Ragging on Ritchie

Add these factors together, and the commercial prospects for AI suddenly look to be decidedly muted, at least in the shorter term, as I have long anticipated. Put that feedback into the investment loop, with the potential loss of fortunes then becoming factored into market analysis, and a stock market bubble burst looks increasingly likely.

There has always been the near certainty that this will happen. The reason for it to do so now looks rather more obvious. The fallout will be spectacular and simultaneously catastrophic for the world economy. Tin hats will not be enough.

But, and this may be critical, the time when an understanding of MMT becomes essential may well arrive sooner than most people realise as a consequence. This will be the moment for its rollout. Politicians watching their neoliberal world fall apart around them for a second time in the memories of even the youngest of them will look for different answers this time. MMT may well be it.

Quite what the link here is is difficult to divine. Other than, you know, it’s 11.09, so it’s time for MMT. It’s 11.10, it’s time for MMT.

Or, well, maybe the failure of artificial intelligence means it’s time for lack of intelligence? Could be…..

So my necessary response to what is happening is that something as critical to our national infrastructure as the supply of internet services should be under state control.

Aren’t we all looking forward to that?

The supply of internet services in a country like the UK represents a natural monopoly because the duplication of the cabling required to get internet into most houses in this country cannot be achieved affordably, and so any veneer of competition is virtually meaningless.

And yet the duplication of local cabling still happens…..and there’s satellite, mobile and so on.

But there will be a price to returning, and the biggest of those might be a demand that we join the euro. The loss of economic monetary sovereignty that might arise as a consequence might be a price not worth paying, albeit that interest rates in the Eurozone have been consistently lower than those in the UK because the Bank of England has so determinedly kept rates in this country artificially high to attract hot money into the City of London, whilst deliberately suppressing growth and employment in this country.

Inflation’s higher here than in the eurozone. So nominal interest rates are.

My belief in the need for a single transferable vote electoral system in this country, based upon multi-member constituencies returning up to 10 MPs each, has never wavered ever since.

If it’s part of Spud’s bedrock beliefs then clearly it is wrong. So, that’s that decision easily made then.

Well, then he wouldn’t be Spud but there we are:

The Reserve Bank of Australia has lifted its key interest rate to 4.6%, its highest level since 2011, while warning of further hikes.

Did Australian mortgage holders need to be punished as a consequence of Donald Trump and Benjamin Netanyahu starting a profoundly unethical war in the Gulf, which they now do not know how to bring to a halt? The answer is obviously no.

Will increasing costs for Australian mortgage holders address the problems that the inflation in question is creating within the Australian economy? The answer is, again, no.

So, the Oz inflation target is already more like what Spud wants – he has indeed said that it should be higher than 2%:

Australia’s inflation target is to keep annual consumer price inflation between 2 and 3 per cent.

OK. And as to the effects of oil etc:

Key statistics
In the 12 months to July 2026:

The Consumer Price Index (CPI) rose 3.5%, down from 3.8% in the 12 months to June 2026.
The largest contributors to annual inflation were Housing (+5.0%), Food and non-alcoholic beverages (+3.2%) and Recreation and culture (+2.6%).
Trimmed mean inflation was 3.6%, unchanged from 3.6% in the 12 months to June 2026.

Trimmed mean inflation is:

The trimmed mean Consumer Price Index (CPI) is Australia’s core inflation measure that calculates the weighted average price change after removing the most extreme 15% of price increases and 15% of price decreases.
💡 How the Trimmed Mean Works
• Ranking changes: All expenditure classes are ordered by their seasonally adjusted price movement.
• Trimming extremes: The top 15% (largest price spikes) and bottom 15% (largest price drops) of weighted items are discarded.
• Middle calculation: The final rate is the weighted average of the remaining central 70% of price changes.
🔎 Why the RBA Uses It
• Removes noise: Strips out temporary or volatile shocks like sudden fuel or fruit price spikes.

They are already looking at prices without the oil rise. And inflation, by this non-oil measure, is well ahead of target. It’s also housing which seems to be a major driver. Yes, increasing interest rates to take some heat out of housing and so lower the inflation rate to target could be justified.

Is there no beginning to this man’s knowledge of economics?

Why should money earn interest simply because somebody owns it? We usually treat interest as a natural and inevitable part of the economy, but in this Understanding Economics video, I question whether that assumption is justified.

There’s a time value to money. That’s the interest rate.

And isn’t this fun?

I am not arguing that interest should be abolished. I am arguing that the basic interest rate on low-risk money should be close to zero in real terms, while genuine costs and risks should be identified and charged transparently.

Lending money to a bank is pretty risk free. Therefore deposit accounts at banks should pay zero interest. Hmm…..

Man who uses AI to write his own claimed output states that AI has no use.

At its core, the message is that AI euphoria is so mad that it is now not just infecting US stock exchanges, whilst massively distorting the allocation of capital resources within the US economy towards a purpose which appears to have no useful human goal

And, well, if AI’s only use was to increase Spud’s output then, well. But isn’t his lack of self-knowledge here wondrous?

Government interest payments become somebody else’s income. They flow to the owners of government bonds and other savings, including pension funds, investment funds, banks and other financial institutions. But because financial wealth is distributed very unevenly in the UK, the benefits of those payments are also unevenly distributed.

I argue that this means higher government interest payments can contribute to wealth inequality. Those who already own substantial financial assets receive additional income, while households with little or no financial wealth receive very little direct benefit.

Is it the richer or poorer who save with government, buy gilts and NS&I etc?

His argument is straightforward. Hargreaves apparently paid £210 million in tax last year. He says that if only a handful of people like him leave the UK, the resulting tax loss might run to £1 billion a year.

Second, as both Hargewaves and the FT appear not to know (which is worrying in both cases), the government’s capacity to spend is not constrained by its ability to raise tax. The household analogy on which this argument relies is just bunkum, but both subscribe to it, or this story would not have been published.

But MMT says the same thing.

The govt is constrained by the appearance of inflation. At which point is must reduce spending or increase taxation – run a budget surplus in order to destroy the excess money causing inflation. If the rich folk leave the country and so cannot be taxed that means that other people must be taxed in order to reduce that excess money supply.

We get to exactly the same place, no?

Workers in Britain and the United States are getting a smaller share of national income than they did decades ago. That is not simply a feeling. The long-run data shows it.

In the UK, labour’s share of national income peaked at around 71% in the mid-1970s and has fallen to around 59%. The United States has experienced a similar long-term decline. The consequence is an enormous shift in income away from wages and towards profits, rents and the owners of capital.

There are four parts to GDP by income. Labour, Capital, Mixed Income and Taxes Upon Consumption and Subsidies to Production.

So, VAT started at 10%, fell to 8, is now 20%. That’s a tax upon consumption and increases one of the “other” components than labour or capital, yes? All those green subsidies…..are there more self-employed, which is mixed income?

Spud’s assuming, claiming, that capital and labour shares are inverses of each other. They’re not.

The first and perhaps most important thing to understand about markets is that they do not occur naturally. They are not the default state of human affairs that governments and regulations disturb. Markets require an institutional infrastructure that only collective action, usually through the state, can provide.

That propensity to truck and barter predates our own species. We find tool making flints hundreds and hundreds of miles from their source. We find it in other species even – funghi have markets trading elements with tree roots.

Oh, that markets might work better with a bit of regulation could be true. But markets predate homo sapiens let alone government.

but more significantly, London’s reputation has not recovered since the 2008 financial crisis, which required far bigger bailouts in this country than elsewhere, indicating the scale to which UK finance failed.

Germany’s bailouts were very much larger.

Margaret Thatcher destroyed manufacturing in the UK

Manufacturing output was up higher when Maggie left office than when she entered it.

Thatcher was utterly confused when it came to economics. She thought that a £1 increase in the value of activity undertaken to meet human need was equivalent to a £1 increase in the value of a financial asset, like a property or a share, when that is utterly untrue.

Maggies wasn’t stupid enough to confuse income with wealth.

and inflated the exchange rate to bring hot money into the UK, at a cost to us all in terms of inflation,

A higher exchange rate reduces inflation….

That distinction matters because it changes how we think about profit. A genuine business needs sufficient income to survive, invest and continue its activities. But that does not mean maximising profit is its purpose. Profit can be a means of sustaining a business rather than the reason why the business exists.

That then raises a much bigger question. If human work creates value, why does conventional accounting treat labour as a cost while treating the residual profit as belonging to capital?

Actual economics – you know, the sort of stuff Mirrlees got his Nobel for – agrees that labour is a cost of doing something. On the grounds that it is a cost of doing something. But so also is that normal return to capital a cost of doing something. That normal return being what is required to attract enough capital to surivive, invest and so on.

In excess of the normal return is called economic profit, or even excess profit. Which is why Mirrlees says don’t tax normal profit, do tax economic profit.

It’s also a commonplace that economic profit is the vale added by doing this thing, this here, rather than all the other things that can be done in the economy. It’s a signal more than anything else….this is a valuble thing to be doing, look at the gap between the cost of doing it and the value created…….

In all this, there is a personal challenge. Do I give up, cower in the corner, and admit that I’ve been promoting something that people do not want, even though, by definition, if 30% of people are now supportive of neo-fascism, 70% are not? Alternatively, do I take a risk and continue to fight for what I think is right?

Who rally would send the bully boys around to an end terrace in Ely?

So, err, what risk?

And then I wonder just who those economists the Telegraph is talking to might be. The claim in the related article is that HMRC’s own data shows equalising capital gains tax rates will reduce yield, but those are Treasury numbers, and they got us into this mess, so I put little weight on their belief in the Laffer curve.

Empirical reality might send ’em ’round, true.

I think I had better think through the answer to that question in greater detail than I have before.

Therefore we all awai the thinking of Die Grosse Kartoffel to tell us all what to do.

Right? We are awaiting the instructions?

If pursued, this programme might reduce the current scale of bond sales by the Bank of England, which could, as a consequence, slightly ease upward pressure on interest rates, but by very little. That is because the guidance given is almost as important when it comes to long-term interest rates, which is what QE and QT are meant to influence, and the clear indication given is that the Bank wishes to dispose of all the bonds that it acquired after the 2008 financial crisis and the financial crisis of 2020, which arose as a consequence of Covid.

This decision makes no sense at all.

First, it gives the clearest possible indication that the Bank of England is intent on keeping interest rates in this country above the level they would naturally be for years to come.

So, we did something to reduce interest rates: QE. Reversing that is QT.

But if we do QT this raises interest rates above where they would naturally be? Eh? But we’ve just agreed that we artificially lowered them with QE…..

The first is that the Bank of England has no comprehension at all of inflation, or the impact of monetary policy on it.

Oh, right.

Governments create money when they spend. Commercial banks create money when they lend. Both processes happen every working day. If creating money automatically caused inflation, modern economies would be permanently experiencing rapidly rising prices. They aren’t.

But, but……the argument is about “how much” money is being created.

Common Weal has appointed a panel of experts, including lawyer and former SNP MP Joanna Cherry and Professor Richard Murphy, to address a raft of concerns the think tank believes the independence movement has so far failed to answer.

The project will focus on a number of issues ranging from currency to what the think tank called “the boring work” including how an independent Scotland would establish new regulatory agencies and the transition of the postal service.

Common Weal said that addressing the granular detail of building a new, independent Scottish state would win over voters who were concerned about the feasibility of such an undertaking.

Someone has given Murph the opportunity to design and plan an entire country! Glories!

Now let’s see how he gets on, eh?

Solanum starts out by insisting that the only real form of money is modern fiat. As bitcoin is not modern fiat therefore it’s not modern money.

OK, fair enough, and?

For as he points out gold is not modern money either. But it’s oft used as a form of money and therefore is, in fact, money, no?

Capitalism is an economic system built on a simple but rarely questioned assumption, which is that capital has the ultimate claim on the financial rewards an enterprise generates.

Capitalism is the private ownership of productive assets.