, which few smaller investors have any knowledge of, and which are almost entirely institutionally owned. So, the truth is that the stock market, and saving in it, does not produce new investment funds. It is almost as hopeless in this regard as saving in cash.
So, lessee. The stock market is returning the profits being made to investors, rather than raising new cash for investment. This makes the stock market a really bad place for them to stick their money, because all that happens is that they get a share of the profits currently being made.
There might even be a bifurcation of the Trousers of Time where this makes sense but it ain’t this one.
But having made these points let me be clear. What they reveal are three things. The first is the difficulty people have with understanding savings. Very few people have any real understanding of the mechanisms they use to save or what the impact of those mechanisms on the real economy is. This leads to serious errors of judgement, mismatched expectation and to exposure to mis-selling, loss and even fraud.
Quite so, but I think we might want to ponder whose errors of judgement.
Second, most ‘saving’ is unrelated to any investment activity, meaning that little economic gain arises from it.
Third, saving in these largely economically useless ways allocates vast amounts of energy to supporting this activity when in many cases little or no return is actually generated as a result of that activity.
Last, and perhaps most important, given that the most important reason for saving is, without doubt, to provide for old age, the fact that many of these savings mechanisms cannot actually generate the returns needed to support people in their old age means that in large part they are unsuited for that purpose. There is massive market failure as a result.
That the market isn’t miraculous does not mean that there is market failure. If you save 10% of your income and the market doesn’t let you finance a 20 year retirement on that it’s not a market failure. Maybe you should just have been saving 15% of your income?
And so let’s go back to the China problem. China’s boom was caused by people seeking to save in mechanisms of which they had little understanding with outcomes that were uncertain, risks hard to calculate and a likely mismatch with their real need.
Hahahaha…..snigger. Jeez. China’s savings problem has been caused by China’s financial repression. And if you don’t get that then you’re really no business commenting…..
Then he suggests his Peoples’ Pensions again. And still missing the point that he’s got no equity slice there. Meaning that there’s no risk takers there.
Vitally important this, a real boost to the wealth of the nation:
Forestry Commission Scotland – upgrade of visitor facilities at David Marshall Lodge,
That’s what Ritchie is promising folks……
So, bloke writes a book about the Weimar inflation. Gets something quite right:
Germany’s inflationary experience took a characteristic course. Price rises led to strikes and wage demands from the huge public sector. As the purchasing power of the mark plummeted, people would rid themselves of money as fast as possible, seeking safer goods or currencies for survival. Mounting velocity of circulation effectively increased the money in use, stoking the fires of inflation ever higher.
Yep, the V in MV=PQ rose.
Blizzards of broken paper promises are history. Only a short time ago Ben Bernanke of the US Fed was able to order trillions of dollars of new money at the touch of a button. Extraordinarily, although Havenstein regularly sent the mark/dollar rate to new unplumbed depths, latter-day QE, though hardly less alarming, has so far failed seriously to breach those dams of public trust in money that keep inflation at bay.
Has the nature of money changed?
Errm, no. We’re trying to compensate for the fact that the V in MV=PQ has fallen.
I would never date a man who hates Beyoncé
I am a gay black man from Houston, Texas. Beyoncé is my Lord and gyrator. She is the beginning, end and body roll to me.
I know it’s the silly season but I wasn’t aware that The Guardian was celebrating it by commissioning articles on the greatest stereotype.
I mean, seriously? A whole article about the black gay man who:
But the one I most adamant about sticking to – and I have encouraged everyone I know to act accordingly: I will never date another person who does not like Beyoncé.
What next? Economics articles that insist the magic money tree does exist, something from the lezzer insisting that all heterosexual sex is rape and perhaps something insisting that all white people are wacist? Or, of course, labiaplasty is equal to cutting a bird’s clitoris off.
Alan Yentob, the BBC’s creative director, apparently warned civil servants that sudden closure of the charity Kids Company would lead to rioting and arson attacks against government buildings.
In June an email signed off by Mr Yentob, the chairman of the charity’s trustees, reportedly said that there was a “high risk of arson attacks on government buildings” and teenagers served by the charity could “descend into savagery”.
The mob possibly led by a trustee worried that the hole in the wages might have to come out of his pocket?
He’s still not getting the point about QE at all:
So, let’s cut to the quick. First, there was no reason why QE had to buy gilts. In fact £1 billion was used for other assets, and then Mervyn King brought a halt to that (I understand). But quite specifically, that was the Bank not following Treasury guidelines.
Second, note the Treasury was firmly in command of this process, authorising what could be purchased. The Bank could merely suggest.
Third, the Bank was indemnified for losses.
Fourth, the condition was that the assets had to be capable of sale at investment grade in normal times (which we still do not have: we still have 0.5% interest rates with no sign of a change in prospect now, I suggest).
So, first of all, unless you can argue that the bonds issued by a new National Investment Bank would not carry investment grade status now I think we can say three further things.
First, People’s Quantitative Easing is not only legal, it has already (subject to National Investment Bank bonds being sold by tender into the market in the first instance, as I have always said is necessary) already been authorised.
Second, the idea that the Bank of England already had any independence on this issue is a total fiction.
Third, when and if the market returns to whatever normal might now be defined to be because these bonds will still exist (I have never said otherwise, although people like Chris Giles in the FT claimed I had presuming (probably in accounting ignorance) that de facto cancelation by consolidation is the same is legal cancellation, which it is not) then they could still be sold, which is the Treasury requirement for acceptability.
So, all the legal and structural arguments for People’s Quantitative Easing fall away: it is already authorised and legal.
So now the question is, why not do it? We still have no effective monetary policy in the UK and no chance of it in the foreseeable future: what might be considered ‘normal interest rates’ are likely to be a very long way off. In that case what is the reason for not doing QE assuming, as is true that we have a) unemployment b) low productivity and so c) under-usage of capacity which only needs the availability of credit (which is, note, the reason for QE) to bring it into use?
And why not also do it when a) we have increased market uncertainty b) a threat to export growth as a result of the China crash and c) a significant new risk of deflation which we need to do at all costs?
And finally, right across the country – in every constituency – I guarantee projects that are ‘shovel ready’ can be found. If I put out the appeal to local authorities and health authorities I think we can be sure they could line up with:
Extensions that are needed
Repairs needing doing
Small road schemes
Local transport infrastructure improvements
Houses needing building
PFI projects they would love to drop
And then ask universities and you’d get:
Capital for research projects and joint ventures
New applied research e.g. on renewables
And if you want to be really broad minded:
Create a small business venture capital fund.
Why not do all that now, when it is legal, authorised and could be managed by a new Nation al Investment Bank under existing BoE authority from the Treasury right now.
The aim and purpose of QE is not to provide money to do anything. It’s to lower longer term interest rates. That’s why you buy extant paper with the newly created money. This takes safer assets off the market and thus reduces their yield, increases their price. Thus, everyone looking for a scrap of interest has to move out along the risk curve. This lowers long term interest rates.
That’s why you do it.
You are proposing something very different. The creation of new money with which to go build stufff. It’s simply not the same thing.
Buying bonds specifically created to be fed into your machine is not QE. Because you’re not lowering the long term interest rate, are you? This is simple monetary financing of expenditure.
Lenny Henry has said ring-fenced funding would help give black, Asian and ethnic minority people in broadcasting the “elbow room” middle class white people take for granted.
Interesting news from the world of science:
Women are three times more likely to become bisexual than men because they are more flexible in their sexuality, new research has suggested.
While the majority of men are convinced they are either ‘100 per cent’ homosexual or heterosexual, women have a much more fluid approach to relationships, based on who they meet, it is claimed.
However US researchers found that women who avoided young motherhood, were physically attractive, or had high levels of education were less likely to explore relationships with same-sex partners because they had more romantic opportunities with the opposite sex. These women were more likely to say they were ‘100 per cent heterosexual.’
“Women with some degree of attraction to both males and females might not be drawn into homosexuality if they have favourable options in the heterosexual partner market.
“Women who are initially successful in partnering with men, as is more traditionally expected, may never explore their attraction to other women.
“However, women with the same sexual attractions, but less favourable heterosexual options might have greater opportunity to experiment with same-sex partners.”
So, who is going to tell ’em that it’s only because they couldn’t get a bloke?
Dom Columba Thorne, who has died aged 101, dispensed vital moral and medical aid as an Anglican chaplain at the ill-fated Arnhem operation in September 1944.
As the walls shook from the hurricane of explosions outside, the local minister’s wife watched the kindly little chaplain with the curly hair and glasses ferociously setting about the task of lavatory cleaning. “A captain and a chaplain doing such work?” she thought, as half a dozen privates looked on. “You should have had five years of German ‘discipline’.”
When the minister’s wife came up from the cellar after giving her five children supper, Thorne handed her his small Bible, saying: “I have no time to read to the boys. Will you do it for me?” In a scene poignantly recaptured in the film A Bridge Too Far, she walked through the rooms reciting in English Psalm 91: “Thou shalt not be afraid for the terror by night; nor for the arrow that flieth by day.”
As a High Churchman, familiar with the works of St Francis de Sales and Abbot Marmion, Thorne already had an interest in Catholicism, which crystallised in conversations at the hospital with Père Pailler, later archbishop of Rouen. But when Thorne asked to be received into the Roman Catholic Church, the French priest said this would leave Anglican soldiers without any spiritual sustenance, and told him to wait until he returned home; he could then visit Downside Abbey in Somerset, where the monks would sort him out.
In the succeeding decades, he said little about Arnhem, which he considered well depicted in A Bridge Too Far, though he could not recall any crosses over the graves of those he buried at dawn in the parsonage garden.
Only after he had turned 90 did his brethren learn what he had done when he donated Father Benson’s crucifix to the museum of the Royal Army Chaplains’ Department; and the Chaplain General attended his 100th birthday party.
He was nicknamed “Bert” by the boys in his class, who were puzzled as to why a short, quiet monk with a stammer was chosen to serve as chaplain to the military prison at Shepton Mallet.
I was asked an hour or so ago by a pretty senior economist I thought of today’s financial market action. I offered a range of reactions.
First I said this is the result of no real correction after 2008: no reduction in inequality; no investment in productivity; no market reform; no real regulation of finance.
Second this is the result of using financial QE as a patch and not using what I would call People’s Quantitative Easing as a reform (even if it was green quantitative easing back in 2010 a far as I was concerned).
Third there has been no attempt by government to build infrastructure when borrowing costs have been near enough zero.
As a result there have been five lost years since 2010 when austerity became the agenda. And now we are paying the price.
What to do? First, provide a safe haven for investors: sell new infrastructure bonds so they are promised their money will create jobs. Do it nationally, do it regionally, do it sectorally, but just do it. People need to know that this time there money will be used wisely and only co-ordinated government action can do that.
Second use these bonds and PQE (which will be the part of this programme financed by new government printed money) to hold rates low, to flood money into the real economy and this time deliver the 21st Century Deal – Roosevelt again.
Third, reform taxation.
Fourth, really regulate markets and banks this time.
Fifth, build the democratic framework that takes us beyond neoliberalism.
Sixth, put people and not finance at the heart of everything.
It’s not a complete explanation of answer. But it’s the basis for both.
He’s positively frotting himself into a stupor in fact.
The markets are collapsing and this tells us a great deal, oh yes. The death of neoliberalism and I tell you this candidly.
This from the man who tells us all that markets don’t get things right.
If Jeremy Corbyn were to become prime minister he would sack the Bank of England’s governor for any opposition to his proposals to fund major infrastructure projects, according to his economics guru.
Richard Murphy, the architect of “Corbynomics” and the controversial “people’s quantitative easing (QE)” plan, which would result in the bank printing cash to pay for public works, issued his warning yesterday.
“Bank of England governors are responsible to democratically elected politicians. If we have governors who think they are over and above the rule of democratically elected politicians, then I’m afraid to say, yes they should be on the next plane,” he said.
Speaking on BBC Radio 4’s Today programme, he added: “There is no such thing as Bank of England independence, there never has been; it’s a fiasco put together, a facade created to appease people to put forward a presentation of something that doesn’t exist.”
Getting like Cartman, isn’t it? You will respect my authority!
But, you know, whatever, Ritchie’s got a book out on 26 th Sept and all publicity is good publicity, right?
Does this really pass for serious economic comment? And why did Simon Jack not challenge this? In his interview with me, in a part that will not, I suspect, be broadcast he tried to make the same point that there was something wrong with PQE money and I made him agree that all money is created in exactly the same way – as he acknowledged was the case, although he persisted in saying PQE funds were somehow different despite that fact.
One is M0, one is M4. They’re Different!
Simon Jack, interviewing me on the BBC Radio 4 Today programme this morning, said he had discussed People’s Quantitative Easing with a range of economists, most of them right wing, and their real fear about it was that the multiplier effect it might have would be too strong.
Let me explain this. The multiplier effect is the impact that £1 of government spending has on growth. A pound of spending by the government always adds to growth by that sum unless (as in time of war) it is so great that it is intended to stop private sector activity: we are nowhere near that situation now. But it also adds additional growth too because the person being paid by the government does then, of course, go on to spend what they get, and the person they spend it with then spends some of what they get, and so on. Duncan Weldon wrote about this rather well when he was still with the TUC.
The size of these multiplier effects is subject to dispute. So, for example, the Office for Budget Responsibility says £1 of government spending on capital may create another £1 of economic activity as well. The IMF says that could be £1.70 extra. But what was really worrying the economists that Simon Jack spoke to was that PQE spending might have too high a multiplier: the impact of the spend would be higher than other types of spending, they said. Or, to put it another way, there might be no better way to stimulate the economy at lower cost than PQE in their opinion. And that is why they did not like it.
Err, no, the worry is that printing M0 and spending it into the economy creates more inflation than spending M4 does.
Because, you know, MV=PQ?
This is monetary economics, not aggregate demand.
PQE is 1 20th the cost of PFI.
Well done Ritchie. You’ve missed that PFI pays maintenance costs, PQE doesn’t.
…..so play nicely.
No, I’m not warbling…..taking actors through the script for a computer game.