Richard Murphy says:
January 31 2021 at 9:58 am
OK

But that does not explain how there is a bigger market than there are gilts available

Where do the rest come from?

The concern is that the banks have perhaps £200 billion in gilts but use them to support perhaps £400 billion in repo. So, there’s more repo than there are gilts!

Don’t worry if this is actually true or not, or whether the numbers are right. Just think for a moment about this.

The country’s leading – nay, one of the world’s! – Modern Monetary Theory theorist is finding it difficult to grasp the idea of the velocity of money. That the same piece of money might be in use several times. Even, simultaneously.

And yet this is the most basic point about money, isn’t it? MV=PQ after all, and the M there is that base or narrow money supply. He also tells us, all too often, that banks just create money by making a loan. So, there’s a multiple, again, to narrow money which then makes up wide money.

But when it comes to repo all of this is ignored. There must actually be the bonds for all – the idea that chains occur, that the same debt might be in multiple uses just doesn’t cross the mind.

It’s like the same person being a professor at three different institutions. Just cannot happen, eh?

12 thoughts on “Sigh”

  1. Spud seems very quiet about the EU threatening a unilateral breaking of the Brexit agreement, being accused of ‘vaccine nationalism’ by the WHO and then having to back-track in embarrassing fashion.

    You can imagine the angry fist typing that would have ensued if the UK had done this.

    Almost as if Spud is influenced by the EU funded grants he gets.

  2. Hilarious.

    See my post above, then see an exchange between “James” and Spud with “James'” post appearing on Spud’s site at 12.53, 37 minutes after my post on here…..

    “James says:
    January 31 2021 at 12:53 pm
    On a slightly different thread ..Richard you are very quiet about the EU threatening a unilateral breaking of the Brexit agreement, being accused of ‘vaccine nationalism’ by the WHO and then having to back-track in embarrassing fashion.

    You can imagine the angry fist typing that would have ensued if the UK had done this….Almost as if your musings are solely influenced by the EU funded grants you occasionally receive?”

    “Reply
    Richard Murphy says:
    January 31 2021 at 2:16 pm
    They acknowledged an error

    It was an error

    I forgive those who own up to mistakes

    Don’t you?”

  3. I wonder what would happen to Spud’s brain if you told him that there were multiple ways of counting money and that notes and coins in circulation are a mere fraction of the total. With any luck, his mind would explode and he would stop effing blogging

  4. There are two sides to every repo contract – so is it counted once or twice when summing up banks’ exposures to repos?

  5. We’ve been practicing fractional reserve banking for how long? A millennium or thereabouts? You’d think an accountant would have grasped that by now

  6. Bloke in North Dorset

    It takes a couple of minutes to check if your understanding of something complicated is about right before announcing your opinions to the world now we have the Internet. How do I know that? I did it because I wasn’t sure if my understanding of repo markets was right, and I don’t intend to hold forth on the subject.

    But that requires a scintilla of self doubt, something Spud has never been troubled by.

  7. @ Chris Miller
    The WHO clearly have their own dictionary with a new definition of “fair” which has no connection with who invented the vaccine or who paid for it.

  8. Pressed wrong key.
    The death rate per million for Bangladeshis in the UK is *well over 30* times that for Bangladeshis in Bangladesh. So what is fair about depriving Bangladeshis in the UK of a probably life-saving injection in order to give the same number of people in Bangladesh a just, but only just, possibly life-saving injection?
    [Death rates for South Asians in UK reportedly much higher than for whites but death rates in Bangladesh 49 per million vs UK’s 1559 per million] Does WHO actually look at facts?

  9. @ Boganboy
    Mebbe but I don’t want to send all of them back – not sure I want to send any of them back (unless some kids have been brainwashed by Al Qaeda) and certainly want to keep the ones who came via Uganda.

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