Third, there are signs that the Treasury and the Bank of England think that things will be extremely difficult post-Brexit. There are provisions in the new arrangements for ‘collateral haircuts’. In other words, if this new lending is asset-backed, as is likely, then the Bank is anticipating falls in asset prices.

Fourth, it would seem as if the Bank is being given more opportunity to decide when, and if, quantitative easing will be unwound. The interest rate at which it may consider beginning this process has been reduced from 2% to 1.5%. In my opinion that suggests it is very unlikely that this will happen any time soon.

Fifth, the coincidence between £435 billion of QE funding and a new £500 billion lending pot backed by £1.2 billion of new capital suggest to me that the new lending is almost entirely dependent upon realisation of QE bonds now held by the Bank. In other words, all that is being said is that if there is substantial demand for bonds post Brexit as the saving community head for safety during the course of an economic crisis then the Bank will be allowed to sell its bonds held under the QE programme to meet that demand and will then be allowed to lend back the proceeds into the commercial banking system to make good the liquidity crisis that would otherwise arise.

I stress, this is a first reaction to a quite complex set of new measures which superficially, and as reported on all the media, make no sense at all. Unpacked as I present the above they do, however, have a coherent logic, albeit that the logic in question very clearly suggests that the Treasury and Bank of England are in practice planning for a hard Brexit and a consequent credit crisis for which they are creating the possibility of emergency liquidity funding for commercial banks.

If I am right then I also offer three other ideas. The first is that the Treasury so lacks confidence in the government that it is outsourcing the saving of the economy. Second, this is dangerous: the Bank will, no doubt, deliver another emergency package that will favour the City and those who are associated with it. Thirdly, democracy is imperilled once again.

The referendum – recall, democracy – decided upon Brexit. It’s possible that this could be rocky. So, contingency plans for a rocky road to a democratic decision isw democracy in peril.

But then for the Great Tuber perhaps it is, his definition of democracy being all do as he says.

Polly’s error

Brexiteers know that if on Brexit day, the 29 March 2019, everything seizes up, they will be blamed – and they will be done for.


‘ll even happily take all the blame (no, I’m not that important).

For the only way out of such a mess will be unilateral free trade plus a killing of most of the regulation of the economy. Exactly what we should be doing anyway.

Yes, I know, it all sounds a bit Trot, we must destroy in order to create anew. But still.

Second order effects, second order effects

Plus Chesterton’s Fence:

Moths are thriving because of a growing energy efficient trend which has seen people wash clothes at 30C, a pest firm has claimed.

Rentokil said callouts to moth infestations had increased by more than 110 per cent from April to May and by 60 per cent over the last four years.

A survey by the company found that 54 per cent of people said they wash their clothes at 30C but didn’t five years ago. Rentokil warned that 55C was the temperature required to kill moth larvae.

Yeah, yeah, sure, pest control firm. Except they’re advising people to do something which precludes the use of their services.

So, why did we use high temps, that’s Chesterton. And what’s the cost of moths as opposed to higher washing temps? That’s the second order stuff.

And as we can see, yet again, those who would tell us how to live seem to ignore both crucial points, don’t they?


For the early years of Amazon’s existence it was just fine with the idea – and the law – that it didn’t have to collect sales taxes. Not that it worked quite like that, but the general outcome was roughly that. As Amazon grew larger its view shifted, to where it does collect sales taxes for each state that imposes one. It’s also supported the idea that everyone else should do so as well – odd that, isn’t it?


Chad had learned the traditional masculine characteristics of our fathers and other men in cities across rural Canada: ill-equipped to handle (let alone display) emotion, unable to properly cope with psychological stress, and prone to view any form of vulnerability as weakness. Stoicism and anger were the primary emotions: great when facing death or danger, but crippling in everyday life; excellent on the hockey rink, but useless for navigating the rest of the 21st century.

Stoicism sounds like an excellent method of dealing with things, no?


Third, the banking sector has, post 2008, needed government bonds as a mechanism to secure overnight deposits.

Not my specialty, but I thought they plonked reserves overnight with the Bank of England now. Is this Ritchie still getting the Repo market wrong?

Try picking the logic out of this

First of all, why is Labour maintaining an independent central bank? This feature, which is an absolute mark of right-wing neoliberal thinking, and which is a legacy of the Gordon Brown / Ed Balls era from which I would have thought John McDonnell was keen to disassociate himself, has three incredibly unfortunate consequences in that it removes economic policy from democratic control, puts bankers in charge, and makes monetary policy the focus of attention when fiscal policy has to be the future direction of all economic policy. The time for economic policy to come back solely under the control of elected politicians within the Treasury has arrived: it is deeply disappointing to see that Labour has not embraced this idea.

Monetary policy isn’t effective therefore government must, democratically, control monetary policy.

Monetary policy isn’t effective therefore we cannot have an independent central bank controlling monetary policy.

Only fiscal policy is effective therefore government must control monetary policy otherwise they’d not be able to use the fiscal policy they already control.

The true logic is that The Tater desires control of monetary policy because he knows a) that it works and b) an independent central bank would use it to offset fiscal policy.

Dear God

This was a mistake. When the economy goes into a downturn, it is necessary for the government to increase spending and run a deficit. If it does not, as our government did not after the financial crisis,

The UK did not run a deficit after the crash?

Whut? No, whut?

The important thing about Facebook

It doesn’t actually sell data:

“If the goal of Cambridge Analtyica was to show personalized advertisements on Facebook, then what they did was stupid,” Kogan said, arguing that it is much more effective for any advertiser to use Facebook’s own advertising targeting tools.

They allow you to explore data so as to direct advertising programs. Entirely not the same thing at all.

No, really, there’s a difference between “Here’s some data for $” and “Here’s the tools which enable you to target ads, that’ll be $ for the ads please”

Entirely fair

The US is withdrawing from the United Nations human rights council, the Trump administration announced on Tuesday, calling it a “cesspool of political bias” that targets Israel in particular while ignoring atrocities in other countries.

The US ambassador to the UN, Nikki Haley, said she had traveled to the council’s headquarters in Geneva a year ago to call for reforms, to no avail.

“Regrettably it is now clear that our call for reform was not heeded,” Haley told reporters at the state department. “Human rights abusers continue to serve on, and be elected to, the council.”

Sensible even – we should do the same.

Yes, this is the one where Saudi Arabia ran the women’s section or summat.

You’ve guessed this already, haven’t you – she’s a Guardian columnist

A Cambridge academic has gone on strike after claiming that a porter’s refusal to call her “doctor” is racist.

Dr Priyamvada Gopal, a fellow specialising in postcolonial literature, is refusing to teach students at King’s College after experiencing what she described as “consistently racist aggression and profiling” from the college’s porters.

The lecturer announced her decision after an altercation with a porter on Monday.

She described on Twitter how she told him: “Please address me as Dr Gopal”, to which the porter responded: “I don’t care who you are.”

A certian standing upon dignity there. The thing is, it’s the wrong dignity for this country:

Dr Gopal, who is from India,


Dr Gopal’s remarks quickly sparked a backlash, with fellow academics saying that her demand to be addressed as “Dr” was unreasonable.

Dr Chris Kavanagh, an anthropologist at Oxford University, said it is “not that common in the UK to refer in everyday situations to academics as ‘Dr’”, adding: “Almost no one refers to me as Dr Kavanagh but that doesn’t mean they are anti-Irish.”

To insist that the habits and courtesies of your native land be imposed upon a foreign one would be, err, colonialist, wouldn’t it?

This is joyous

Boris Becker’s diplomatic passport is a “clumsy fake”, a Central African Republic foreign minister has claimed, in the latest instalment of the former tennis star’s bankruptcy saga.

There appears to be a difference of opinion between the country’s foreign ministry and its Brussels outpost, and the foreign ministry appears to be contradicting a statement attributed to the president, Faustin Archange Touadéra.

As someone with a little experience of third world diplomats.

Thinking of there actually being the one government with the one view or set of actions is not the right way to think about things. There are various little groupings. Think of them as baronies perhaps. Each of which have their own independent – and often contradictory across the entire system – freedom of action in their territory. That territory can be a field of action, rather than actual piece of land.

One Baron has issued the passport in return for, well. At least one other is disputing their right to do so or angling for a share of the, well.

A point worth repeating

One other note that I think is worth mentioning: Rupert Murdoch gets a lot of cr*p for being the poster child of destructive corporatization of media. In this story, he was the single largest investor in Theranos with $125 million of his money in the company. He was one of the older men who fell totally for Holmes. But when Holmes came to him several times asking him to shut down an out of control reporter at Murdoch-owned WSJ, Murdoch said no, despite the fact that this reporting would eventually make Murdoch’s $125 million investment worthless.

If only Ritchie understood Friedman

Or even money itself:

The UK is expected to have GDP of £2,054 bn this year (table 4.1 here).

In current cash terms that is expected to grow to £2,116 bn the following year. That is a nominal increase of 3%. 1.5% of that is real growth. The rest is forecast by the Office for Budget Responsibility to be the result of inflation.

In April this year M4, which is the broad measure of UK money supply, was £2,356 billion. That M4 is greater then GDP is normal. It had risen by £45 billion over the previous year.

I make the point for a reason. That reason is to note that we need new money creation each year. Money can only be created in two ways. Banks can lend it. Or the government can create it by running deficits.

Right now the government is aiming for and achieving a current fiscal balance: it is balancing its books on day to day spending. It is borrowing for investment, but not to cover current spending.

The aim of Chancellors for almost a decade now has been to reduce borrowing to zero: in other words, to withdraw from new money creation.

That means the private sector has to go increasingly into debt to fund the creation of the new money the economy needs. The risk of a private debt crisis is increasing as a consequence.

That a growing economy requires more money is quite right. Milton Friedman said so thus it is true. And wouldn’t the Senior Lecturer be pissed to know that he’s following in St Milt’s footsteps?

However, as ever, the Great Tuber is missing some basic education in the subject under discussion. There is the interaction between base money and wide. That V in MV = PQ thing. We know very well that V is significantly depressed. That’s why the vast slugs of QE cash creation have only limited deflation, not caused galloping inflation. Which, as a matter of mathematical necessity, they would have done if V hadn’t fallen.

And as V recovers – which is just the same thing as saying the economy does and thus we raise interest rates again to temper that V – then we need less of that government created money to increase the wider money supply, don’t we?

What glorious logic

The NHS is a efficient as it gets, except on health outcomes, and we just don’t spend enough to get them

Some of us might think that health outcomes is the measure of efficiency.

When you hear the right wing say the NHS is inefficient, it isn’t. Nobody does it better with the resources they have got. To claim otherwise is to talk nonsense.

But then what do we right wingers know? Output as a measure of efficiency? Pah! Fie to your neoliberal measurements, candidly.

Statistics, statistics

The average New Yorker now works harder than ever, for less and less. Poverty in the city has lessened somewhat in the past few years, but in 2016 the official poverty rate was still 19.5 percent, or nearly one in every five New Yorkers. When the “near poverty” rate—those making up to $47,634 a year for a family of four—is thrown in, it means that almost half the city is living what has become a marginal existence, just one paycheck away from disaster.

“Near Poverty” is defined as twice the poverty level.

As it happens, the poverty level is about 50% of median incomes.

So, our intrepid reporter has just discovered that around 50% of people are on less than median income.

Well done, well done.

About which we are told:

As a commentator, using the name Calgacus, said in a comment on the blog yesterday:

Revenue is a pretty good word to use for taxation. What is bad is the idea that it provides income for the state. Revenue comes from re + venir; means to come BACK. It encapsulates the idea that taxation returns unto Caesar what originally came from Caesar, the correct spend first, tax later order.

Or, in other words, it is MMT compliant.

A search for “revenue etymology” provides that little chart. Plus this:

noun: revenue; plural noun: revenues
income, especially when of an organization and of a substantial nature.
“traders have lost £10,000 in revenue since the traffic scheme was implemented”
synonyms: income, takings, receipts, proceeds, earnings; More
antonyms: outgoings, expenditure
a state’s annual income from which public expenses are met.
“his priority was to raise government revenue and to lower expenditure”
the department of the civil service collecting state revenue.
noun: the revenue
“when the revenue makes a demand for tax, that demand is implicitly backed by the powers of the state”


early 15c., “income from property or possessions,” from Middle French revenue, in Old French, “a return,” noun use of fem. past participle of revenir “come back” (10c.), from Latin revenire “return, come back,” from re- “back” (see re-) + venire “to come,”

A return from property or assets. Which is indeed MMT compliant I guess, given Ritchie’s insistence on Musso’s nothing outside the state. He’s insisting that everything does belong to the state, the rest of us just being farmed to produce a return.

Well done Senior Lecturer, well done

Papers are filled with talk of the Theresa May’s NHS Brexit dividend this morning.

Thankfully, it appears that no one buys the story. Not one serious media outlet believes there is a Brexit dividend. The UK will still be paying the EU after Brexit. And because Brexit will shrink the economy there will be less tax paid.

But because the economy will be smaller the NHS will cost less money. Baumol’s Cost Disease, recall? Wages are set by the economy as a whole? Thus in a poorer country wages will be lower for all. Including those in the NHS.


I patiently explained that there are three ways in which government spending impacts the economy. First, I said that the government could simply create the money in question. I pointed out that over the last decade the government has created £435 billion to, in effect, bail out our banks. That is more than £40 billion of new money a year and there has been no inflation as a result: any inflation we have had is because of changes in oil prices or because we have left the EU.

QE wasn’t to save the banks. It was, as the BoE has repeatedly explained, to lower long term interest rates. Which it has done. And no inflation? Looked at asset prices recently?

Alternatively, we can let more people save with the government. That, after all, is all that government bond issues are: they are the creation of new savings accounts managed by the government for people who want to save with it. And, as I explained, as more and more people come to retirement age, more and more of them want more and more government debt to underpin their pension payments and as a consequence the demand for government savings accounts is growing exponentially. So, I argue, why not let them have what they want, especially when it has the benefit of having almost no net interest cost and providing funding for the NHS at the same time?

That low interest cost possibly having something to do with QE?