Well done, well done

Second, if there is a personal debt crisis it has developed on Mark Carney’s watch. Where is the mea culpa for failing to put appropriate measures in place to stop it developing? The signs have been there for some time, as I, amongst many others, have noted.

Third, why isn’t the Bank being blunt in saying that the solution to this is to be found in fiscal policy, led by government investment that would boost real economy, actively increase productivity and drive up wages?

And come to that, why isn’t it saying that this crisis is the consequence of austerity that has forced people into debt and what is needed now is a fiscal stimulus by relaxing that policy?

The solution to a debt crisis is to borrow more.

28 comments on “Well done, well done

  1. If he could join his own dots, and was honest – I’m sure you’re not holding your breath on either count – he would tell you that government debt is different, because the government can default with impunity.

  2. Adipose Authority: why isn’t the Bank being blunt in saying that the solution to this is to be found in fiscal policy?

    Sir, sir, please sir. Is that because it’s not its business?

  3. In Snippa’s world, everything that is not tax evasion is a debt crisis. How can anyone get so worked up about a potential crisis and write a stream of such utter crap?

  4. no, Tim, candidly you’re wrong – the solution is for the Curajus Stait to borrow more on the behalf of The People, in order that wise and benevolent rulers (of whom Richie would reluctantly become one, were he to be asked) can decide how it is distributed. The debt can then be paid off by printing more money with no adverse consequences whatsoever that Dickie can foresee. Anything else is neoliberal sophistry.

  5. ‘The signs have been there for some time, as I, amongst many others, have noted.’

    It takes some chutzpah to write that given his track record. You could never accuse him of modesty. Odd behaviour given my experience of Quakers, I have to say…

  6. There is a difference between private debt and public debt. It’s a lot harder for the state to go bankrupt than it is for individuals. It’s pretty dumb to conflate the two kinds of debt.

  7. It’s true that a country can’t be declared bankrupt, but “a rose by any other name”?

    You don’t have to stick a label saying “bankrupt!” on every square inch of land, but the consequences are much the same.

  8. ” It’s a lot harder for the state to go bankrupt than it is for individuals. It’s pretty dumb to conflate the two kinds of debt.”

    True, but for the reasons noted above – the State has a pretty terrible track record of not paying its debts back, either by actual default, or by stealth via inflation. Which one rarely hears from those who advocate more State debt – ‘We can borrow lots more money and spend it because we’ll stiff the lenders eventually, one way or another!’

  9. The lenders aren’t forced to lend – they choose to because they want a safe place to park their savings.

    Real interest rates are often negative, once you account for inflation. Caveat emptor.

  10. The personal debt crisis is spelt “g o r d o n b r o w n”
    Insolvency Service Statistics show personal insolvencies rose (in England & Wales, July 1ft to June 30th) from 25,452 in 1996-7 to 141,241 in 2009-10. For Scotland I can only start from calendar year 1998 – 4,465 soaring to 21,359 in 2009-10.
    In both countries insolvencies have declined since 2010: to 93,654 in England and Wales and 9,958 in Scotland each for the last published rolling 12 months.
    Murphy lives in a Fact-Free zone.

  11. Now I’m even more confused. Hasn’t he recently had a post where his response to some criticism about his claim that banks create money out of thin air was that the Governor of the BoE agreed with him. Now he’s saying that having created that money out of thin air that we have a problem. Why can’t they just create more money out of thin air, why do they have to rely on loans being paid back?

  12. “The lenders aren’t forced to lend – they choose to because they want a safe place to park their savings.”

    Not true really is it? Very few savers make the active decision to personally hold gilts, its all done via institutions for pensions etc. And they have very little say in where exactly the fund puts their money. And it doesn’t really matter to the pension fund, its not their money. So savers are being put into gilts without giving any real agreement, or having any knowledge of what risk of default they are so taking.

  13. “Now I’m even more confused. Hasn’t he recently had a post where his response to some criticism about his claim that banks create money out of thin air was that the Governor of the BoE agreed with him. Now he’s saying that having created that money out of thin air that we have a problem. Why can’t they just create more money out of thin air, why do they have to rely on loans being paid back?”

    Compared to this pile of confusion, Richard Murphy looks like an intellectual colossus.

  14. Mr Yot, it is slightly weird to say that Snippa looks like an intellectual colossus in comparison with his own thoughts

  15. Is mr Murphy really saying that because loans are created out of thin air they shouldn’t be paid back?

  16. @R.Yot

    Yep. He’s stated on previous occasions that government debt isn’t a problem as more money can be magicked up to pay it off.

    BinD’s comment is basically saying ‘why not do the same for personal debt?’

  17. A debt Jubilee, just like in the Bible.

    It’s a strawman though. I don’t think that’s what Murphy is actually saying, it’s just a bunch of stuff jumbled together in a salad of misrepresentation.

  18. @R. Yot

    Well, you can think that if you like.

    I mean, you’ll be wrong, but think away.

    (That’s not snark at you, by the way. I think you are just assuming that R.Murphy is consistent (he’s not), and has thought deeply about the things he posts (he hasn’t). You are probably also a pleasant person, and therefore you are assuming that R.Murphy’s intelligence is somehow on a par with his public profile (it isn’t).)

  19. I don’t think that’s what Murphy is actually saying

    You must be new in town. Enjoy your stay.

  20. The pile of confusion against which Richard Murphy looks like an intellectual colossus is something beyond the scope of human imagination.

  21. @R. Yot

    Welcome – couple of questions for you…..

    1/ any interest in the concept of a Land Value Tax or the theory that Banks are solely responsible for the creation of money in the modern economy?

    2/ Do you live in the Channel Islands?

  22. Hi there.

    No particular interest in LVT.

    I don’t live in the Channel Islands

    Banks do in fact create most of the money in the modern economy (I didn’t even realise this was controversial before coming here).

    http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

    Anyway, probably just passing through. I’ve enjoyed some discussions here, and the crowd is friendlier than I expected. It’s good to have my ideas challenged, and a couple of conversations I’ve had here have forced me to sharpen my thinking.

  23. “There is a difference between private debt and public debt.”

    Quite true. There’s a difference between government & the people. State goes bankrupt, who cares? Lot of public employees don’t get paid. Colour me indifferent. We certainly won’t be bankrupt. We’ll just find a workaround.

  24. @R.Yot

    Have a look at the ‘Laffer’ thread over on TRUK – it sums up RM’s complete lack of knowledge about anything and his arrogant attitude to those who do know.

  25. Mr Yot’s de haut en bas attitude is so revealing. He has lost all the arguments but is leaving on his own terms. He is probably Guy Verhofstadt

  26. John Square – I speculate he may have shuffled off this mortal coil or the establishment holding him in Guernsey may have rescinded his email privileges…..

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