Isn’t this fun?

The Senior Lecturer now needs to write letters to The Guardian rather than being hired to write articles:

In your editorial (26 September) on John McDonnell’s proposal that PFI contracts be bought back by a future Labour government you suggest that any such action might be constrained by the need to persuade the financial markets to continue to lend the government money. This was an error on your part: this constraint does not exist.

Firstly that is because no government has to borrow. Quantitative easing proved that. In the UK the government (via the Bank of England) has done £435bn of QE, with the result that the government owns nearly a quarter of its own debt now, effectively cancelling it and all the interest payments due on it in the process. What this means is that another £58bn of QE could be used to cover capital costs of PFI without any difficulty. The remaining cost of buying out the service element may be little more and since QE debt carries no interest cost, there may be precisely no cost at all to buying these PFI contracts back into government control as a result. This was precisely the basis of People’s QE, which I created in 2010 and which was one of the platforms on which Jeremy Corbyn was elected Labour leader two years ago. In that case the idea that we are beholden to the bond market “confidence fairy” (as Paul Krugman so aptly named it) when proposing such a move is just nonsense. The fact is that if bond markets are truculent any government can just work around them.

Second, your editorial also ignores the fact that there is enormous demand for government debt from the growing number of relatively (and I stress relatively) wealthy retirees needing a secure home for their money. The enormous cash piles of multinational corporations only adds to this demand. That demand proves that in fact those buying government debt are not doing the government a favour: it is instead doing them a favour by providing them with the secure savings opportunity that they crave.

People’s QE was one of the core pillars of Corbynomics and can deliver the end goal of cancelling PFI. It is time for it to re-emerge centre stage and see off once and for all the interminable questions of how PFI repurchasing and other infrastructure investment will be paid for.

Professor Richard Murphy
Professor of practice in international political economy, Department of International Politics, School of Social Sciences, City, University of London

Isn’t that gorgeous? Note that he still thinks business buys gilts – they’ve some £1.5 billion of them, 0.01% or so of the total.

21 thoughts on “Isn’t this fun?”

  1. @SMFS

    Nice! You can imagine his horror when he first saw the stats.

    (Also: I had no idea that the Gleaner was a real paper- I thought that Fleming made it up)

  2. Methinks the Prof continues to try to keep himself in the public eye as much as possible as the prospect of the furry touch of vermine against pustulent skin still beckons.

  3. The Poet-professor seems to be taking a more emollient line towards Labour – I thought he had gone full “Beam me up, Scottie” but perhaps his recent visit to north Britain has unsettled him.

  4. TMB, I’ll bet when he asked about an invite to the next round of committee meetings the response was “Don’t call us, we’ll call you”.

  5. The egotist once again says “I created …”. Damn it, governments have been buying/selling bonds/gilts to finance trade, wars, nationalisations for decades and even centuries. The logical conclusion of his deranged arguments is that governments can eliminate all deficits and fund investment by just book-keeping entries.

  6. I know the Guardian us ailing, but did they actually use up column inches printing this garbage? By extension of the reasoning here there is no need for the National Debt and all currency eventually becomes worthless.

  7. Good heavens, I just spent a few days in London at a rental flat in Bloomsbury and now discover I walked about the U of L to go to the theatre and the brit museum.

    No doubt I was breathing the same air as the marvelous mr m.

  8. Fred Z

    University of London and CITY University of London are two clear different things. One is a world ranking university, the other is a renamed Technical College.

    Don’t worry; your lungs were safe.

  9. Graun printing this garbage is, on balance, positive. There will be a few more lefties who haven’t completely fried their intellectual faculties who will think ‘who is this eejit?’ and his star will continue to wane.

  10. Bill the data is in this. If you compared the 2006 report with this one you would have a reasonable idea of what deals were signed when. The 2016 data excludes any contracts that have terminated. But it looks as if Blair/Brown were cranking out the deals. Snippa doesn’t really understand graphs and is useless at finding data. Sorry I can’t be more helpful. Chart A. 1 seems to be the data source

  11. abacab – I like this
    John McDonnell here said “He is not the economic adviser and never has been, because we doubted his judgment, unfortunately. He is a tax accountant, not an adviser. He is actually excellent on tax evasion and tax avoidance, but he leaves a lot to be desired on macroeconomic policy”. Even Corbyn has better sense. Ever since Murphy has been briefing against Corbyn and the snake is now trying to get back in favour because Corbyn got on without him.

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