So, Mark Carney doesn’t support Ritchie’s QE then

Mark Carney, the Bank’s Governor, has said that he could “not envision any circumstance” in which an advanced economy central bank should finance government deficits.

Which is interesting, isn’t it?

And this is even better:

Buying the instruments directly from the state is illegal under Article 123 of the Lisbon Treaty. Richard Murphy, who Mr Corbyn has named as the architect of People’s QE, has proposed “a ruse” in order that the Labourite’s plans not attract the ire of EU lawmakers.

“The bonds have to be sold into the financial markets first, but there is no reason at all why this could not be for an agreed fee akin to underwriting, after which the bonds are, indeed purchased by the Bank,” he has said.
Mr Murphy said that Article 123 was clearly a piece of legislation whose “sell-by date had passed”, and that some fiddle would be required to get around it. But the EU may not look kindly on attempts to bypass its rules.
Simon Gleeson, a partner at Clifford Chance, said that the ECJ tended to be “quite hot on things that are a deliberately constructed ruse”. He said that such a scheme is “exactly and precisely what Article 123 is meant to stop”.
“There’s a lot of experience at the European level with member states coming up with clever arguments to get around the Treaties, and the ECJ takes quite seriously its role as the guardian of those Treaties,” he added.
A European court, unlike an English counterpart, is far more likely to object based on the spirit of the law, rather than a literal interpretation, Mr Gleeson explained.

So what does “Mr. we’ve all got to obey the spirit of the law” have to say about that?

18 thoughts on “So, Mark Carney doesn’t support Ritchie’s QE then”

  1. “Mr Murphy said that Article 123 was clearly a piece of legislation whose “sell-by date had passed””

    So something that entered into force in 2009 has, a mere 6 years later, had its day already?

  2. So here we again have Mr. “Spirit of the Law” and Mr. “Anti-Artificial Avoidance Constructions” advocating an entirely artificial construction to avoid the letter of a treaty, and hence to go 180 degrees against its spirit.

    But it’s different when he does it, right? Because Tax Justice.

  3. This is pedantry worthy of our host, but doesn’t the central bank of every advanced economy finance government spending as it expands the money supply? I mean the government benefits from seigniorage.

  4. This is pedantry worthy of our host, but doesn’t the central bank of every advanced economy finance government spending as it expands the money supply? I mean the government benefits from seigniorage.

  5. I’m staying with Huatdian-reading family this weekend and “spirit of the law” nearly a de me choke on toast. They think I’ve gone mad, I’m giggling at random moments.

    As to what does Ritchie say, well everyone, absolutely everyone is wrong and hasn’t read properly or “has ignored that”.

    He reminds me of Tom Baker’s bonkers-as-hell ship captain in Blackadder Ii: “Do you need a crew? Well, opinion is divided: I says you don’t; everyone else says you do”.

  6. Bloke in North Dorset

    But the EU may not look kindly on attempts to bypass its rules.
    Simon Gleeson, a partner at Clifford Chance, said that the ECJ tended to be “quite hot on things that are a deliberately constructed ruse”. He said that such a scheme is “exactly and precisely what Article 123 is meant to stop”.
    “There’s a lot of experience at the European level with member states coming up with clever arguments to get around the Treaties, and the ECJ takes quite seriously its role as the guardian of those Treaties,” he added.
    A European court, unlike an English counterpart, is far more likely to object based on the spirit of the law, rather than a literal interpretation, Mr Gleeson explained.

    A link for Ritchie to contemplate: https://en.wikipedia.org/wiki/Petard#.22Hoist_with_his_own_petard.22

  7. “Richard Murphy, who Mr Corbyn has named as the architect of People’s QE, has proposed “a ruse” in order that the Labourite’s plans not attract the ire of EU lawmakers.”

    That’ll fool the markets!

  8. Gawd almighty! Ex UKIP press officer Tim Worstall flies into the arms of European bureaucrats to stop the UK government regaining the right to create money.

  9. Louis Enrique is right. To put his point a different way, we’ve actually implemented “print and spend” big time over the last few years in that we’ve implemented fiscal stimulus followed by QE, and that nets out to the same thing as “print and spend” (and/or cut taxes).

    Thus the argument is not about whether to do print and spend, but over HOW TO DO IT.

  10. Bloke in Costa Rica

    If Murphy keeps getting monstered in the mainstream press, do you think there will be an epic outburst of stampy-foot? I do hope so. Really one of his saving graces is that his nonsense has hitherto only really been remarked on by weirdos like us, which is a pretty small audience. If it’s exposed to wider scrutiny then I do not think he will fare well.

  11. Murphy’s raging against ‘artificial’ husband and wife companies which can be used for abuse is particularly hypocritical.

    Murphy has just received £40k off of the Friends Provident Trust which won’t make grants to sole traders. Luckily for Murphy he’s in an LLP. But the LLP has just two members, him and his wife. She does as far as we can see nothing at all. She receives just 1% of profits, indicating just how little she does. She is a (retired?) doctor with, as far as we know, no knowledge or experience in tax or economics. We have never seen any output from her. Murphy has claimed in the past that she does some admin and proof-reading(?!) but if this was being done by a third party would Murphy make that person a member of his LLP? Of course not. As artificial LLPs go, TRUK LLP is about as artificial as it gets.

    So, artificial structures are an outrage to civil society when used to financially benefit people. Unless the artificial structure and the financial benefits are Murphy’s. What a hypocrite.

  12. Bloke in costa rica

    There was a ‘pre-emptive strike’ against Reuters (!!) the other day regarding ‘feral finance’ – if a relatively innocuous news source can force him into that, I’d give him about two months at the outside before he withdraws from association with Corbyn or accuses him of betrayal.

  13. @BiCR

    There is press speculation that the Conservatives are drawing up an attack plan on Corbyn if/when he wins.

    I do hope they have a similar plan for Corbyn’s tax/economics adviser.

    I can’t help thinking his grant from Friends Provident Foundation ought to be looked at from a compliance point of view. The Foundation rules require that:

    Can’t go to a sole trader – let’s be honest, TRUK LLP is a sham.

    Can only go to an organisation with proper governance controls – say what? it’s just Murphy. What governance controls?

    Mustn’t go to fund “Activities to promote a specific political party” – so Murphy bleats on about not being a member of Labour but is Corbyn’s personal adviser and is now touting for a job as Labour’s tax adviser…..

  14. AndrewC

    IF he comes under scrutiny he’s knackered – even an undergraduate researcher combing through TRUK should be be able to come up with enough instances of near Libel to bankrupt his operation. Never mind his notoriously ‘thin-skinned’ approach to criticism.

    Not sure if anyone saw his ‘The ignoring and the laughing are over: the fight’s now on’ post at the weekend but his argument seems more or less to be ‘dialectical’ and his relentless insistence that he is ‘on the side of history’ sounds akin to something off some soviet era propaganda piece. The level of derangement on display is near total…..

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