There was another reason for thinking this in yesterday’s announcement. The Bank said in that announcement that:
The Committee voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100 billion over the next 12 months, to a total of £558 billion.
In other words, the Bank will raise £100 billion from the City by way of offering new saving facilities to it, meaning that the funds in question will be removed from use in the commercial economy of the country, and then nothing will be done with that money. It will simply reduce the central bank reserve account balances.
We can print lots more money to fund government. But, when inflation arrives, we must extract that money from the economy.
That’s QE and QT. That’s also MMT. At this level they’re exactly the same thing.
But he’s demanding that, in the presence of inflation – the policy relevant rate is core CPI which just rose to 3,6%, near double target – instead of withdrawing money we go spend more:
£100 billion could be used to end child poverty.
It could fund a Green New Deal.
And the NHS.
And social care.
And a great deal else.
So, he doesn’t actually understand MMT, that idea that he’s a Great Guru in. Surprise, eh?
It’s also a great example of what I’ve been saying is the real MMT problem all along. That the incentives are such that we’ll gain runaway inflation. Sure, MMT is right, we can print money to spend it. But the incentive to stop doing so, to reduce the money supply, when there is inflation just isn’t there. Therefore the reduction never will happen if the MMTers gain power. As Spud is proving.
Sure, MMT is right, we can print money to spend it.
I really do not like that as a phrase. Sure it describes what happens with government scrip. But in reality, in commerce it takes goods & services away from some people & gives them to others.*
Which begs the question of the topic. Is this real money or just government scrip of the future being moved around? Damned if I can work it out. Government money has parted so far from reality it’s difficult to know what’s happening.
*Why MMT’s a crock. It doesn’t describe reality. But to be honest. Nor does most macro-economics.
Printing money is just an indiscriminate tax. And takes value from savers & gives it to debtors. One can see why governments likes it 🙂
The whole point of his promoting MMT is that it is a way to persuade politicians that it’s OK to spend more money.
The point is the spending, and any “theory” that says it’s OK is a theory that he will support.
It’s also why he supports more tax and says people aren’t being taxed enough. He thinks it’s an answer to people who think that the current level of spending is too much.
More spending = more opportunities for him to dip his beak. Which is the end point.
it’s an answer to people who think that the current level of spending is too much.
The only way you could achieve that would be to reduce the production of goods & services.
Hold my beer!
“£100 billion could be used to end child poverty.
It could fund a Green New Deal.
And the NHS.
And social care.
And a great deal else.”
The £100bn is a capital sum. You can spend it once. Its not a flow of £100bn a year. So how the f*ck could you ‘solve’ even one of those problems with a one off payment of £100bn? At least 3 of them are ongoing costs, £100bn spread over a generation isn’t going to even touch the sides. The State does spend £1.2tn each year after all. If all that isn’t creating a paradise on earth, how is a one off expenditure of £100bn going to?
Jim
I think Murphy’s response to you would remind me of the character Vilos Cohaagen from ‘Total Recall’
Who told you to THINK? I don’t give you enough information to THINK!
O/T
Oh well done, congrats, pyrrhic is your victory. I lived next to an Employment Tribunal judge in London. As up himself as Murphy and equally as thick and obnoxious.
“Next has said it could be forced to close stores after losing a landmark legal battle over equal pay.
The retail giant issued the warning after an employment tribunal ruled last month that Next should pay its store staff, who are predominantly women, the same hourly rates as its mostly male warehouse workers.
This will threaten Next’s ability to make stores “individually profitable”, bosses told investors on Thursday, as they pursue an appeal against the decision.
If unsuccessful, Next could have to pay more than £30m to settle the claim, which was first lodged in 2018 and includes more than 3,500 current and former shop workers.”
Well I think we all agree that the state has been ‘cut to the bone’ in recent years certainly:
And, more than that, she has, as a consequence, adopted the whole approach to austerity that the Tories had. In other words, shrinking the size of the state, shrinking its intervention in the lives of people, reducing the support that it makes available, and denying us the services that we desire; all because, well, she just doesn’t want to do it any more than the Tories did.
Anyone here feel the state is ‘uninvolved in their lives’? Whatever hallucinogen he is having – I want some.
@BraveFart – September 20, 2024 at 12:03 pm
The retail giant issued the warning after an employment tribunal ruled last month that Next should pay its store staff, who are predominantly women, the same hourly rates as its mostly male warehouse workers.
Isn’t that the same problem that dropped the City of Birmingham in the merde – having to pay “dinner ladies” the same as “bin men”? That the award was also backdated some years appeared to have made a material contribution to its bankruptcy.
Still… “All must have prizes”…