Ragging on Ritchie

This is truly fascinating

The only currency we have in the UK is sterling. It is government created. No one else can make it. It is the only legal tender we have. It can only be put into circulation by the Royal Mint, which is government-owned, and the Bank of England, which is likewise government-owned. We literally only have government made money in this country. And we have to use it: nothing else is accepted for payment of taxes but g0vernment made money. That is why we use it for our everyday transactions.

And there was me thinking that the banking system made a lot of our money by issuing loans.

Or is that only on Mondays?

Arse handed to

Any way you look at it though, and however you consolidate the accounts buying Gilts back at higher prices than they we issued at is still going to mean HMT has lost money. You can acknowledge it upfront, as you see to want to do with consolidated accounts or you can amortize the cost as HMT has done, but you can’t escape this very basic fact.

This is pretty simple stuff in concept – you only need to understand bond valuation and pricing and some common accounting principles to get there. I’m sort of surprised you haven’t managed to.

Richard Murphy says:
October 26 2020 at 5:38 pm
I have already explained why you are wrong on this

And the Treasury did not lose on repurchasing these gilts

It saved paying future interest to third parties – and that was what the premium represented

Hence, prepaid interest

It really is not hard

And now your posts will be deleted, because I bet bored after a while with people who can’t understand macro issues

It’s all rather amusing.

Richard Murphy says:
October 26 2020 at 6:59 pm
It hasn’t been paid

Stop the BS

That was your last post

How dare you disagree with me!

Gissa Job

This is what really hurts:

Both are using patterns of political preferment to appoint inappropriate and under-qualified people to critical public positions.

Says the Tre Professori of economics without any technical training in economics.

Because pensions

Prentii says:
October 23 2020 at 10:22 am
If it is caught by IR35 (and almost all of those roles should be and should have been even prior to public sector contract changes) then there isn’t much tax advantage that I can see to the contractor. The whole £1000-£2000 per day will get netted down after allowing for ER NI, EE NI and PAYE. What it does do is keep this contractor off any employment benefits, including pension.

Many contractors see these conditions as the worst of all worlds – mind you there are plenty who could cope with that indignity for up to 2 big ones a day.

Or can you see how the contractor can game the system?

Richard Murphy says:
October 23 2020 at 10:34 am
But why not employ them then?

Why play a game that is wholly unnecessary and too closely related to tax abuse?

Because pensions, holiday pay, maternity leave and all the rest for a contract that is going to last 5 months…..

Or, as we might put it, if you’re going to make employing someone expensive then you might well want a trapdoor in the system when you want to only employ someone for a few months…..


What MMT says: a chance for the critics to take a pop

So someone does take a pop. Detailed and valid critiques – critiques, not disproofs nor criticisms.

Richard Murphy says:
October 21 2020 at 3:32 pm
Let’s conclude you’re pout of your depth here and haven’t tread MMT, as is very apparent to those who have

I have no more time to waste on your nonsense

Marc says:
October 21 2020 at 4:14 pm
I have critiqued MMT, which I thought was the purpose of this post, having read the title.

The questions I have asked are relevant and important, assuming MMT is to be taken seriously. Even more so if you think it should be used to manage fiscal and monetary policy. One would have thought that if MMT was an accurate description of “how the world actually works” as some have claimed, it would actually…..have a description?

It turns out that you can’t answer some of the questions, won’t answer others and the answers you do give are pretty much entirely incorrect. That is when you are not just answering a question with rhetoric or another question.

Then at the end of it all, you resort to being obnoxious, making a claim that I’m out of my depth (pretty bold, given the obvious and basic mistakes you make here and in some of the other posts of yours I have read) and then shutting down debate.

So I take it this post is not a place for critics to take a pop at MMT?

MMT can’t (and isn’t) be taken seriously because it can’t or won’t answer some basic questions. I thought that by asking those questions again you would be able to set the record straight and provide some of the answers. The closest you got was admitting that MMT doesn’t actually have a model as to how tax would be used to control inflation.

Richard Murphy says:
October 21 2020 at 4:32 pm
I’m delighted if [eople can critique MMT

You didn’t

You haven’t read it

And the claims you made were not true of MMT

That’s not a critique

You won’t get posted again



Richard Murphy says:
October 21 2020 at 12:09 pm
1. Trillions of QE around the world has not created inflation. Your claim is wrong.

So that deflation we’ve avoided through QE is summat else than inflation then, is it?

Well, yes, quite

King thinks otherwise. He says:

Far from it. Giving elected representatives the keys to the printing press is the equivalent of giving a gambling addict the keys to the casino.

In other words, democracy cannot be trusted and politicians, without the wise paternalist constraint if the banking community exercised through their club in Threadneedle Street, would run amok. The little faith he has in democracy is all too apparent.

Give Jezza, Snippa or Hancock, any of them, unlimited never running out chequebooks and the result will be?

Tee hee

The only vaguely coherent motive I have seen from anyone comes from Richard Murphy, the self-styled father of Corbynomics, and it is nuts. Murphy reckons that “herd immunity” (which he wrongly thinks is a veterinary term) is “the economics of neoliberalism running riot” and that the end goal is a “cull of the elderly”. Aside from the fact that the explicit aim of “Focused Protection“ is to protect the elderly, it is a mystery why Charles Koch, aged 84, would support such a diabolical plan.

Basics Here, Basics, They Do Matter

I have heard it said that only the mad and economists think that perpetual growth is possible in a finite world.

Kenneth Boulding but still.

(Chart of rise in GDP per capita.)

Is that growth mad?

Is it unreal?

Is it unsustainable?

Is it time economics realised that this cannot continue and ask, in stead, what else is possible?

The answer to all four is yes.

At which point we need some basics. What is GDP? It is the value added in the economy over a set period of time.

Is adding more value mad?

Is adding more value unreal?

Is adding more value unsustainable?

Does economics need to realise that this cannot continue and instead ask what else is possible?

The answer to all four is no.

Consider this for a moment. The next argument – we can see this one coming down the pike from a mile away – is that instead of increasing GDP we should be trying to increase security, or love, or community because these add real value to our lives. Sure, so, we’re increasing value then, right?

But then Spud never has bothered to find out what economics is trying to tell him, has he?

Odd this

The UK government always said it could not legislate for Jersey.

Can’t think of any UK government who would ever say something so stupid.

The 1973 Kilbrandon Report stated that “In international law the United Kingdom Government is responsible for the Islands’ international relations” and “also responsible for the defence of the Islands”.[37] The United Kingdom is responsible for Jersey’s international relations as an aspect of the island’s status as a Crown dependency. It is now normal practice for the UK to consult the Jersey government and seek their consent before entering into treaty obligations affecting the island.


The truth is, of course, that it could always have legislated to stop tax abuse and corruption, but it chose not to.

That it now thinks it can legislate on fish proves that.

And shows that it never had any intention of beating tax abuse and corruption.

Which does, of course, show how corrupt it is.

Who gets to fish what, where, being one of those international relations things. That’s why the UK and rEU are discussing it right now, see?

So here’s a prediction

There is not the remotest chance that any of these rep[urcahsed gilts will ever be sold back to financial markets. Nor is there ever going to be reason why they need to be so.

Well. Even MMT would say that if we get to full employment there is a chance that the increased money supply will lead to inflation. Something that is solved by reducing the money supply. Which could – not necessarily will but could – o done by selling the gilts back into the market.

You know, the same way the Federal Reserve shrank its balance sheet?

I wonder

If Britain’s leading and foremost modern monetary theory expert were asked about this would he agree?

The following equation is always and everywhere precisely true, to the very last decimal point:

M*V = C + I + G + (X-M)

And if you then said it is something Milton Friedman liked, MV=PQ, would he still agree?

It’s the ignorance that’s so painful

And that is the risk being seen here, that I very strongly suspect that few in government understand because most have been taught be economists who make the assumption that neoclassical economics usually makes, which is that businesses react instantly to new information, when the reality is that they cannot do anything of the sort.

Neoclassical economics doesn’t make any such assumption. It’s more a feature of classical theories than neo-. In fact, Marshall tells us that:

Marshall explained price by the intersection of supply and demand curves. The introduction of different market “periods” was an important innovation of Marshall’s:

Market period. The goods produced for sale on the market are taken as given data, e.g. in a fish market. Prices quickly adjust to clear markets.
Short period. Industrial capacity is taken as given. The level of output, the level of employment, the inputs of raw materials, and prices fluctuate to equate marginal cost and marginal revenue, where profits are maximized. Economic rents exist in short period equilibrium for fixed factors, and the rate of profit is not equated across sectors.
Long period. The stock of capital goods, such as factories and machines, is not taken as given. Profit-maximizing equilibria determine both industrial capacity and the level at which it is operated.
Very long period. Technology, population trends, habits and customs are not taken as given, but allowed to vary in very long period models.
Marshall took supply and demand as stable functions and extended supply and demand explanations of prices to all runs. He argued supply was easier to vary in longer runs, and thus became a more important determinant of price in the very long run.

That we’re dividing things up into four periods – where we have different levels of flexibility in each one – oes rather show that we’re not assuming instant reaction, doesn’t it?

That long term elasticities of supply and demand are greater than short term – a thoroughly neoclassical assumption – is just a restatement of the same point.

Man’s howlingly ignorant.

So, how do we tell if this article is bollocks?

It is already clear that the declaration is being used to legitimise a libertarian agenda. Indeed, some authors have questioned if it was ever anything about health, or whether its motivations were always purely economic; as the professor of political economy Richard Murphy put it, the declaration was “the economics of neoliberalism running riot … revealing in the process its utter indifference to the interests of anyone but those who can ‘add value’ within that system”.

Given that this is an approving quote then that settles it, doesn’t it?

It also neatly justifies the Ragging on Ritchie that so bores some around here.

To misunderstand neoliberals

Third, the moral bankruptcy of neoliberal thinking has been exposed, and as a consequence the entire moral foundation of our economy has collapsed. The aberrational, and even mad (I use the term advisedly) thinking that underpins our economics, which suggests that we are all entirely selfish individuals, born without empathy or concern for others, has to be eliminated from our education system, where it has represented a pernicious form of corruption. At the same time its impact has to be removed from the structuring of our economy, where it has driven us to the brink of massive failure.

Who says peeps are without empathy? We have rather a good description of it – called sympathy but still – in Theory of Moral Sentiments. By, you know, Adam Smith. Even, actually, a discussion of mirror neurons – not that they were called that then – in the discussion of the watchers of the man walking upon the tightrope.

Equally, that discussion of how the man might think his finger or summat is more important than a million Chinee. Which is rather how humans work, that empathy radiates out and declines by distance rather like gravity, squared and distance and all that.

But isn’t it lovely to know that all this must be banished from the education system? We must, that is, be censored into Spudnomics as we can’t and won’t reach it by any other route.

Third, and very obviously, we also need to address the failed culture of our economics. I can think of no easier way to achieve this than by revising the mandate of the Bank of England. At present, all the Bank of England is required to do is keep inflation below a 2% target.

It would help if these pronouncements were in fact true. But no, the Formerly Tre Professore knows not of what he speaks. The ECB has an inflation target of up to 2%. The Federal Reserve a dual mandate of full employment consistent with an inflation rate. One which the Fed interprets as core PCE running at 2%. The Bank of England one of either side of 2% inflation – less than 1% or more than 3% triggers a letter to the Chancellor explaining why the target hasn’t been hit.

There is a perfectly good argument saying that an “up to ” target is a bad idea as the incentive will always be to low ball in order not to exceed. Which is the very reason why the BoE’s target is not an “up to” one but an “around” one.

And recall, Snippa is the one who would tell us how the world should be run, has the detailed plans for it even. And yet Snippa is the one who doesn’t know how it currently works.

Nothing could more effectively say that the economy is to be run in the interests of those with wealth than this single statement does. The reason for the paranoia about inflation is that inflation deflates the value of debt, which debt is the instrument that those with wealth use to preserve their wealth and maintain their income whilst simultaneously, imposing their control upon most of the population.

Oddly, the rich folk out there tend to be in equity and property, two inflation protected classes of investment. But you know, knowledge and all that.

A change is, then, required. If that mandate was re-written as follows our economic policy would be very different:

The Bank of England shall be required to cooperate with HM Treasury in the promotion of an overall economic policy that:

Promotes full employment;

Funds the transition to a sustainable, net-zero carbon economy;

Supplies sufficient fiat currency to the economy to facilitate the smooth operation of the financial system in fulfillment of the above goals;

Recognises that inflation might prejudice achievement of these objectives and seeks to limit it to not more than 3% per annum.

You see the problem? The BoE is already fine up to 3% inflation. And “up to” targets are a bad idea anyway. We want “around” targets. The man’s too ignorant to be designing that new world.

Then we would have a fundamentally different economy.

Well, no, not really, as anyone who grasps the current one would know.

Oh, and the supplies sufficient fiat currency one? That’s straight Milton Friedman. The money supply should increase as the size of the economy does. You know, a restaurant serving 150 covers needs more plates than one serving 50? Or even, MV=PQ and if the right hand size increases then so must the left…..and you can’t get much more neoliberal than that now, can you?


What happened? It would be so easy to say that everything was down to Covid. But, important as that is, I don’t think that is true. Coronavirus exposed this crisis. It did not, however, make it. The fact that there are countries, from New Zealand and South Korea, to several in Southeast Asia, plus Japan, who have managed this crisis so much better than we have makes it clear that there is something much more to what we are facing than the impact of a virus.

OK, New Zealand. What was New Zealand doing then? Ah, running a budget surplus. Destroying the government created money that is so necessary to economic expansion.

source: tradingeconomics.com

So, err, to not follow Supuddanomics then.

Not that I control or direct any of you but….

Ragging on Ritchie is, of course, a grand spectator sport. However:

Richard Murphy says:
October 16 2020 at 9:26 am
Let me provide a provide summary answer to this.

In 2013 my wife was diagnosed with cancer. I am pleased to say she is now in remission.

However, when being treated she had chemotherapy, as well as surgery and radiotherapy. One of the advised side effects of chemo, with maybe a 1 in 10,000 risk, was serious mental ill health. She was the 1 in 10,000, and an extreme case at that. She had never suffered mental ill health before then.

For five years she could do very little, including parenting, which fell to me. Her condition was so bad that we lived apart from 2015. We still do. But I maintained my commitment to care for her, and have. We remain married. The arrangement may be unusual. We have not changed it, for many reasons. That’s our business.

Perhaps – and again I point out that you are not my charges nor can I, or even would I, direct you – some things might not be ragged upon?

So, such things as minimal salaries, zero national insurance taxation, profits paid out as dividends, from a limited company when raging that such was tax abuse is fair game. Bits about wife – well, you don’t need me to tell you this – are perhaps not.

there’s a certain hostage to fortune in my saying this as of course some will possibly use it as proof that I control some pack of feral commentators. Which, of course, I don’t, but it still seems worth saying. It is my opinion that certain things about Snippa should be ragged upon and others not.

Snippa and herd immunity

It is depressing that we have a health secretary who does not understand, let alone believe in, herd immunity (Tory rebels fire warning shot as 42 MPs vote against stricter Covid measures, 13 October). The three examples that he quotes of diseases that never reach herd immunity are all incorrect, in different ways.

With malaria, the problem is the lack of individual immunity, and with flu the problem is that different strains of the virus emerge from time to time, bypassing any herd immunity that has built up. But it’s his inclusion of measles that really upsets me. You do get herd immunity, in the adult population, but this gets diluted out because people keep having babies. This can be easily counteracted by vaccination of children.

Because measles is far more infectious than Covid-19, with R possibly as high as 20, achieving herd immunity requires vaccine uptake of about 95%. Obtaining that requires a continuing campaign to counter the ignorance and misinformation about vaccines that is circulating.

By wrongly suggesting that herd immunity is impossible for measles, Matt Hancock has just shot himself, and us, in the foot.
Prof Jeremy Dale
Glossop, Derbyshire

Well, don’t that just shoot that fox?

Jeremy Dale studied medicine at Cambridge University and the Middlesex Hospital, London. Following GP vocational training in Oxford, he was appointed as a lecturer in primary care at King’s College School of Medicine and Dentistry in London, becoming a senior lecturer in 1992. While in London, he also worked as a part-time GP principal in a busy general practice in one of the most socially deprived parts of the city. In 1997, Jeremy was appointed Professor of Primary Care at Warwick. Between 1998 and 2007 he was the Director of the Centre of Primary Health Care Studies and between 2003 and 2006 was Head of the Division of Health in the Community at Warwick Medical School. He is also a part-time GP with the Engleton House Surgery in Coventry.

Ho hum.