Well done to Ritchie

The alternative is to ensure savings are actually used to fund real investment, which is possible (and I do understand MMT). As I have argued, if savings were directed via pension funds and through ISA accounts into Green New Deal related investments then those funds would be available to invest in the transformation of our society needs if it is to survive. Those Green New Deal investments might include government gilts, but are more likely to be dedicated to the purpose. So, it could be green gilts. But better still they would be issued by a National Green Investment Bank to fund the Green New Deal, either directly or by making loans to those businesses that will actually supply much of this activity on the ground. In addition, I think that there could, and should, be housing bonds to fund new net-zero carbon social housing. And I see no reason why we should not have transport bonds and energy bonds as well, and I also happen to think that all of these could come in regional forms so that people could direct their funding towards the aeria where they live, if they so wished

From the discussions that I have had these ideas appear to be very popular.

Maybe that is because I add another suggestion. In my opinion the minimum funding required for the Green New Deal is £50 billion a year. I have shown that none of this need come from taxation if savings are properly reorganised using tax incentives. But in that case I think the least that we can do is pay a decent rate of interest. Right now that need be no more than 2%. If that was on offer are present the money would pour into these accounts: all the funding we need to transform society would be readily available, and at a cost of just £1 billion a year to fund £50 billion of investment.

2% eh?

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.0% in July 2019,

You’re to get a zero real return on your savings for your retirement. anyone want to work back to the savings rate required for that?

The Consumer Prices Index (CPI) for the 12-month period to March 2019 stood at 2.0% – down from 2.1% in April 2019, according figures released by the ONS.

Less than zero return?

20 thoughts on “Well done to Ritchie”

  1. Right now that need be no more than 2%. If that was on offer are present the money would pour into these accounts

    Given that interest rates reflect the risk of an investment, and your pension will be spunked away on massive public sector pay, bonuses and employment, never to be seen again, I’m not sure 2% quite cuts it.

  2. The interest rate on the savings is a mere quibble.

    The real problem is when your savings get squandered on some green bullshit and the state says you won’t get a penny back but “thank you for your contribution comrade”.

  3. There’s a simple way of dealing with Richie cockwaffle. If New Green Deal investments were good investments, investors would be investing in them now.. Because for an investment to be an investment, the investor has to be of the view they’re going to be better off making the investment. And they’re not. Proved by Richie needing to think up ways of incentivising or compelling investment. It’s not investment. It’s just a way of spending other people’s money against their will.

  4. Dennis The Erudite 'n' Insightful

    If New Green Deal investments were good investments, investors would be investing in them now…

    Yes, but when it comes to Richard Murphy, no plan is truly complete without government compulsion being at its very heart.

  5. There was an article a while ago where council houses had been retrofitted to become carbon neutral at a cost of something like £80000 per house (it may have been higher) I don’t call that value for money.
    Who’s going to invest at a rate of 2% per annum where the benefits are at the best nebulous and the chances of getting your capital back are next to zero. The potato reasoning is still stuck at the stage of “all your money belong to us” the state being” us” Anyway i don’t see him investing thousands making his home carbon neutral. Until he does I see no merit in his arguments.

  6. A school of thought is developing around the principle that there is nothing natural or right about positive interest rates,

    I quote from a recent essay by that ineffable cockwomble Chris Dillow:

    “Some are now questioning whether having cash on deposit is a virtue at all. “No one should be rewarded for refusing to take risk,” says finance writer Frances Coppola. In fact, we can turn this presumption around. People who borrow or don’t save risk living in poverty in their old age. If people must be rewarded for taking on risks, why not reward them for taking this one, by having negative yields?”

  7. It was inevitable that sources of money as colossal as pensions would attract the usual suspects sniffing around. Even they realise, however, that it is hard to steal that money without a very, very good reason, if only to convince/con others of the need.

    Enter our current perpetual cycle of hysterical ‘crises’.

  8. Let’s have posters put up everywhere like they did in the War for bonds, with a Kitchener type picture of Murphy. Surely he took some inspiration from his Dachau visit

    “Green New Deal pensions macht Frei!

  9. “If New Green Deal investments were good investments, investors would be investing in them now.”

    Well, quite.

    Excuse me for being thick, but could somebody please explain to me very, very slowly – because I’m clearly too thick for anything else – how those people who put their cash into the GND are supposed to receive the return on their investment?

    Is it basically “the state takes your money and the state pays you back at the end?”

    You don’t have to be a green-spectacled moron to believe there are socially-optimal investments available out there that are not getting made because too few of the benefits of those investments are capturable by the investor – there might be loads of positive externalities that benefit everyone else, but you don’t get to see that in pounds and pence. Sometimes this provokes law changes to ensure that investors do get to capture more of the benefits (eg creating patents and copyrights) so the investment becomes worthwhile, and sometimes we just put our hands up and accept it’s one of those things that the government has to pay for.

    But where I lose the thread of what the Green No Dealers are saying is how there is a “return” on pensions when the government is performing the investment on behalf of the future-pensioner. The government doesn’t seem in a much better position than a private investor in terms of capturing the value from many of the investments under discussion – if the benefits are non-pecuniary or otherwise uncapturable, so can’t be collected by the state then passed on to the investor, is the idea that the state just “makes up” a nominal return on the investment and gives that to the investors instead?

  10. If the return isn’t a real return then isn’t this just a disguise for subsidies to greenie pet projects, so fund gives out money at cheap rates and then writes off chunks when it can’t be recovered or effectively gives grants dressed up as investment. Govt then makes up the shortfall for the pension funds when repayment time comes.

  11. “You’re to get a zero real return on your savings for your retirement.”

    No no no no – you’ll get a nice new freeway to nowhere, a community center for the ‘youf’, and a brand new mosque, along with at least one building named after Murphy.

    What would you need with food with a bounty like this.

  12. “bloke in spain
    September 3, 2019 at 1:37 pm

    . . . the investor has to be of the view they’re going to be better off making the investment. ”

    For some reason Murphy thinks that is *everyone* is worse off – then you’re better off. And if you’re better off and not everyone else is, then you’re worse off – and he should be given a gun to ensure you don’t make that mistake.

    Murphy is a more economically illiterate Bernie Sanders – and he doesn’t hide the hate and viciousness as well.

  13. Government doesn’t invest: it spends.

    You’d think an economics teacher would know that.

    I presume his school is oblivious to his his blog. A casual perusal would end his teaching career.

  14. @bis September 3, 2019 at 1:37 pm

    +1

    Same applies to HS2 (and all Gov’t/Council white elephants) – if it was viable it would have-been/be-being built by eg GWR

    What is viable is LHR 3 & LGW 2, but Gov’t refuses to permit these non-taxpayer ~£30bn infrastructure projects; then says we need HS2 to create infrastructure jobs (for immigrants?)

  15. @Pcar

    “Same applies to HS2 (and all Gov’t/Council white elephants) – if it was viable it would have-been/be-being built by eg GWR”

    I’m not saying HS2 is a great idea, but I don’t think the argument is quite right because there are some big infrastructure projects which essentially are only going to happen if the state gets involved. Partly because of the sheer scale. Partly because of difficulty capturing the value added by the project – I think this argument is clearer with metro rail rather than long-distance high-speed rail, where extending a suburban commuter rail service like the Tube can, among other things, whack a whole lot of value onto local property prices. There’s no straightforward way for infrastructure investors to pocket a share of these gains, so projects that would add value on a social level may never go ahead. Having said that, the case made for the wider economic benefits of HS2 didn’t look massively compelling.

  16. It’s long been my view that the word “ïnvestment”, in the financial sense, should be strongly policed. There’s two fundamental concepts involved with it. The investor should expect the return of their investment, some time in the future. That the investment should be expected to provide or accumulate some financial benefit to the investor during the period of investment. Anything else is just spending money & should be described as such. You can spend money on things that can be expected to provide a future benefit. But that’s still just spending.
    Of course, you can use the other meaning of investment . To lay military siege.to an edifice or dwelling place. In this sense Murphy can use it as much as he likes. it aligns perfectly with his intent.

  17. ” … where extending a suburban commuter rail service like the Tube can, among other things, whack a whole lot of value onto local property prices. ”
    Then its obvious where the finance should come from, isn’t it. There once was a method of doing this. They were called railway companies.

  18. “From the discussions that I have had these ideas appear to be very popular.“

    I assume these discussions were just him stood in front of his bathroom mirror?

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