It’s fun, isn’t it?

The gaping hole in the understanding:

I will make two points. One is that coronavirus is already paid for. It’s being paid for by money creation, albeit imperfectly via QE, and by people saving with the government. What that means is that ‘how is this going to be paid for?’ debate has to really be about something else, which is ‘how are we going to reverse QE?’, the reason for doing which is unknown, and ‘how are we going to force people to save elsewhere?’, which, again, is a bizarre question. Why would we want to punish the
economy to achieve that goal?

Well, why have we done it through QE? Because it is, potentially at least, reversible. As the Federal Reserve did reverse some of it.

If we invent money then go spend it then the only way we can take that money back, if inflation arrives, is through taxation. That’s pure MMT and should be obvious to an MMT guru like Snippa.

OK, so why didn’t we do that? Why go through this bonds and QE and all that? Because it is potentially reversible. If inflation turns up then we can sell the BoE bonds back into the market, collect the money and destroy it. This gives us a second – and quite possibly more useful – tool to beat the inflation resulting from money creation. Reversing the creation of the money.

Now, whether we will do that is another thing. But what is the reason to reverse QE? We’re getting – note, this is if we do – inflation as a result of the money creation. So, let’s reverse the money creation.

The reason Snippa finds this so difficult to understand is?

Well, we know actually. It’s because he wants to insist that QE never will be reversed, so that he can say that the national debt isn’t all that large. In pursuit of being able to say that he’s willing to ignore the entire point of doing it as QE in the first place.

5 thoughts on “It’s fun, isn’t it?”

  1. Govt deflation Tim? Not very likely.

    Esp as Blojob seems to be working the early stages of the Agenda 21 plan. Keep LDs going + let local trash play themselves + more green bullshit. Allowing chrome-domed cunt Dame May Whitty to spread 2nd lockdown crap and undermine business confidence. The mask/vaccine caper. Now almost certainly leaning on supermarkets to demand med certs before you can come in w’out a mask. Knowing NHS scum wont give them. Even tho Govt “official” guidance is not to ask.

    Everything someone wanting the UK to recover should NOT do the scumbag is doing.

  2. ‘coronavirus is already paid for’

    Sleight of hand. Coronavirus requires no payment. Based on the context, I assume he’s talking about government’s outlandish expenditures, justified they claim, by coronavirus. It’s a head fake to get people to assign responsibility to a disease, and not the government.

  3. “Coronavirus is already paid for” in IOUs. So when I bought my first flat I paid for it by borrowing most of the price from my employer (and a bit from my mother as I didn’t want to sell my largest investment, which was significantly underpriced at that time – I later sold it at nearly twice the price and my liquid assets didn’t cover all of the gap between the price and my employer’s loan) as the price was a lot more than my accumulated savings. But it was “paid for” in Murphy’s meaning of the term.
    Every non-Murphy mortgagee knows that he/she/xe has to pay off the mortgage. We, the UK, needs to pay off the debt incurred for lockdown

  4. If your “inflate and flog bonds on the market” plan is so good Tim–why did none of the great cash printers of –say recent –history use it? There must come a point were no credible bond issue can no longer be made–like an ordinary mug writing to a bank asking for a billion pound note loan.With a 300,000 house as collateral.

  5. I accidently clicked on Richie’s site earlier.
    Yesterday: why we need and must have MOAR TAXES!
    Today: We can spend whatever we want without taxes, and should do so.

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