Just accept being poorer, says BOE…

That’s why I chose to separate it… maybe start an informative thread on MMT.

@stevextc

[url= https://singletrackworld.com/forum/topic/mmt/ ]Like this one?[/url]

Rather than admit this, they seem to believe that we’re just not doing it hard enough.

Yeah. Maybe my imagination is getting carried away but the destructive race to return to a world of 5%-ish interest rates feels like the last desperate stand of a defunct socio-economic model. Much like Ernie I think we're on the cusp of significant change. What it will look like I don't know, and it may not be positive, but the status quo as it is today is looking more fragile with every new crisis, and the crisis to end all crises is gathering moementum rapidly in the form of climate change.

DT78

Got to say I don’t really understand macro economics fully – but I see people so rich they can have their own space programmes and others who are struggling to heat and feed their kids. Its just not right, there is more than enough for everyone to be comfortable if there was fairer distribution – and I’m not talking about screwing those who are doing slightly better than the ‘poor’. I’m talking about the super rich. So I agree with the sentiment that money is being funnelled to the super rich

I don't think anyone really understands economics as such, it is what it is but the non expert adult explanation is pretty easy to understand.
If we take Elon (as an example but could be Jeff or our dear Richard) they don't have an income like we do that they use to spend on things they want or need.

If Elon wants to take a trip to say London for example he tells some people to get "his" plane sorted and get somewhere for him to stay and do some logistics stuff.

He's obviously a busy bloke .. so no problem with him getting his minions to organise it.. the thing is HE personally doesn't pay for any** of it. (**he might get a sandwich ??) It's no "his plane" it s plane belongs to a shell company even if he has exclusive use... he didn't pay tax on money he bought it with .. in fact he offset corporation tax against it.. that's a bit of the bigger scale... (jets and stuff) but the same is true for the smaller stuff. He doesn't need an "income" as such to pay tax on because he doesn't need to spend his own money.

^^ that's a bit simplified but the Level 2 ^^ I'm sure Elion would argue he's using this money for the good of humanity and getting a population off earth as he states... and perhaps that a long term good thing or not... but short term people starve, don't have access to medicine etc.

The takeaway is when you have enough money the goods and services you consume are not for the most part in the system.
If you want to spend ??Bn on launching a rocket and it blowing up you can...

You don't need to be as rich as Elon though... (unless you really do want to be able to launch rockets)

Look on it as supersizing on owning a freehouse that serves food... your beer and food are taken care of and you "only use the car for work" etc.

@dazh Yes, there is a definite "end times"  chaos mix of many folks' financial fragility, the climate, war and a sharp rise of anti-democratic regimes in countries that seem to have been steadily on the path of plurality that just feels overwhelming.

I wonder if rising interest rates could be seen politically as a combative move against our now competitor EU countries? Most people borrow money for cars, but if it's too expensive to buy new cars then we won't, we'll keep fixing our old ones. But those new cars are mostly made in the EU, and by robots, aren't they? So it would be a way of getting us to spend money on local UK businesses (mechanics) rather than EU ones?

I know it's a bit tin-foil hat, sorry.

Like this one?

Nope one that describes what it is.

Basically, something goes beyond the level of bronze age books being used as proof of a sky fairy.

I get lots of people have different takes but those takes at the moment seem to span as wide a gulf as "literal earth in 7 days" to "well, it's more of a spiritual thing and I don't believe its actually transubstantiation" or its like a monotheist trying to explain to an atheist why their god exists and is the only true god but those 1000's of other gods people have believed in and died for their beliefs in are all fakes.

Or ... and the bit I'm interested in perhaps is MMT is actually the equivalent of atheism and simply lack of beleif in the financial institutions and their churches and holy books?

dazh

Without wanting to be a tin-hatted conspiracist about it,

Well, it seems suggesting the rich just want to keep all the wealth is definitively tin-hat stuff.

I wonder if rising interest rates could be seen politically as a combative move against our now competitor EU countries?

Except interest rates are rising in the EU too, and in the US. It appears to be coordinated action from the 3 major western economic blocks. Who knows what plans and decisions have been made behind closed doors, but G7 finance ministers and leaders clearly don't talk about nothing when they get together at their summits with the great and good of industry and global finance. Geo-politics obviously plays a large part. It's interesting how the Russia-Ukraine situation has forced the west to reunify. No doubt a lot of the UK climbdowns on brexit are a result of that. Maybe the interest rate thing is too?

Or … and the bit I’m interested in perhaps is MMT is actually the equivalent of atheism and simply lack of beleif in the financial institutions and their churches and holy books?

I don't think that's really a valid comparison. You have a tendency Steve to reduce everything to the most basic concepts which is very often a good practice but you can reduce too far. Economics is a science, the study of how money affects people, whereas religion is more about the spiritual position you want to take. So let's not go there.

This is more like say, people in the early 20th century debating wether or not light is particles or waves. You can use both theories to describe some aspects of what's observed, and people were arguing that the other side was incorrect. As I understand it, MMT is just a different way to describe the consequences of what already goes on. It meets resistance because the theory suggests actions that some people don't want to take.

As I understand it, MMT is just a different way to describe the consequences of what already goes on. It meets resistance because the theory suggests actions that some people don’t want to take.

Can I go one bit further?

There isn't another accurate model - anyone (That I've read about) that goes in in to research it seems to come to the same conclusion.

Classic clip of Greenspan telling the truth.

Molgrips

I don’t think that’s really a valid comparison. You have a tendency Steve to reduce everything to the most basic concepts which is very often a good practice but you can reduce too far. Economics is a science, the study of how money affects people, whereas religion is more about the spiritual position you want to take. So let’s not go there.

This is more like say, people in the early 20th century debating wether or not light is particles or waves. You can use both theories to describe some aspects of what’s observed, and people were arguing that the other side was incorrect. As I understand it, MMT is just a different way to describe the consequences of what already goes on. It meets resistance because the theory suggests actions that some people don’t want to take.

If economics is actually a real science then the way to examine it and the theories is by reducing it to the component parts and challenging them.

The entire MMT debate/thread seems at the same level as "If evolution is real show me a fish giving birth to a horse" put by people who can't accept the theory because

the theory suggests actions that some people don’t want to take.

Many of the arguments seem to be in the same class as "prove the non existence of" rather than "show me how it works" which is not the realm of science.

If economics is actually a real science then the way to examine it and the theories is by reducing it to the component parts and challenging them.

But you're not challenging them. You're either repeating myths that have already been debunked, or making silly false analogies, and then combining those with a load of undecipherable philosophical stuff about whether money is real or not. Please actually address the issue, which is being honest about how money is created in today's modern economies, and how that can be put to use to benefit everyone rather than a few rich people.

If economics is actually a real science then the way to examine it and the theories is by reducing it to the component parts and challenging them

You're not doing that though are you? You just want to make puns about sandwiches.

@rone has been providing excellent links and descriptions about how MMT works in the most polite and constructive way on this on this thread in particular and on site generally since ages ago. The least you could is perhaps engage with what he's trying to show you?

The entire MMT debate/thread seems at the same level as “If evolution is real show me a fish giving birth to a horse” put by people who can’t accept the theory because

Dunno about that. I think I've gone to great pains to show hard-to-refute evidence of the government paying for stuff.

Just think of it as a description as per above.

"A diagrammatic representation of the end-of-day sweep of Exchequer
accounts is shown in Figure 1.4. Represented are the Consolidated Fund and
the National Loans Fund, as well as two of the accounts described previously
that are administered by the Government Banking Service. These are: the
Drawing Account of HM Paymaster General (PMG) which is involved in
settling expenditure into the banking system; and (one of) the HMRC General
Account(s) which receives incoming revenue. All of these accounts start each
day with a nil balance, as shown in step 1."

"There are a couple of aspects of this process that should be noted. First,
spending and revenue are both anchored to the Consolidated Fund but proceed
during each day via separate accounts at the Bank of England. These accounts

its initial zero starting position – at the end of each day. It follows that any and
all expenditure from the Consolidated Fund occurs when the Fund has a nil or
negative balance and there is never a situation wherein a deposit of tax revenue
furnishes a balance that is subsequently used for spending. In this sense, all
spending arises as new money advanced under credit and not ‘from taxation’."

Andrew Berkeley, Richard Tye, and Neil Wilson - 9781802208092

DEBT ISSUANCE

"It is often claimed that the government should reduce the quantity of out-
standing government debt, or that the government budget should be balanced,

maximise economic activity and participation at the same time."

you can have the state provide the things society *needs* or you can lap up the problems with your own income and/or private debt and watch state services collapse.

Or the private sector can provide services and goods and the government procures them through properly thought out contracts and enforces the penalties on the private providers if they don't deliver.

Want spare capacity in your electricity generation network, build that stipulation into the generators contracts / regulation, if you don't it shouldn't come as a surprise there's no spare capacity.

Anyway back to the OP, the BOE is right, we do need to accept we're getting poorer, nowt we can do about it, idiots voted for Tories and Brexit and this is what we get. For all of the passionate debate above about magic money tree theory our economic system isn't going to change in our lifetimes so might as well get upset about something we can influence. It's like road rage, you can't stop idiots cutting you up or driving like loons but you can choose not to get mad about it.

It was bit rich coming from the BOE though who've hiked interest rates for no meaningful impact.

Or the private sector can provide services and goods and the government procures them through properly thought out contracts and enforces the penalties on the private providers if they don’t deliver.

Yeah the private sector still needs government money to exist.

Anyway back to the OP, the BOE is right, we do need to accept we’re getting poorer, nowt we can do about it, idiots voted for Tories and Brexit and this is what we get.

And the BoE role in the process of making us poorer?

It was bit rich coming from the BOE though who’ve hiked interest rates for no meaningful impact.

That is the point.

For all of the passionate debate above about magic money tree theory our economic system isn’t going to change in our lifetimes so might as well get upset about something we can influence.

The economic system has undergone at least 3 major changes in my lifetime. The swwitch to moneterism and cheap credit in the late 70s/early 80s. The introduction of QE and zero interest rates in 2008, and the direct support of the economy by the govt during and after covid. It's daft to say nothing can change.

Many of the arguments seem to be in the same class as “prove the non existence of” rather than “show me how it works” which is not the realm of science.

I'm not sure you're really understanding what's being said to you.

Anyway, another government debt question - often on the news they talk about the government having a credit rating, and having to pay interest to service the debt. So surely that means it is borrowing money on a commercial basis from someone? If so, who?

As much as I know about them they're just largely irrelevant made up mechanism to judge a country's financial risk/outlook in the eyes of investors.

But don't forget these organisations will see government borrowing (i.e debt issuance/bonds) as a measure of a countries financial ability to function.

They will see rising government 'debt' as a problem without acknowledging it's real purpose.

In terms of real measures of anything - I'd say pretty useless, apart from allowing financial institutions to have boardroom speak.

They're opinions - quite frankly mired in conflict of interest with their own clients too.

Corporate bonds are likely to be viewed riskier than government securities too.

When a government (with central bank) issues its gilt UK / treasury USA for money from the private sector - an asset swap from non-interest bearing to interest bearing, it can always meets its obligation despite what a CRA believes.

The thing is, it's easy to get hung up on what actually works/what's "real". Because we have invested spectacular amounts of effort over the years into making it possible to sell things that don't exist, or for profitable businesses to be bought and discarded as if they're worthless or loss-making businesses to make people rich, to telling people that lives must be destroyed in the name of spreadsheets... Or that paying for something by giving someone a debt for 30 years and then writing it all off is somehow good while doing stuff for free is unaffordable, or that buying things with other people's money and then borrowing from the thing you just bought and using that to pay the people back,is wealth-creating, or that not paying your bills or your taxes is good business.

it's absolutely true that we can't just "do MMT" and have it work, because if nothing else all the current bollocks has tremendous momentum. But also because all of the tools that currently are used to keep the current system of failures and contradictions and made-up nonsense working, can equally be used to destroy anything that would work better- if you can make the illogical into a way of life then it's far easier to make the logical impossible. And the people who control those levers, every single one of them, got there by doing well in the current system. Just look at all the pushback to QE etc- we've got through the last 2 crises entirely by "printing money" on levels that would have been unbelievable not so long ago, and it worked, and as a result we're now completely committed to never doing it again and to making people poor for no reason.

Economics isn't a science and government fiscal policies aren't economics and politics certainly is neither science or economics. Trying to approach all of this on a fiscal logic basis is basically insane, because to do that, you have to ignore that on a fiscal logic basis our economies only continue to exist because we believe in them really hard.

Honestly it doesn't really <matter> if MMT works. What we've proven beyond doubt is that we can make an economy out of sunrises and misery and wishes. We can just switch to different wishes. But that's a hard sell, because a) the people who control the leavers make the wishes, b) most people believe in the myth and don't believe in the new myth.

So probably the best we can hope for, in teh meantime, is to lean on things in the right direction and normalise "quantitative easing" as part of the current package of nonsense and at least get some benefit out of it, until such a time as it all falls over.

Who knows what plans and decisions have been made behind closed doors

The dollar rules. We follow. Nothing more sinister than that.

I’m now liking posts from people who look like they are disagreeing fervently… when they’re just looking at the same thing from different angles (using different codification).

Economics isn’t a science

It is part of the social sciences. Apologies for repeating this, but I find it helpful to remember it.

That's mostly a matter of definition. Yes the study of economics is part of the social sciences. But that's not really what we're talking about when we talk about economics in this way. "Real world economics" is mostly a mix of a cult and a massive-scale con act. Or rather a couple of cults, and a whole lot of massive-scale con acts. Even the stuff that really works is mostly built on thin air.

Social scientists study cults etc.

Well we've really gone down the rabbit hole. Meanwhile inflation is still rampant and there is next to zero chance of getting to the point of deflation yet alone enough deflation to get to the point where pay rises take us back to income levels of 2 years ago. Ergo we all need to accept were getting poorer.

Now you lot get back to your hifluluting nonsense and theoretical arguments.

^^^

Yeah, but we've got a nice big hearty bowl of sovereignty to ward off the hunger.

greyspoke
Free Member

Social scientists study cults etc.

Correct, but it's not studying economics when they do it, even if the cult declares itself to be the church of economics.

Interesting turn of events.

All that's being said here is when politicians say they can't afford things - and taxes fund spending - that's a lie or a total misunderstanding of the way things work.

It can be shown, it has been demonstrated - now are you going to lean on the establishment and start turning this ship?

Remember

https://twitter.com/swarming1905/status/1652039700842946568?t=xnSBIT7yR-krqqm4J0TRbw&s=19

This gave way to the acceptance of austerity in the minds of many.

Yeah, but we’ve got a nice big hearty bowl of sovereignty to ward off the hunger

Well it's a good job we are and were monetarily sovereign before and after Brexit, despite the loons at the driving seat.

This gave way to the acceptance of austerity in the minds of many.

If anyone is doubting Rone et al when they say spending (how much & where spent) & paying government debt is a political choice by whomever forms a government, I found this an interesting read

https://www.taxresearch.org.uk/Blog/2021/06/24/the-tories-have-always-borrowed-more-than-labour-and-always-repaid-less-they-are-the-party-of-big-deficit-spending/

First, Labour borrows less than the Conservatives. The data shows that.

And second, Labour has always repaid debt more often than the Conservatives and has always repaid more debt, on average…

…Or, to put it another way, the Conservatives are the party of high UK borrowing and low debt repayment contrary to all popular belief.

That laughable comment about the social sciences sounds like it came from someone with a Richard in chemistry.

That laughable comment about the social sciences sounds like it came from someone with a Richard in chemistry.

Which one? All the comments I have seen, including my own, appear unremarkable.

There a nice and simple (very recent) retread of MMT by Kelton here to some younger podcasters.

Covers the brass tacks we've discussed.

Quite long and not cut up.

https://twitter.com/AnnelieseDodds/status/1653046122452008962?t=72UjgyD0iBCJdRJqNUf-MQ&s=19

You see how much of a lie this is?

I mean would Labour lean on the BoE to reduce interest rates? And remember which party gave them this ability?

Both parties avoiding criticism of the one institution that is making most of us poorer.

Neoliberal thought process is the gift that keeps on taking. But no one in politics seems to notice or care.

Also for those people that are suggesting that Pill was pointing out we're 'all' getting poorer - I guess he wasn't talking about those with bumper access to private jets, or those with a lovely chunk of cash or gold.

Just those who's wages have been suppressed for years.

Liam Byrne trying to be funny in 2010 has literally cost the Labour party more votes over the last 13 years than any other single action by an MP.

This "joke" was the same joke left for time immemorial by outgoing administrations. It wasn't Byrne's fault that it was reported as a serious economic assessment by our corrupt press.

This “joke” was the same joke left for time immemorial by outgoing administrations. It wasn’t Byrne’s fault that it was reported as a serious economic assessment by our corrupt press.

Knowing what we know about the press and the Tory party to accentuate the idea of no money - maybe it was better to not do the 'joke'. In that sense it was his fault.

That 'joke' has been done in various forms before for sure - that's not a good excuse. And it's not as much of a recurring theme as you might thing in terms of times it has happened in that context.

Knowing what we know about the press and the Tory party to accentuate the idea of no money – maybe it was better to not do the ‘joke’. In that sense it was his fault

Seems to me that this falls squarely under the heading of "blaming the victim". If we can't say anything for fear of the Mail telling lies about it, there won't be much said.

Seems to me that this falls squarely under the heading of “blaming the victim”. If we can’t say anything for fear of the Mail telling lies about it, there won’t be much said.

Best just not to do the joke in that climate I would say - it's hardly the most constructive of comments/joke/point.

But let's be clear I'm not blaming him for Tory policy specifically. That's not what this is about. It's more what it does in the minds of the voters.