It could discuss why economics education is so bad that we think that things that aren’t real are significant, when things that are decidedly real are not.
True, true.
What is more, Rachael Reeves does not need to borrow if her books supposedly do not balance. She could just leave a deficit outstanding on the account that exists, all the time, between the government and the Bank of England.
True, true. That’s the monetisation of fiscal policy. Or, if you want to use the MMT lens, printing money to spend it. If you use that MMT lens then you also agree that this can be done but only to the point where inflation starts to appear. At that point you should tax back that newly created money.
We’ve got inflation right now. Therefore we do need to tax back that newly created money.
If only we had decent economic education in this country.
Telling magic money tree believers that they’ve got to start taxing back the new money is the same as telling Keynesians that they can’t spend on their favourite projects now then economy is growing because they’ve got to (fix the roof) pay back the debt they took out in the bad times to spend on their favourite projects.
You might as well save your breath, it just isn’t going to happen.
Just a passing thought,
If Govt. A balances books through borrowing and Govt. B goes proper MMT and taxes to reduce inflation.
Scenario, money supply needs to increase over time due to economic growth.
ceteris parabus I’d expect nation debt to be lower with MMT, no?
I suppose the upcoming bond strikes will be the fault of neolibralism rather than borrowing too much money then spunking it up the wall (NHS and green wankery).
“If only we had decent economic education in this country.”
Presumably why you got a third from the LSE.
In MMT all government spending works via ‘printed money’ (crediting bank accounts literally money only printed when have bank deposit take out as cash.) Essentially government buying limit is run out of things to buy at price government sets (real resources limit.)
Mainstream theory government finances spending by tax, borrow or print is wrong. In the UK all government spending works by creating money and there are unlimited intraday overdrafts at the central bank borrowing happens at the end of the day. Money can’t leak abroad it is a swap/exchange, not a conversion. If there is no saving or pay back bank loans in the spending chain you will get all government spend back as tax. Similarly, if people spend from savings or take out bank loans and spend no saving or pay back bank loans get all that money back as tax too. Government spend at Tesco get some back as VAT (taxes as ‘cashback’), Tesco pays its employees another chunk taken by government in income tax and so forth.
https://publications.parliament.uk/pa/cm200102/cmselect/cmpubacc/349/349ap02.htm
Point 20 says:
“ensure that its position is balanced at the end of each day”
Also at diagram in bottom surplus/shortfall in consolidated fund.
Mechanism qe result inflation debunked here: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy