Well, yes, three professors can’t be wrong, can they?

It literally beggars belief to think that those on the left who want to talk about money have failed to notice that what money was and what it is now are quite literally not the same thing.

Lack of knowledge is a terrible thing.

John Law’s great idea was to introduce paper money created by the government. That was innovative, I admit. It’s made a big change to the world. It was important. But there was a proviso. His requirement was that the promise to pay printed on the money be backed by precious metal holdings. In other words, this was gold standard paper money. And, according to Ann Pettifor, John Law explained all we need to know about money.

No, Law’s bank was a fractional reserve bank. There was gold, indeed, but with a reserve ratio of – so it is said – one fifth.

Lack of knowledge is a terrible thing, eh?

In Ann’s case it’s even more staggering when she works with Geoff Tily of the TUC who is steeped in Keynes and yet she has not apparently noticed that Keynes’ greatest contribution to WW1 was the introduction of what was called the Bradbury pound – or fiat money that was not convertible into gold, despite which it was readily accepted for exchange.

Bradbury pounds were introduced in 1914, Keynes argued that suspension of conversion into specie should happen later, when it was really necessary. Keynes was, at least at introduction, against Bradbury pounds.

Lack of knowledge is a terrible thing.

7 thoughts on “Well, yes, three professors can’t be wrong, can they?”

  1. I just looked up Bradbury – hadn’t heard of him. At the end of his Wikipedia page it says:
    “Britain left the gold standard in 1931 and the note issue became entirely fiduciary, that is wholly backed by securities instead of gold”
    https://en.wikipedia.org/wiki/John_Bradbury,_1st_Baron_Bradbury

    Isn’t that incorrect? I didn’t think GBP is backed by anything. And don’t think they ever went through a stage of being backed by anything else.

    Think the Jersey pound is 100% backed by UK gilts (so there’s no risk, they can be redeemed for GBP at any time, but the Jersey government gets the interest on the gilts as profit). Aren’t Manx pounds sort of backed by securities (the Mann government invest the money from Manx pounds in shares, which provides some sort of backing although the value fluctuates)? But actual GDP pounds I thought were purely unbacked.

  2. It literally beggars belief to think that those on the left who want to talk about money have failed to notice that what money was and what it is now are quite literally not the same thing.

    His usual incoherent style. How does something literally beggar belief?

  3. Wow, money has changed in the last century? Apart from a massive widespread loss in value, who would have noticed?

  4. I don’t think that’s entirely the case. These were the first low-value BoE banknotes, made it possible to reduce gold coin in circulation (a Sovereign was a pound). Before that point local commercial banks had been issuing bearer banknotes, as they still do somewhat in Scotland and NI.

  5. @ Richard T
    There is some gold in the Bank of England which, in earlier years, provided backing for the banknotes it issued which said “… promise to pay on demand one pound (or ten pounds, or whatever”. The Bank of England could also issue bank notes in excess of its holding of gold *if the Houses of Parliament approved”. Periodically Parliament would approve an increase in the “Fiduciary Issue” which was the notes not backed by gold.

  6. “John Law’s great idea was to introduce paper money created by the government. That was innovative, I admit.”

    Was it? WKPD:

    Carthage may be the oldest user of lightweight promissory notes. The first known banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century. … In Europe, the concept of banknotes was first introduced during the 13th century by travellers such as Marco Polo, with European banknotes appearing in 1661 in Sweden.

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