Byline Times has asked the P³ to produce a proper Credo. Which is fun, because it’s not going well so far:

It is my suggestion that the left should replace this with a new ethos:

“The left wants to create a sustainable economy by putting all the resources available within society to best use, including those that the market fails to use to best effect.”

That does rather run into the “Who, Whom?” test, doesn’t it? Who decides what is best and by whose standards is something best?

Neo-liberal dogma might have survived the 2008 financial crisis, but the practice of government and its financing since then has suggested that much has changed. The idea that governments cannot create money to fund their own activities without dependence on either taxpayers or borrowing has been shattered by quantitative easing.

No one ever said they couldn’t. They did say there were effects of their doing so. Monetisation of fiscal policy has entire libraries written about it. Henry VIII’s debauching of the silver currency for example. Even 2 nd Century Rome’s same thing. We all knew and agreed that government can create money and spend it. But also that we might not wholly enjoy the consequences of their doing so.

Money is Made by Lending, not Saving
We now know that all bank-made money is created by lending. As a result, we know that no bank lends savers’ funds. They are not the intermediaries that they were once supposed to be. The reality is that cash savings in banks are macro-economically inconsequential because they almost never create new employment or jobs in the way they are saved at present;

If banks don;t require deposits to finance their lending then no bank can be illiquid not go bust because it is. Banks can go bust because they are illiquid – therefore the claim is wrong, banks do require deposits to finance their loan book. Spud is simply wrong here.

What has been called government borrowing is nothing of the sort but is instead an incredibly secure savings facility offered by the government largely as a favour to the banking sector who need it to underpin their operations;

That’s why government has to pass laws insisting, nay forcing, financial institutions to buy gilts then, eh?

Company Shares Do Not Finance Investment
Based on research colleagues and I have been doing at Sheffield University and elsewhere, we know that FTSE companies do not rely on or need new share issues to finance their investment activity. In fact, they are repurchasing shares faster in most cases than they ever issue them. What that means is that saving in shares also rarely if ever creates new investment or jobs now. This is as true of property companies as any other quoted company;

The observation is fair enough, the implication is woefully misunderstood. Stock markets are, largely enough, methods of being able to sell previously successful investments. Now imagine if you couldn;t do this. Any investment you make you are locked into for all time. It’s not possible to sell – because there’s no market in second hand investments. Now what does that do to the supply of new investment? And to the price people will demand for investing in new things?

In the absence of being able to sell on successful investments there will be fewer investments.

The conclusion is that as things stand, the whole edifice of the financial services industry has ceased to be an intermediary between savers and investors, which was once its raison d’etre. Instead, it merely provides cheap capital for banks in the case of cash savings

Deposits are not capital to banks. Man’s a buffoon.

A Renewed Social Contract: the Uses of Capital
Government has to take on a new role in society. It has, in effect, to become the intermediary between savers and investors to make sure that the nation’s capital is once more used for social purposes.

“Social” purposes. Purposes Murphy approves of. Rather than either consumers or investors.

Using the very obvious power that tax reliefs have to direct the use of savings it is suggested that the tax reliefs attached to ISA and pension savings accounts should be changed to mandate their being saved in new Green New Deal bonds to be issued by National Investment Banks in the case of ISAs and to encourage that same use in the case of pensions.

The man’s insisting that pensions savings be invested in 1% bonds at a time of 9% inflation. Twat.

This even before his error about what equity does in a new and real investment project. Who are the first people to lose money if the plan fucks up? Equity, capital. They are the buffer. So, who is to be the equity buffer in the Green New Deal where all gain 1% on their bonds? Bondholders – at a price of 1% – have to carry excecution risk? Man’s an ignorant twat, not just a twat.

In both cases, the National Investment Banks of each of the countries of the UK would be directed to use the funds that they can generate from these Green New Deal bonds to fund the transition that is required to a sustainable economy faster than might be possible by relying on any existing decision making or funding process. As a consequence additional investment will be made in:

New social housing
New sustainable energy generation systems
New energy efficiency systems, including in public and private housing
Sustainable transport systems
The renovation of many existing public buildings to make them energy-efficient and sustainable
R & D into:
New food production systems
Reduction in food waste
Alternative energy systems
The support mechanisms for society, most especially in health and publicly provided social care, whether at home or in residential provision
Education and related facilities to support all these programmes


How are the gains from all this gloriousness to be captured? The assumption is that these schemes will all make money which will pay the interest on those bonds, right? Great, so how is that interest captured from the profits of those investments? There’s no thought, let alone detail, of how that will be done. Reuing food waste – OK, maybe a good thing to o. But how does this produce an income to investors?

And then, well, OK, so we mangle the system so that it does produce an income to investors. Great – so why then do we need govt diretion of the investment funds? Folk can just do it themselves and gain access to the income stream from making those investments.

This is a core problem with The Tuberous plans. If the profit can be captured by investors then there’s no need to force the issue. And if they cannot then there’s no income stream for the forced investors, is there?

But perhaps most of all, the purpose is to recreate the link between the saver and the investment that they fund that has been entirely destroyed in modern financial capitalism when the saver in a pension, ISA of any sort, or any structured fund has no real idea what their money might be used for. That it so happens that the investments with which the saver might associate themselves resulting from this proposal could also be of their choosing, either by offering dedicated (e.g. climate, health or transport funds) or regional funds so that the saver might associate their money with new projects in their own region or devolved country, enhance this goal.

Dunno really, I’m pretty sure that I can direct my ISA funds to Imperial Baccy if I should so wish. And I might well do so – aiding those who enjoy smoking serves a social purpose, right?

What is the downside?

Well Professor Murphy, other than it’s entirely barking mad, what else might we add? It’s inefficient, illthought through and misses the entire damn fucking point? Which is, just to remind, that other people get to spend their money as other people wish to spend their money. Not as a retired accountant from Wandsworth thinks they should be forced to.

25 thoughts on “The Credo”

  1. Tangentially I see govt is briefing their frustration with PRA taking their time over relaxing investment regs for insurance (read pension funds)…

    Can’t help but think the real agenda here is getting pension funds to invest their clients’ funds in whatever NetZero schemes the govt favours this week…

    Any with knowledge of this field here shed any light on the subject?

  2. Potatoes are very useful vegetables in so many ways. To call Murphy Mr Spud is an insult…to the natural world.

  3. “What is the downside?”

    As you say, there are plenty. But moreover, there are undoubtedly many more that we don’t know about until we try it. And that’s the beauty of a market over the political system: there are alternatives, and they can be discovered quickly. If a market investment starts to fail, you get the hell out and invest in something else. If Spud’s plan fails, you lobby the government, vote for the other side, realise they’re no better, start a campaign, get banned from social media for spreading misinformation…

    ‘Course, for Ritch and his chums on the “sustainability” bandwagon, this probably appears as an advantage.

  4. Are you meaning the Thunderer here? As far as I’m concerned it can lurk behind its paywall undisturbed, so I’m not familiar with it.
    But if it is, one would have expected some sage to rip him a new arshole in the Letters to the Editor. But that was The Times of yore. Nowadays, who knows? That anyone there might ask him to write anything is an indication of the depths to which it has sunk.

  5. 《We all knew and agreed that government can create money and spend it. But also that we might not wholly enjoy the consequences of their doing so.》

    《That does rather run into the “Who, Whom?” test, doesn’t it? Who decides what is best and by whose standards is something best?》

    If an inflation-indexed, generous, money-printed basic income benefits me and only hurts your economic model, not your physical existence, is the only harm emotional?

  6. The most frustrating, disappointing, aggravating thing about Mr Murphy is that he has managed to carve a high profile media niche for himself despite his obvious deficiencies. He gets invited onto TV & radio; to write articles; to teach ACTUAL students… AND TO GET PAID FOR DOING SO.

    I still haven’t found the round hole for my round peg… I’ve spent decades painfully trying to file off corners and never quite managed it. But this dangerous c*nt seems to have achieved it.

    The Bastard

  7. There is no such thing as an economic model. As government economists have repeatedly proved. There is only the economy.
    If an inflation-indexed, generous, money-printed basic income benefits laybouts who should be knelt on the edge of a trench & neck-shot pour example les autres.

  8. ‘Later in 1294, in order to control the treasury, Gaykhatu of the Ilkhanate in Persia attempted to introduce paper money in his khanate, which imitated the notes issued by the Yuan dynasty so closely that they even had Chinese words printed on them. However, the experiment proved to be a complete failure, and Gaykhatu was assassinated shortly afterward.’

    As you can see, they did things better in the good old days.

  9. 《who should be knelt on the edge of a trench & neck-shot pour example les autres.》

    Qu’ils mangent de la brioche, n’est-ce pas?

    Also, when our blogger says “Banks can go bust because they are illiquid”, does he forget that banks with charismatic leaders can always find another bank (the Fed as a last resort) to lend them deposits, if they have the proper force of personality?

  10. @ Sancho Panza

    The debate is regarding the proposed changes to the Solvency II framework, inherited from the EU, but itself largely based on the previous UK regulation.

    There are some likely changes that will affect all insurers, but the biggest ones will affect the large insurers managing annuity business, including pension buyouts.

  11. I did Google Credo/Times Tim. And it came up with some Thunderer god-bothering before the begging bowl obscured it.

  12. “Qu’ils mangent de la brioche, n’est-ce pas?”

    You could have taken the words right out of my mouth.
    One thing I’ve learned about the poor in years of contact with them. Most of them want to be. There’s no other explanation.

  13. O/T
    Questions we can answer:
    Chef Big Zuu: ‘Why is it that the only black chef on TV is Ainsley Harriott?’

    Answer: If you insist on seeing the issue in those terms, at 3% of the demographic, with one, blacks are massively overrepresented. You didn’t make the cut. Suck on it.

  14. “Based on research colleagues and I have been doing…” – The potato has colleagues? And they imagine they’re doing research?
    After I stopped laughing, the sad side of this struck: he has fooled others into believing him over common sense, their own education and accepted accounting practices. The man’s not only a fool, but a danger to others, degrading them and dragging them into his own distorted and nonsensical beliefs.

  15. Does capitalism owe me basic income, at least until the Lockean Proviso (“as much and as good” land is left in common for non-participants in money systems) is re-established?

  16. It is interesting that he talks about forcing people to buy green bonds in the same week as NS&I reported

    “Overall, Green Savings Bonds sales were £288m, which is small compared with the £4.4bn of net financing delivered by our core products.”

  17. Chef Big Zuu: ‘Why is it that the only black chef on TV is Ainsley Harriott?

    Bit rude to Andi Oliver, I thought.

  18. Sadly BiS, he has now made the cut, albeit as some sort of cooking/comedy/banter mish-mash, from what I read. Surprisingly not on Al Beeb, but on Dave.

  19. Martin Near The M25

    I don’t think he has colleagues, just people he hasn’t fallen out with yet. He’ll probably soon have to arrange an expedition to the Amazon to discover new people he can block on Twitter.

  20. A lot of talk of “creating” money. Well you can’t eat money, can you? Perhaps this is too obvious for these intellectuals.

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