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Tim Worstall

Not understanding banking again

The same is true if you put your money in a bank. If you put your money in a bank, all you have done is move money out of your current account into a deposit account at the bank.

This is simply an electronic transfer between two balances in the bank’s bookkeeping system. The bank then pays you interest, which it might not have done on the current account, but otherwise, precisely nothing has changed. The money in the bank was dead when it sat in your current account. It became interest bearing when you put it into a deposit account, but the bank doesn’t do anything with it.

It does not, in particular, lend it to anyone else.

It can’t because it owes it back to you. It can’t take the money that it owes back to you and say, well, I don’t owe it to whoever you are now, and I’ll put it onto somebody else’s account because you’ll say, hey, what have you done with my money? Where is it? It’s got to stay on your bank statement to record the fact they owe you. They can’t transfer your bank statement to somebody else’s ownership.

And that’s all that having money in the bank means. It means you have a balance on your bank statement. Nothing else at all.

When they lend money to somebody else, it’s new money that they create for that purpose. So, saving in a bank, is absolutely dead money, totally and utterly. It does not produce any new economic activity.

If banks don’t need deposits in order to be able to lend then how can we have bank runs?

Depends on where you start from

Torsten Bell, recently departed from the Resolution Foundation and now expected to be a Swansea MP, who I think might be in the running at that time. As former Chief of Staff to Ed Miliband, he already knows his way around. Whilst he is still right of centre,

Torsten? Right of centre? Right of where you are, perhaps, but of centre?

Horrors, horrors

Swedish media outlets have reported on nationalist “troll farms” in the past, but a TV4 journalist spent a year working undercover at the communications department of the Sweden Democrats. The channel said it was able to confirm at least 23 social media accounts run anonymously from the department. In just three months, posts from these accounts got 27m views across social media platforms.

The reporting suggests that this is the tip of an iceberg of misinformation and ultra-nationalist hate speech coming straight out of the publicly funded offices of a party on which the governing coalition relies for support. In hidden camera shots, party strategists were also seen coordinating secret attacks on political opponents, including conservatives who were deemed insufficiently loyal to the Sweden Democrats’ cause.

People we don’t like are able to talk to other people.

The Horror.

This is a new, dangerous phase for Swedish democracy. By launching a frontal assault on the legitimacy of the news media, the far right has raised the stakes for the future stability of Sweden’s democracy.

That’s almost American in its pomposity.

For too long, our dangerously unregulated digital commons have been poisoned by misinformation and hate speech,

As is that. People we don’t like should not be allowed to speak.

Ressa did not just place the blame on the despots and wannabe dictators of the global far right, but also on the tech companies for allowing misinformation, hate speech and troll farms to grow and fester, suffocating the truth. “Without facts, you can’t have truth, and without truth, you can’t have trust. Without these three, we have no rule of law, no democracy.”

This is a particularly serious challenge for Sweden and its neighbours. The Nordic model is built on high trust in governing institutions, in the media, in academia and science, as well as interpersonal relations.

That is, people shouldn;t be allowed to speak because that might damage trust in ……..what? Seriously, you can imagine Goebbels saying that, can’t you? We can’t have Jews running newspapers because that might destroy trust in Der Fuhrer. Jesu C onna pogo stick that’s a vile attitude.


Through two world wars, the Depression, recession, the social revolution of the 1960s and the rise of feminism, the only whiff of scandal in its demure pages came in 2001 when Jane Andrews — who had been recruited as the Duchess of York’s dresser through an ad in The Lady — was convicted of murdering her boyfriend.

It really did take a little bit there. I mean I know Julie Andrews has had problems with her voice but I thought she’d probably made enough to not have to go into service.

No, really, no

The sugar economy in São Tomé and Príncipe was critical to the construction of a modern world built on Black bondage. As Cruz put it, it’s the “first time that you have slaves who were enslaved Africans. It’s the beginning of the concept of slaves being Black,” though slavery itself is an age-old practice.

The Arab slave trade had been plundering south of the Sahara for 500 years by this point.


Now here’s an interesting thought

No they don’t. Taxpayers have got nothing to do with footing the bill.

When the rail industry, the coal mines, the steel industry, the road transport industry, and other industries were all nationalised post the Second World War because the economy required their output and they were left in a dire state, by the consequences of that war, the owners were paid for the value of their businesses.

And they were paid with government bonds. Government bonds are simply a statement of a loan with the government. The government said “We owe you the money that this bond represents and we’ll settle it with you in 30 year’s time” – that was the normal figure used at the time by the way – “and we’ll pay interest on it in the meantime of say 3%.” That was the normal figure used at the time.

And the consequence was that they paid market value because the businesses in question could generate a surplus sufficient to cover that interest cost.

Back then 3% was 3% real. So, did those nationalisations make 3% real returns?

Even, when we flogged them off, did we pay off the national debt that we’d taken out to buy them?

And the bonds themselves were not paid for out of taxpayers’ money. Let’s be clear that even if there is such a thing as taxpayers’ money, and I doubt it, what happened to those bonds when they came to be due for payment in the 1970s was that the value was extended. In other words, the original bonds were replaced with new bonds for another 30 years. And what happened when we got to 2005 and those bonds ran out? They were replaced with new bonds which ran for another 30 plus years.

Ah, no, we didn’t. Therefore we didn’t make 3% real, did we? For we’ve not got the companies but we do have the debts still…..

Sometimes those activities did not make revenue surpluses but that was because of the choice that government subsequently made to improve the quality of the services to meet the needs of the people of this country. And that’s an entirely separate issue.

Or, the other way of putting that, government’s crap at running such activities. Meaning it does cost taxpayers’ money. QED.

Oh for fuck’s sake

After three weeks of trivia, we’ve finally alighted on the one issue that towers above all others. Productivity. It may sound a rather insipid word, but it’s the fundamental determinant of living standards, public services and whether we have the budget to upgrade our (currently enfeebled) military. And it is painfully, tragically flat.

True, then not true. Productivity isn’t everything but in the long run it’s almost everything – to quote Paul Krugman.

Productivity isn’t flat today in the slightest. It’s just turning up in the consumer surplus, not GDP. As with my favourite example, WhatsApp. That is in the economic statistics as a decline in productivity (no, really). It’s also giving 2 billion people free telecoms. As another (non-NL so far at least) economist, Hal Varian puts it, GDP doesn’t deal well with free.

Why? The reason is that every technological innovation — and there were quite a few — ran into an insurmountable problem: a lack of energy. Agricultural economies, you see, were fuelled by biomass: plants. We ate plants for food, our domesticated animals ate them too and we burnt them (in the form of wood) for industrial processes. But to obtain more plant energy our ancestors had to bring inferior land into cultivation, reducing returns on labour and capital. Growth fizzled out almost as soon as it had started.

Tossery. Productivity increased just fine. So did output. What actually happened is that a better food supply led to more humans, therefore living standards went back down to subsistence again. It’s called a Malthusian economy.

This is important because it reveals something invisible to most economists: abundant energy sits at the centre of all economic activity and, therefore, growth.

The claim that many tens of thousands of often quite bright people, chewing over a subject for centuries, are going to miss something as obvious as that? Tossery.

The point is that productivity growth is about energy, energy and energy. And, while economists fiddle with their abstract models, this is what is screwing us today: we are an energy-constrained civilisation.

Ignorance. Summat called “energy intensity of GDP” which is how much energy do we have to use to create a unit of measured output? Been declining since Nineveh.

This is why I suggest all politicians open their eyes to what’s staring them in the face: productivity will rise only when we move to higher-EROI sources of energy.

Oh, so that’s where he’s going, EROI. Folk stumbling through economics do find the weirdest things to call unicauses.

One of them things

The first challenge they will bequeath to Labour, should it win, involves untying the tangled knot around imports and exports. The confused introduction of hyper-bureaucratic and horrendously expensive border checks is the result of hardcore Brexit ideology.

It’s the EU that demands the hyperbureaucracy.

We can do whatever we want – and we should. One useful idea is that if we were in the EU then we’d accept German, French, Italian, inspection as being valid. So, why not do so when we’re out of the EU?

But then of course we’ve got cretins like Jay Rayner.

But that would have stopped us doing terrible deals with other countries of the sort the EU would not allow. It’s why many UK products are now marked “Not for EU”. It isn’t that they don’t currently comply with EU standards; it’s that theoretically they may not. If an incoming Labour government negotiated alignment on food standards, huge costs and bureaucracy would be stripped out of food production. Imports could flow. With our self-sufficiency at just 60% and falling, that would be a very good thing. We need them.

Who so desperately confuse the EU’s rules on our exports with our rules on imports. They really, really, do not have to be the same.

Dicks, we’re good at being dicks

Footage has emerged purportedly showing England fans ignoring calls from German police not to sing ‘10 German Bombers’ at this summer’s European Championship.

A TikTok clip captioned ‘England fans in Dusseldorf #england #euros #euro2024 #fyp’ posted on the opening night of the tournament appears to feature Three Lions supporters performing the illicit song outside a Mexican restaurant in Dusseldorf.

The footage was uploaded barely a week after the chief of police of Gelsenkirchen – the nearby city where England play Serbia in their opening Euro 2024 match on Sunday – told any supporters thinking of singing the song while attending the Euros: “Don’t be a d—.”

As I’ve been known to say we’ll take the piss out of absolutely anything.

The Army is finally catching up with the Navy

Dotted among the 1,400 soldiers in the parade on Saturday were soldiers sporting a variety of beards beneath their bearskin hats.

However, the style of grooming differed very little as rules regarding facial hair remained strict.

All the beards had to be “full-set” – with a moustache – and be trimmed neatly off the cheekbone and neck. Bristles had to be thick – not patchy – and the length had to be between 2.5mm and 25.5mm, or between a Grade 1 and Grade 8.

Wonder how they’re going to do the other bit of it?

Traditionally, the Navy was fine with someone having a beard or not. Not so fine with someone growing a beard. So, the actual production of one was limited to either leave or a long cruise (note that this is a generation ago). At which point, “Permission to stop shaving, Sir” and the responsible officer would muse on whether he thought a full beard could be produced in the time to the next port. If yes, then OK. If not, then no.

So, what’s the Army’s equivalent of a cruise – and do they have to ask permission – which can be denied – to grow a beard?

Here’s your problem Robert

How have we ended up with the imminent prospect of a socialist takeover that nobody asked for? The simple answer is because the Right-wing commonsense majority is fatally divided between the Conservatives and Reform. Our first-past-the-post electoral system means that Reform splits the “small c” conservative voting bloc, and provides Labour with a majority so large, they can change our country for a generation.

Despite the Conservative Party and Reform’s combined vote share being on level pegging with Labour’s, it is not implausible that 85 per cent of our elected MPs could come from the Left. Even in the most optimistic of scenarios, Reform can only win a handful of seats – while costing Conservative MPs who have strived for lower taxation and reduced immigration their seats to Labour.

There’s very little evidewnce of the lsat part of your last sentence there. Thus people – some number that is – are voting for a party whoich at least claims to be more interested in those questions.

Or, to make it simple for a politician – as we must – if you lot had actually been right wing then you’d not have had a further right challenger.

Weird detailed silliness

The former Labour prime minister Gordon Brown receives the highest award of companion of honour for his public service.

One of the little conventions is that a subsequent PM doesn’t decide upon which gong he wants until the previous one has done so. Not written down anywhere, just is.

So, with Brown not having picked up anything that meant Cameron could have the Earldom he so clearly gasps for. No, the Barony to get him to be Foreign Sec isn’t the same thing. This then also applies to Boris, May and Truss.

Now that Brown is accepting the CH this might then clear the way. So, I’d say Boris is odds on to want an Earldom. Anyone else?

I recognise some names here

At the point Nigel Farage announced his intention to stand for parliament “my heart sank”, admitted Trixy Sanderson, 42, formerly known as Annabelle Fuller. “It’s very triggering,” said Farage’s former lover and press aide.

The overriding emotion of Doug Denny, 76, a former member of Ukip’s ruling body, was frustration. “I don’t like frauds,” he said, with a shake of the head. As for Nikki Sinclaire, 55, one of Farage’s former MEPs, she said she felt cold anger.

It was inexplicable to her that this particular political bandwagon was still rolling on. “I get very frustrated because the media have had the tools for many years to down Farage.”

It’s a bit of a hit job and those are – from politics – the three basically doing the hitting. Having been there at the time (or for some of it at least) I’d not put a huge amount of credence to the hits. There are, shall we say, backstories.

The bits about he can be ruthless and all that, sure. That’s sorta a given in someone capable of running an organisation of campaign.

But, you know……

An interesting question

Argentina’s inflation rate (MoM) has now fallen 5 months in a row. Javier Milei was sworn in December 10, 2023 just 7 months ago.

Down from 25.5% to just 4.2%

How did Argentina’s President Javier Milei do it?

Slashing government spending.

OK, that’s simple enough (and not fully correct either).

But I wonder what Spud’s answer would be to “How did he do it?”

New Vermine!

Many of these suggestions will be familiar to readers of this blog because it looks as though Plaid Cymru, like the Greens and the Liberal Democrats, have adopted many of the ideas in my Taxing Wealth Report 2024: some of the figures look remarkably similar. I cannot be sure what the relationship between that Report and those three manifestoes is, but the coincidences do appear high.

PC does, in my opinion, play an important role in Welsh politics, even though it remains a minority party. It champions Wales and the Welsh language.

Unlike Labour, which dominates the Welsh scene, it is a party of ambition.

It is willing to promote the interests of the people it seeks to serve, and not vested interests.

Its role in promoting the opinion of those who live in West Wales in particular, which is an area for which I have a strong affection, is important, and from my conversations there, I realise that it is appreciated.

I think he’s realised that, as a matter of policy, the SNP does not nominate for vermine.