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Maybe Modern Monetary Theory is true after all… I have seen the light. The man who convinced me of the truth of MMT was someone called Daron Medway, who replied to a tweet by Richard Murphy that said,
The government can never run out of money https://youtu.be/2m3BXdkDJYI?si=cjSA5MJ5AcDWkKgJ
Politicians, commentators and journalists all like to claim that the UK government could run out of money, but that is total nonsense. The UK government can always create the money it needs to pay its debts. It is the one and only organisation in the UK that can never, as a result, run out of money.
with this extremely persuasive point:
This is great! I guess I can keep all of mine then?
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Fancies himself an “economist.” Like hiring witch doctors to staff the surgical college.
“This is great! I guess I can keep all of mine then?”
My immediate reaction too!
If the government can’t run out of money, why is there taxation? Why are governmental agencies perennially “underfunded”? Why are there budgets? Why doesn’t each one of us just get $100,000 a year from the government as a matter of course? What’s the point of public-sector strike action if the government has an infinite supply of cash?
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”
bobby,
Doctors are at least ball-park for surgeons. Murphy is more like getting clowns to run The Pentagon. some people reckon this has already happened…
Richard Murphy is a fifth columnist, of the type Margaret Thatcher completely (negligently) failed to counter in the educational sector, and as a result, he ( and his ilk ) have been spewing his nonsense into the minds of students for the last forty years.
Instead, she ‘reformed’ the legal profession, as a result we got that little grifter phil shiner, and his ilk.
Leaving the field open for Blair’s reforms, which cumulatively, have left the British citizen with no legal protections what so ever.
I’m reminded of the quote attributed to More:
Well, here we all are!
“Why are governmental agencies perennially “underfunded”?”
C. Northcote Parkinson pretty-well stomped this one flat. He pointed-out that a civil servant in a hiring mood will never hire just one new subordinate – he’ll always hire two. Thus he looks overworked and worthy of a raise, and he’s now in charge of an additional “Section” and thus worthy of promotion, and he can keep his new “Section” at each other’s throats so, unlike a single hire, they’ll be too busy in-fighting to come gunning for his job. Worked for Schicklgruber…
A Newfie joke, if I may (Yeah, I’m Canadian; I’ve even lived in Newfoundland, and they tell the best Newfie jokes – they especially love this one)… The logging site foreman has a knot in his face; he put out the “We’re Hiring!” plaque and this Newfie shows-up to apply. Well obviously this dumb Newfie hick doesn’t know anything about trees & logging – why, do they even have trees in Newfoundland? So he loads the Newfie into his pickup truck and takes him for a drive, so he’ll be able to show-off his colossal ignorance and the foreman won’t have to hire him.
“Tell me about THAT tree there…” “Ahhh… pretty sure it’s a Sitka Spruce. Nice tree – she’ll do 715 board feet if she’s sawn right, prime export lumber!” Which was all perfectly correct, and the foreman hadn’t realized that much lumber could be got out of it, which naturally didn’t cheer him up a bit.
“How about THAT tree?” “Oh my, dat one’s a Douglas Fir – never seen one before! Got a nasty twist halfway up though, gonna’ cost ‘er the best cuts, I’d say… 675, 680 board feet is the most you’ll get out of ‘er…” The foreman hadn’t noticed the twist in the trunk, although he could see it now; so one of his most prized trees wasn’t as good as he’d hoped, and he’s getting pretty unhappy.
They drive back to the office, and the foreman says ” – one more test, and if you muff this one you’re out. THAT tree over there – which is the front side?” Well, this is a poser because who ever heard of a tree having a “front side”? So the Newfie wanders over to the tree, looks it up, looks it down while walking slowly around it. He’s out of sight behind it for awhile, and he comes back scuffing and dragging one of his boots in the gravel. “THIS side here – THAT’s the front of that tree!”
The foreman isn’t giving any clues away. “What makes you think that?”
” – Because somebody took a crap around the back.”
The Newfie got the job. A month later, he got the foreman’s job.
A variant of this is being acted out at the moment in my adopted home town. There, the miners institute is threatened with closure through lack of funding. It should be said there are no mines and no steel industry, thanks again to Thatcher, ( but I digress ).
Meanwhile the CEO of the local authority who has apparently, been off on full time sick pay is still in receipt of over £100,000 salary. A fraction of which could keep the ‘stute open for a couple of years.
But, but, ‘created’ money is created with a corresponding debt. Now the debt might be handled in different ways according to circumstances but eventually the debt will need to be repaid and the original money uncreated.
So yes, a Government can create money but it will have to deal with the debt. Which is perhaps why inflation is so hard to eradicate because governments use it to reduce the ‘real costs’ of their debt.
It is quite true that government can create as much fiat money as it wants. But it cannot create value. Taxes represent the government’s cut of something real, such as work or a transaction. Fiat money created out of thin air represents nothing apart from the government’s best wishes. That’s why when a government starts out on that path, the road is wide open to the £1 million loaf of bread. The government can create as much money as it likes, but it won’t be worth anything.
Professor Murphy describes himself as an “Economic Justice” campaigner – “Economic Justice” (like “Climate Justice” or “Racial Justice”) is just another term for “Social Justice” – i.e. plundering and tyranny.
Nor is “Modern Monetary Theory” modern – as various Roman Emperors debased the coinage, when prices went up Emperors, such as Diocletian, threatened to execute people – but prices went up anyway.
Sadly there is not a nation in this world that now does not now have an entirely fiat (i.e. command – whim) currency.
In the 1980s corporate types still pretended (perhaps even to themselves) that they were operating in a capitalist economy – trying to please customers (even Hollywood did so – producing films and television shows with conservative values, conservative values that the Hollywood types hated and despised, to try and please customers) – but today “the penny had dropped” in their minds, they now realise that they just need to please BlackRock, State Street, Vanguard and the Credit Bubble Banks – as “money” can, and is, created from nothing.
Governments have realised this to – which is why, for example, even the official American government debt is now over 35 (thirty five) Trillion Dollars (the unofficial debt is much higher) rather than less than 1 (one) Trillion Dollars which it was at the start of the 1980s.
Create money, from nothing, dish it out the Credit Bubble banks and other such – and borrow it back at a higher rate of interest.
Everyone is happy with this, utterly insane, state of affairs – and will be till the system collapses, will it will soon.
The Roman Empire, even the Eastern Empire, eventually collapsed into a barter economy – with the government just grabbing stuff as it decided it needed it (not really different from the barbarian bands of looters). The Emperor Anastasius restored a money economy – based on real gold and silver coin. Both collecting taxes in gold and silver and paying for things in gold and silver (rather than just grabbing stuff almost randomly and having most of it rot in government store houses). California and Oregon did this even in the American Civil War of the early 1860s, they kept a real economy based on cash-money – not the Credit Bubbles of corrupt bankers in New York supported by the government in Washington.
President Grant restored cash money (although he did NOT have Congress repeal the Banking Acts that gave insane privileges to the New York Credit Bubble bankers) and got rid of income tax – both in the early 1870s, evil returned in 1913 (well was passed in 1913 – not really operational till 1914). 20 years later with the top rate of income tax now over 60% (accepted by President Hoover) the government of “FDR” stole all monetary gold from ordinary people and violated the gold clauses in all contracts, public and private, and in 1935 the Supreme Court (5 to 4) ruled that was fine – with hindsight the judgements of 1935 (yes as long ago as that) were the end of the rule of law and the American Republic – if the government can just rob everyone of all the monetary gold they have and rip up all contracts.
If you can see an Emperor Anastasius or a President Grant (supported by people such as Senator Roscoe Conkling), anywhere on this planet, you have been mental sight than I have.
Sadly, although President Trump and Senator Vance mean well, they do not understand the basic principles at stake – as for Vice President Harris and Governor Walz – they do not even mean well, they mean badly, they intend (consciously – deliberately) to do harm.
APL – you are correct.
But is there any nation on Earth where the education system is not in the hands of the left (of the forces of lies and Collectivism – the left hand path to Hell) and where the legal system is not a horrible mess?
These are real questions – as I would be delighted to learn of a country where the education system was straight and were the “Justice” system was straight.
In Zimbabwe, the government won’t accept its own money. They have plenty of it though.
Created money – the stuff hot off the press, is not the same as debt that the government has just borrowed. Borrowed funds will eventually get neutralised as the debt matures and is paid down.
The problem ‘created money’, that is the rubbish the government produced in 2020, the stuff that led directly to the inflation we’ve been experiencing since winter 2021
@JohnK
It is quite true that government can create as much fiat money as it wants. But it cannot create value.
I think about this differently. If all the value in the economy is represented by a trillion pounds in circulation and the government prints one hundred billion pounds in addition, then now the same value is represented by 1.1 trillion pounds which is to say the 100 pounds I had in the bank is now worth about 91 pounds “old money”. So printing money is basically a widespread, automatic tax on wealth. It transfers some of the value in private hands into government hands. This is generally called “inflation”. Using this word is mechanism whereby the government can blame our diminishing bank account values on “greedy corporations”. In fact, it is now being loudly proclaimed just so in the current presidential election in the US. What Kamala Harris is saying is so stupid, so historically ignorant, so economically wrong, it is breathtaking in its ignorance or mendacity. But it sure does play well on the hustings.
In a sense I don’t totally oppose this idea of taxing wealth. Were we to have no taxes except a fixed expansion of the money supply to fund government operations (say at 4%) the economy would flourish, government diminished, and all of us more free. Problem is when government has unconstrained rights to do this. If it was fixed at, for example, 4%, and there were no other income taxes, we’d be in much better shape. Some years would be inflationary, some deflationary, but it would all be very predictable. In a sense it is a “fee” for using the government imprimatur on money. And if you can chose to use different currency we’d have competition to hold everything in control. (Imagine Amazon where you can chose what type of currency to use, USD, UKP, BTC, or maybe those little automated signs in retail stores that change the currency based on want.)
However, of course none of this will happen because its purpose is to take back power and money from the government, which is the absolute last thing people who decide these things want.
@staghounds
In Zimbabwe, the government won’t accept its own money. They have plenty of it though.
One year I gave my kids $100,000,000,000 for Christmas. 😀
Amazing what you can buy on eBay.
At least in the case of the USA with its jaw-dropping national debt, huge inflation might well be the only way the fedgov remains a viable concern.
Well, okay, an almost-viable concern.
In a recent video on YouTube the libertarian John Stossel has pointed out that K. Harris has a record of being of being the most extreme supporter of wild government spending in American politics.
It is not even close – K. Harris has a record of promising wildly more government spending than any other Presidential candidate in 2020 (yes the lady was a candidate then – in the Democrat primaries) or 2024 (or ever). Many TRILLIONS of Dollars more than any other candidate.
How is this to be financed? Partly by increasing taxes, including introducing a tax unrealised capital gains (which would destroy investment and industry in the United States), but mostly by the hyper inflation of “modern monetary theory”.
It takes only a few minutes to find the political record of Vice President Harris, so anyone who votes for this person either wants (yes – wants) to destroy the United States, or is too lazy to do basic research before voting.
In November we will find out if the United States has any chance of survival.
Do not mistake me – if Trump/Vance win the United States is quite likely to still collapse, the problems are that bad, but if Harris/Walz win the collapse of the United States is certain. The rise of statism, which goes back more than a century now (statism, collectivism, in the United States has been on the rise since at least 1913 – and, arguably, for some years before this), will have reached its tragic conclusion – the collapse of the United States of America.
And, I repeat, there is nothing secret about the political record of Vice President Harris – anyone who votes for her, either consciously (deliberately) seeks the destruction of the United States, or is too lazy to bother to do a few minutes research before voting.
If (if) most people really are that lazy does the Republic even deserve to survive?
If the people of the US want statism and collectivism, who are we to stop them?
jdh
These policies lead to death – and they are not confined to the United States.
Perhaps we are like the man screaming at passers by (and, understandably, thought insane) at the end of the first “Invasion of the Body Snatchers” film (and yes that film was meant as a coded warning about totalitarian ideas taking control of society).
Every institution, public and private, has been or is being taken over by evil (that word is not too strong) – if all we can do is warn the public and have them laugh in our faces and carry on over the cliff, then so be it.
It is still our duty to warn people – even if they laugh at us, and dismiss us as insane.
It may, tragically, be too late to save the United Kingdom – but there is still a chance, a small chance – but a chance, that the United States may be saved.
We will know if “small chance” has turned into “no chance” in a few months.
My own country Singapore comes close. We can’t afford to be deluded. Besides, our fascist system coopts the collectivists into the greater nationalistic whole.
Justice system… well, we got rid of the jury system many years back, and the public more or less views the legal/justice system as accountable to the politicians – the politicians are the ones to get the stick if the judiciary messes up.
It comes down to a simple calculation by the Democrat Party leaders – steal or don’t steal.
Don’t steal, they lose the election, but can reload for the next one, and their allies in the Deep State will keep Trump’s agenda in check.
If they do steal, what are the chances of a revolt?
But as far as I can see, the Democrats, like much of their constituency, have never been one to see far ahead. If they did, they would have let Hillary win in 2008, get Obama to be Veep, then run him in 2016.
Well yes, but unless you invest it in hard assets like gold, platinum, land and so forth, it would rapidly become worthless.
What, you think the government would cut spending? They’d likely go even more apeshit with it since raising or introducing taxes is politically painful.
The Wobbly Guy – excellent points Sir.
Tom Hunter – correct.
I have nothing to add – both of you have said what needs to be said better than I did.