In fact, all that they have not noted is that the role of tax is to cancel the money the government has created, meaning that the tax yield and not the interest rate is now the primary tool for the control of inflation in the UK.
This is important. What we actually have here is, as Peter has noted, an admission that the government can create money at will. So the ‘magic money tree’ exists, as a matter of fact. But what we have not got is an admission on the role of tax in this equation.
What that suggests is that the role of tax in controlling inflation has to be the next argument brought to the Treasury’s attention.
Interestingly, the Tuberator thinks the economy is not running at full whack, therefore we require further fiscal stimulus. Thus taxes should fall so as to provide both that and a little moe inflation. The Tuberator does not recommend lowering tax levels. Thus the Tuberator does not believe his on theory.