Commercial banks are agents of the state. They create money when they issue loans under state charter, & with support from the govts bank.
But they cannot create net financial assets. When loans are paid off the money is destroyed. The economy needs Govt created money.
The govt spends money into existence by instructing its bank to credit the reserve accounts of commercial banks, who in turn credit the bank accounts of the private entities the govt is buying services from
These r net financial assets to the private sector. Our financial wealth
Mar 3, 2022 • 4 tweets • 1 min read
For some bizarre reason some economists seem to think MMT says that as long as you issue your own currency you can get anything you want. And “nothing can go wrong”.
I’d really like to see the academic paper they are quoting from.
MMT says that “a monetarily sovereign nation can buy whatever is on sale on its own currency”. Of course this doesn’t include imports. On imports you’re limited by the rest of the worlds demand for your own currency. Under sanctions that is what suffers. >
Jan 17, 2022 • 5 tweets • 1 min read
This video, which explains in detail how the UK Govt funds spending, has not enough views.
Lets summarize the key takeaways:
1) The UK Govt does not spend out of pre-existing balances. It creates money as it spends it.
2) The UK Govt does not accumulate and retain tax receipts for subsequent spending.
3) Nothing can prevent spending authorized by Parliament from being made.
4) Taxes are paid using only money from the Bank of England, not commercial banks.
Sep 9, 2021 • 4 tweets • 1 min read
Reminder that Eliminating excessive wealth (“taxing the rich”) and funding social care are two very important but ultimately completely separate objectives that undermine each other when correlated.
As Randall Wray pointed out. In 2008 the banks didn’t make their bailouts dependent on a tax. That would have been immensely politically foolish. And so is making public purpose dependent on tax revenues.
UBI solves no problems and creates new ones.
There is a lot to unpack here. But let me try and do this here:
1) UBI cannot achieve what it sets out to achieve, namely:
- to free ppl from poverty
- to give people freedom to choose to work or not to work.
May 14, 2021 • 4 tweets • 1 min read
I don’t know who needs to hear this but Socialists should not “cost” their policies. It gives the Right an excuse to divert attention away from the issues those policies are meant to address and towards dead-end discussions about ‘unaffordability’.
It is predicated on an acceptance of the enforced scarcity generated by austerity. And it forces activists into framing working class gains as an inevitable loss to someone else. As good as Corbyn’s manifesto was, costing it was its weakness, it was unorthodox & unnecessary.
Dec 9, 2020 • 4 tweets • 1 min read
Why conceding the ‘scarce money’ narrative just to tax the rich is a bad idea. They hit back with this
“If we tax those investments we end up with less produced, less produced means lower wages and lost pensions, that means a worse life for all of us.” bbc.co.uk/news/business-…
We see it time and time again:
Right: “we want to reduce deficit”.
Left: “I agree it’s necessary let’s do it by taxing the rich”.
Right: “good you agree it’s necessary, so best make sure we don’t spook the investors who have all the money. Let’s not tax the rich”
Aug 12, 2020 • 5 tweets • 1 min read
I never thought I’d see the Chancellor of the Exchequer predict unemployment and poverty with a smirk. As if he wasn’t directly responsible for any of it. #recession
Raising wages of nurses and other public sector workers could have gone some way into avoiding this recession. They chose not to.
Increasing universal credit entitlements and reducing waiting times could have helped avoid this recession. They chose not to.
Mar 19, 2020 • 4 tweets • 1 min read
This is excellent.
“The crisis may not be the fault of shareholders but it is the risk they take when investing.”
Suck it up Branson. You shan’t get something for nothing.
1) increased funding to local authorities to the tune of £1000 per capita to fill financial holes left by crisis and deal w local effects.
2) nationalise failing enterprises deemed strategically important for public well being. Leave current ppl...
Nov 20, 2019 • 5 tweets • 1 min read
Reminder that The UK Govt wasn’t “bankrupt” after the 2008 crash.
The Govt bailed out the banks, not the other way around. And austerity was neither necessary nor good.
No. The U.K. wasn’t “bankrupt” in the 1970’s. It ran down its foreign reserves foolishly trying to target a foreign exchange rate. And the IMF deal simply served to masquerade politicians support for austerity by helping them pretend it was imposed on them.
#MMT At it’s core it’s just a description of how money works. How money was created as a means for authorities to command resources (in the old days kings etc, but now more democratic govts).>
@CatatonicUk@meadwaj@richmondpapers@NeilSalter4@DaveRHumphreys@CarolineLucas@BBC@davidgraeber It focuses on the crucial role of fiscal policy in the economy (The money creation which is under democratic control). And It also outlines the differences between Govts who issue their own currency, and those that don’t.
There are prescriptive aspects, e.g. the job guarantee,>
Aug 21, 2018 • 4 tweets • 1 min read
Greece was never bailed out. They bailed out German & French banks, who held Greek debt. This stabilized Germany & Frances economies post crisis, while the Greek ppl were punished w severe cuts and forced to run a fiscal surplus. They never saw the money.
The bailout allowed Germany & French Govts 2 keep political face in their countries (They had lost control of banks lending in the run up to the crisis), While presenting Greece as lazy & irresponsible.
They also promoted the narrative that they were “saving” Greece.
Aug 7, 2018 • 4 tweets • 1 min read
Today’s Economic tips:
“The Market” does not set yields on Govt “debt”. Govt does.
Govt issues “debt” & offers whatever interest rate it wants to pay for it.
The purpose of issuing “debt” is not to fund Govt spending. Is to offer savings accounts to the private sector.
>
“Debt” (bonds) don’t have to be issued every time we run a deficit. Govt can choose not to.
There is no reason why issuing bonds corresponding to a deficit would be more or less inflationary than not doing so.
Can we now stop being scared of the “Govt Debt” bogeyman?
Jul 30, 2018 • 9 tweets • 2 min read
The European Union was never about left wing cooperation.
It really bothers me how disingenuous ppl seem to be about the contents of the Maastricht agreement which founded the EU as we know it today. It was a full-fat neoliberal treaty designed to embed austerity in Europe.
Jul 28, 2018 • 4 tweets • 1 min read
“I expect crocodile tears to be shed in Brussels over our fire victims, and similarly hypocritical posturing by the Greek government. But I do not expect any reversal of the organized misanthropy afflicting Greece just because nearly 100 people died in a single day.”
This is not the first horror story related to the brutal cuts imposed by the Troyka, which created a recession in Greece comparable to that if the Great Depression.
>
Jul 26, 2018 • 5 tweets • 1 min read
A note on why I support leave:
When I signed up to the Labour movement, I signed up to fight Austerity.
Why? Because I consider it to be a fundamental aspect of that destructive ideology called “neoliberalism”, >
Which is behind the social injustices, the destruction of the environment & the erosion of democracy that has brought much the western world to the edge of global demise.
But I wrongly assumed those beside me where interested in the wider battle. >
Jul 23, 2018 • 13 tweets • 3 min read
I hear a few ppl say that #MMT applies only to the USA & not the U.K. I don’t know where this comes from, but they’ve made up so much stuff about MMT that I’m not surprised about this. so lets clarify some things:
>
1) MMT applies to all nations that have a fiat currency & r monetarily sovereign.
2) the UK has a Fiat currency. So does the US, Australia, Japan, and many others. This means their currencies r not pegged to gold or any other currency or commodity.
