This is possible for reasons I explained in an academic article here. In that piece I explain the formula for funding government spending, which is:

G = T + ∆B + ∆M

where G is government spending, T is cash tax revenues, ∆B is the net change in government borrowing in a period and ∆M is the net change in government-created money in a period.

Hmm, OK.

You will not find the formula noted above in many textbooks: I’ve searched and not found it. The ∆M bit is missing. That’s because the mainstream of economics has not recognised that such funding can take place in this way. But that’s because dogmatically they have refused to believe it possible and have insisted that government is solely dependent on funds provided by third parties to fund its activities – so perpetuating the myth of ‘taxpayer’s money’ and the ‘burden of debt’. But neither of those myths is true. The government can create money whenever it wishes, simply by deciding to spend it into existence and by instructing its own bank to create the money to make settlement of the liabilities owing. ∆M changes everything.

Not really, no. If you look at the accounts of the Federal Reserve (I assume the BoE does something similar) you will see that they make a profit printing dollar bills. It’s some $99 and change on a $100 bill for example. This is sent to the Treasury each and every year.

We even have a name for it, seigniorage. A word which first appears in English around 1400 or so. Which means we’ve been aware of the concept for some 6 centuries now just in this one language. There’s a profit to be made in making money, a profit that can be spent. And?

And Diocletian was certainly aware of the concept when he debased the sestercius.

The and being that there are libraries full of information on what goes wrong when it is done in any volume. Not starting with Diocletian either.

It ain’t new Ritchie, it just ain’t new

18 thoughts on “Fool”

  1. I reminded old Redwood of that word when he suggested that we should cease to regard QE as debt.If it is not debt then I really cannot see how it differs from printing money. It is one of the many things about which I could no longer give a flying fuck
    Jesus, I hate working from home!!!

    At least the dead haven’t started waking up and looking for some breakfast yet ( althoiuhg as I watch my neighbour staring into the sky in his drive I wonder …..)

  2. Your neighbours are likely similar scum to you Facepainter. Otherwise they couldn’t stand living next door to a grade z cunt like you.

  3. BiND – I put my trousers on, have a cup of tea and I think about leaving the house
    (Corona Tax!)

    It is one of the many things about which I could no longer give a flying fuck

    This must be hell for you, Newms. Not only is your beloved EU falling apart like a papier mache condom, borders are closing and those urbane, sophisticated Krauts, Frogs and Czechies are hoarding life-saving medical supplies the way Diane Abbott does calories… but we have a Conservative government whose policy is “Ha ha! Money printer goes BRRRR!”

    Thoughts and prayers x.

    Can we get Sir Elton to rerelease “Candle in the Wind” for people afflicted by Remainavirus?

  4. Still got your gun oil to drink tho’ haven’t you Disease.

    Until they take your guns from your blubbery hands. While you promise retribution that will crush Heaven and Earth

  5. The reason why delta M is missing in most equations is that M is part of B so it would be double-counting to include both M and B.
    The Bank of England note is a promissory note to repay the amount borrowed.
    Double-entry accounting is not the same as double-counting.

  6. Dennis, Who's Got Him A Shootin' Iron

    Still got your gun oil to drink tho’ haven’t you Disease.

    Positively Newmania-esque… You have the grammar and syntax down pat, but the typing needs a bit of work.

  7. Jesus, I hate working from home!!!

    I pity Violet Elizabeth Newmania’s family. Imagine having to be holed up with that fuckwit 24/7.

  8. Slightly OT, but why doesn’t The Donald move bill-printing powers from the Fed to the Treasury? Is he worried he might get JFK’d? It seems odd that a collection of vastly wealthy bankers is allowed to make even more money by printing the notes.

  9. Bloke in North Dorset

    “A great inflation is coming. ”

    I thought Spud had said it would never happen, all we have to do is raise taxes and the economy will just keep humming along?

  10. You’d have thought with Spud being isolated that he could read some books about economics. Probably to busy wanking and frothing at the mouth.

  11. Yes indeed Professor Murphy and have you realised yet that literally ANYONE can create money?

    For example, yesterday evening I took my daily exercise by wandering to a local off-licence where I picked up two bottles of champagne and offered to pay for them with freshly minted Iron dollars. They told me to fuck off, which doesn’t invalidate my points at all, which are:

    1.I’m goimg to need to mint a whole lot more Iron dollars before I’m not told to fuck off, showing that printing money can be VERY inflationary and
    2. Everyone that has ever tried your economics – try having have a chat with Nicolas Maduro – likewise gets told in time to fuck off by the markets.

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