Ragging on Ritchie

How excellent!

Exceptionalism is the idea that a country is different to others, and better as a result.

Brexit was powered by exceptionalism. So too is Russian aggression. So is the indifference of those in power in the USA as to the impact of their decisions on its currency on developing countries a form of exceptionalism when that currency is used by so many other countries.

Exceptionalism is based on arrogance, mythology, and straightforward lies. Its founding assumption is that there is an indigenous people who are possessed of superior traits that occupy a territory. Racist and eugenic within itself, the claim is also very obviously false. The only truly identifiable human trait is our extraordinary commonality, rather than our differences. Exceptional individuals might exist. There is no evidence that exceptional populations do, although those capable of being deceived into brutality seem to be a recurring theme of history.

The logical conclusion being that there’s no reason the indigenes should be ruling Africa. Bring back colonialism!


In practice, the paper argues that the greatest unused resource in our economy are people’s savings.

They’re savings, being used as savings. The problem with this is?

As a result most of the £8.4 trillion of financial assets owned by people in the UK are not being directed towards any useful social purpose in the UK at present.

Ah, yes, there’s the problem. Spud wants to spend the £8 trillion.

This is pretty good

The increase in interest costs for the most vulnerable households makes this worse. And let’s be clear that this policy is targeted on the most vulnerable households, which borrowers and renters always are as they have always the smallest budgets available to meet other costs.

Mortgage interest rates rise. Renters hardest hit.

So, the families and households most likely to be most under stress in the UK will see their bills for mortgages and rents rise rapidly if the Bank gets its way.

Someone’s also going to have to explain how higher interest rates increase rents…..

The Credo

Byline Times has asked the P³ to produce a proper Credo. Which is fun, because it’s not going well so far:

It is my suggestion that the left should replace this with a new ethos:

“The left wants to create a sustainable economy by putting all the resources available within society to best use, including those that the market fails to use to best effect.”

That does rather run into the “Who, Whom?” test, doesn’t it? Who decides what is best and by whose standards is something best?

Neo-liberal dogma might have survived the 2008 financial crisis, but the practice of government and its financing since then has suggested that much has changed. The idea that governments cannot create money to fund their own activities without dependence on either taxpayers or borrowing has been shattered by quantitative easing.

No one ever said they couldn’t. They did say there were effects of their doing so. Monetisation of fiscal policy has entire libraries written about it. Henry VIII’s debauching of the silver currency for example. Even 2 nd Century Rome’s same thing. We all knew and agreed that government can create money and spend it. But also that we might not wholly enjoy the consequences of their doing so.

Money is Made by Lending, not Saving
We now know that all bank-made money is created by lending. As a result, we know that no bank lends savers’ funds. They are not the intermediaries that they were once supposed to be. The reality is that cash savings in banks are macro-economically inconsequential because they almost never create new employment or jobs in the way they are saved at present;

If banks don;t require deposits to finance their lending then no bank can be illiquid not go bust because it is. Banks can go bust because they are illiquid – therefore the claim is wrong, banks do require deposits to finance their loan book. Spud is simply wrong here.

What has been called government borrowing is nothing of the sort but is instead an incredibly secure savings facility offered by the government largely as a favour to the banking sector who need it to underpin their operations;

That’s why government has to pass laws insisting, nay forcing, financial institutions to buy gilts then, eh?

Company Shares Do Not Finance Investment
Based on research colleagues and I have been doing at Sheffield University and elsewhere, we know that FTSE companies do not rely on or need new share issues to finance their investment activity. In fact, they are repurchasing shares faster in most cases than they ever issue them. What that means is that saving in shares also rarely if ever creates new investment or jobs now. This is as true of property companies as any other quoted company;

The observation is fair enough, the implication is woefully misunderstood. Stock markets are, largely enough, methods of being able to sell previously successful investments. Now imagine if you couldn;t do this. Any investment you make you are locked into for all time. It’s not possible to sell – because there’s no market in second hand investments. Now what does that do to the supply of new investment? And to the price people will demand for investing in new things?

In the absence of being able to sell on successful investments there will be fewer investments.

The conclusion is that as things stand, the whole edifice of the financial services industry has ceased to be an intermediary between savers and investors, which was once its raison d’etre. Instead, it merely provides cheap capital for banks in the case of cash savings

Deposits are not capital to banks. Man’s a buffoon.

A Renewed Social Contract: the Uses of Capital
Government has to take on a new role in society. It has, in effect, to become the intermediary between savers and investors to make sure that the nation’s capital is once more used for social purposes.

“Social” purposes. Purposes Murphy approves of. Rather than either consumers or investors.

Using the very obvious power that tax reliefs have to direct the use of savings it is suggested that the tax reliefs attached to ISA and pension savings accounts should be changed to mandate their being saved in new Green New Deal bonds to be issued by National Investment Banks in the case of ISAs and to encourage that same use in the case of pensions.

The man’s insisting that pensions savings be invested in 1% bonds at a time of 9% inflation. Twat.

This even before his error about what equity does in a new and real investment project. Who are the first people to lose money if the plan fucks up? Equity, capital. They are the buffer. So, who is to be the equity buffer in the Green New Deal where all gain 1% on their bonds? Bondholders – at a price of 1% – have to carry excecution risk? Man’s an ignorant twat, not just a twat.

In both cases, the National Investment Banks of each of the countries of the UK would be directed to use the funds that they can generate from these Green New Deal bonds to fund the transition that is required to a sustainable economy faster than might be possible by relying on any existing decision making or funding process. As a consequence additional investment will be made in:

New social housing
New sustainable energy generation systems
New energy efficiency systems, including in public and private housing
Sustainable transport systems
The renovation of many existing public buildings to make them energy-efficient and sustainable
R & D into:
New food production systems
Reduction in food waste
Alternative energy systems
The support mechanisms for society, most especially in health and publicly provided social care, whether at home or in residential provision
Education and related facilities to support all these programmes


How are the gains from all this gloriousness to be captured? The assumption is that these schemes will all make money which will pay the interest on those bonds, right? Great, so how is that interest captured from the profits of those investments? There’s no thought, let alone detail, of how that will be done. Reuing food waste – OK, maybe a good thing to o. But how does this produce an income to investors?

And then, well, OK, so we mangle the system so that it does produce an income to investors. Great – so why then do we need govt diretion of the investment funds? Folk can just do it themselves and gain access to the income stream from making those investments.

This is a core problem with The Tuberous plans. If the profit can be captured by investors then there’s no need to force the issue. And if they cannot then there’s no income stream for the forced investors, is there?

But perhaps most of all, the purpose is to recreate the link between the saver and the investment that they fund that has been entirely destroyed in modern financial capitalism when the saver in a pension, ISA of any sort, or any structured fund has no real idea what their money might be used for. That it so happens that the investments with which the saver might associate themselves resulting from this proposal could also be of their choosing, either by offering dedicated (e.g. climate, health or transport funds) or regional funds so that the saver might associate their money with new projects in their own region or devolved country, enhance this goal.

Dunno really, I’m pretty sure that I can direct my ISA funds to Imperial Baccy if I should so wish. And I might well do so – aiding those who enjoy smoking serves a social purpose, right?

What is the downside?

Well Professor Murphy, other than it’s entirely barking mad, what else might we add? It’s inefficient, illthought through and misses the entire damn fucking point? Which is, just to remind, that other people get to spend their money as other people wish to spend their money. Not as a retired accountant from Wandsworth thinks they should be forced to.

Because the man’s an ignorant tosser

Shares in quoted companies are almost irrelevant to their funding so why do we let so much emphasis be placed on them?

Shares in public companies on stock exchanges are, largely enough, the exit route for the original investors. Those people who actually stump up the risk capital to go and build the new thing do require an exit. Otherwise their insistence on annual returns would be horrifically high because they’d never be able to sell – they could only hold forever.

So, the existence of public equity exchanges increases the amount of capital spent upon building real stuff and new companies etc.

The only reason Spud doesn’t get this is because he’s ignorant. What makes him a tosser about it is that stock exchanges are the very method by which we gain what he says he wants, investment in new activities.


There are two options. One is that this is an event now, requiring to be accounted for at this moment. That is the option the government is adopting. The other is to suggest that this is an event happening in maybe 18 years time which has to be accrued for between now and then in equal equivalent stages over that period.

The higher capital repayment from RPI indexed bonds should not be assigned to this year. Instead, it should be discounted over time until redemption.

This from the man who insists that discounting the future is the work of the very devil.

Even then his calculation doesn’t work. Because if we do as he says, allocate over years to redemption, then where in the accounts are the allocations for this year from past inflation? The current accounting method means those increases are all buried in past year accounts. Spud’s chosen method would mean that this year’s accounts should have some portion of past inflation in them.

Oh, right

In the summer of 2021 no one was really expecting serious inflation

Except every monetarist on the planet. Try Tim Congdon for example.

Because the government is going to take more in tax this year – most from people who’re suffering the most and they will not acknowledge this

But more tax is the MMT answer to inflation!

A package of new spending funded by QE

Oh, right.


Fifth, expect to find that the good people of Devon are not so good by Friday morning: I suspect large numbers of them will vote for a candidate from our fascist party.

Getting close to having to elect a new people, isn’t he?

Err, yes

And the government could always run a small deficit to make sure people are protected from harm.

They could run a small deficit, yes.

The deficit, which soared to 14.8% of GDP in 2020-21, fell to 6.1% a year later and is forecast by the OBR to decline to 3.9% in 2022-23 assuming the economy keeps growing.

They’re already running a large deficit then.

Umm, yes

You cannot have hollowed-out firms driven by the demands of financial neoliberalism and also have businesses capable of surviving downturns caused by reasonably anticipatable issues like inflation.

This from the bloke who only 6 months ago was calling 1% coupon bonds “high interest”. Very foreseeable inflation, oh my yes.

This is interesting news

Political economy is related to economics, of course, but it is a much more useful field of study for two fundamental reasons. One is that it adds money into the normal field of study when most theoretical macroeconomics and quite a lot of microeconomics simply ignores it.

Does it? Will come as something of a surprise to the monetarists among others…..

Dr Evil numbers here

But the other is to break the power of the wealth accumulation that underpins the arrogance of neoliberal capitalism. There is more than £8 billion of financial wealth in the UK. More than 80% of that is in tax subsidised funds (ISAs and pensions) used by neoliberal capitalism to maintain its hold on wealth and to support the status quo. And none of it is used productively. Almost to the last penny it is used in socially useless ways, from sitting dormant in bank accounts to being the fuel for stock market speculation. This has to change. I am writing separately right now on that issue.

Of course, what he means is that you should not be allowed to save as you wish, but as Spud insists.

His latest being that all should invest in high coupon – by which he means 1% – bonds at a time of 9% inflation. Your pension’s going to do just great on that of course.

Get Nicola on the IndyPhone, Stat!

Richard Murphy says:
June 17 2022 at 3:33 pm
Re Santander etc, I don’t know

Re leaving, I would be going to Scotland, as and when…

“Right, that’s it love. ‘Ee says ‘ee’s going your way on Indy. So, immediate vote, we’ll fiddle it so you’ll win and good luck – ‘ee’s yours.”


I don’t think he quite gets this

Second, note that before 2007 there were almost no such balances, at least in total. The commercial banks and the Bank of England sought to achieve this result each day but used other very short-term overdraft and loan arrangements if that was not possible at that time. The current situation where all CBRAs are, in effect, bank despot accounts held by the UK’s commercial banks as a mechanism to guarantee their ability to make settlement to each other is almost entirely a creation of the post 2008 global financial crisis as a result.

Yes, the central bank accounts have largely displaced the overnight markets, agreed.

Overall, the sum held on these accounts is not within the control of the commercial banks. The sum that each bank might hold will vary from day to day. However, that is the consequence of payments between banks varying. However, the quantum of funds held in the CBRAs as a whole is determined by the Bank of England

Well, no, not really. Because if the banks went back to balancing their books using the overnight markets then that would affect the central bank accounts, right?

And how might that happen? Well, if the interest rate differential between the central bank accounts and the overnight market became larger than the perceived risks then we might well see a switch back. Which does place a control on how low the interest on those central bank accounts can be, doesn’t it?

But enough of such trivia. Look at the large point here. Spud is now agreeing that banks must balance their books. There is some day to day process and or moment when deposits plus capital must equal loans. The very thing he was denying was true mere days ago.

Umm, yes

Nor, incidentally, can quantitative tightening (which is simply reversing quantitative easing) solve inflation either, because QE has not contributed to inflation in consumer prices, as I have shown, and reversing it will in that case likewise have no impact on those prices.

QE hasn’t caused inflation. Nope, because Spud likes QE, therefore it cannot have caused inflation. D’ye see? Things Spud likes do not cause bad things.

Therefore reducing the amount of money in the economy – QT – cannot reduce inflation. See?

The entirety of world economics is wrong and I, Spud, The Tuberous One, am right. QED.

Tensions that might be impossible to peacefully resolve are being crashed at this moment as financialised neoliberal capitalism makes what might be its ultimate, and ultimately destructive, power grab.

And all because the money supply doesn’t influence inflation, d’ye see?

We have concerns

ChrisW says:
June 16 2022 at 9:47 am
At the risk of sounding paranoid, do you think that there is any sort of coordination behind this Richard?

Richard Murphy says:
June 16 2022 at 10:06 am


That individuals might decide to just do summat never is really grasped, is it?