A short thread of useful articles that debunk the quantity theory of money explanation for inflation.
Please add to the thread if you find more!
1. Money Growth Does Not Cause Inflation!
web.archive.org/web/2021102208… 2. Rapid Money Supply Growth Does Not Cause Inflation.
evonomics.com/moneysupply/

The QE process.
Start. Govt and private sector starting with zero is a convenient assumption, it doesn’t matter what balances exist, we’re just looking at a single instance of QE. 🧵👇1/7 1. Govt spends money into the private sector. Govt creates a deficit in its bank account and the private sector gets a surplus in its.
Bonds can’t be sold until the private sector has a surplus with which to purchase bonds.
Note the balances:
govt, –1
private sector, +1.

Meganumerophobia (fear of big numbers)
"Black hole" sounds scary. It isn't. It's a weasel word/ phrase designed to invoke fear of something, but people don't really understand what it means. 1/15
🧵👇 2/ There is an assumption that it means the govt has spent more than it has taxed. An easily invoked fear, and journalists use this buzzword technique all the time. For instance, what image does the word "Weimar" make you think of? This perhaps?

OK, @elonmusk, lets examine this claim. INflation is caused by "printing money" yes? 1/…

https://twitter.com/elonmusk/status/1824410315422871867

2/ Increase in money supply vs inflation 1.
Hmmm, annual increase in money supply 12-15%, inflation: 1%?🤔

This article on Medium predicts the NHS is going to die because it is unaffordable. Sadly that rather long article displays economic illiteracy that will genuinely kill people if it is accepted. This thread explains why that is all nonsense. 🧵👇
medium.com/@Richard.taunt… The NHS is perfectly affordable. It poses no threat to the economy should any govt actually have the courage to fund it adequately. In fact fully funding the NHS would massively benefit the economy by providing thousands of jobs and incomes, proper living wage incomes.

Not the way you think it does.
Every deficit is someone else's surplus.
Who is the govt's countrparty?
Whose assets balance govt liability?
You, me, our pension funds, our savings, our cash.
It doesn't matter how big the "debt" is, it matters who benefits and who gets the money

https://twitter.com/Peston/status/1805181207983849473

It is a mistake to think only of it as a debt, and a mistake to treat govt finances like a household.
A govt that issues its own free floating fiat currency can never run out of £ or go bust. Ever.
The "national debt" is our surplus. Without it the economy would cease to function

If you are serious about ridding the country of Tories, and by extension the world of neoliberalism, you need to understand better how they work, how they control things.

The political and economic debate is defined by language and ideas. The way to defeat Tories is not to use their language and ideas. Not to use the words, slogans, concepts, which they have given us over the last 40+ years. Accepting the premises they have carefully used to frame the debate sets the limiting the debate.

It’s not true what the grocer’s daughter said. This may be a shock, but there’s no such thing as “taxpayer money”. She lied. There’s only government money, and if government doesn’t spend enough money into the economy, taxpayers don’t have money to pay taxes. Or live on.🧵👇 The difference between a currency user and a currency issuer is critical. We, the “taxpayers” are currency users. The government that imposes and collects tax, is the issuer. It creates money when it spends, we can’t (apparently it’s illegal). They know Thatcher lied.

The problem with Reich, and seemingly “progressive” campaigns founded on “tax the rich” is that they reinforce the neoliberal narrative.
They subscribe to the idea capitalism is OK, we just need to tax more fairly, that there is merit in wealth accumulation, but not too much…🧵 …that we *need* rich people so that we can tax them to pay for stuff.
That immediately triggers the concept that we mustn’t upset rich people too much or they’ll go away and take all their money with them…

Here's a short quiz: Are these statements true or false? Note your answers for later. What do you think people would reply to these 3 questions:
1. Do you believe the govt deficit should be cleared in the next X years?
2. Do you believe everyone should save a small amount of their income?
3. Suppose the govt spends £1000. How much does the govt recover in tax?

It’s not Brexit trashing the economy.
It’s 40+ years of Thatcherite “household budget” economics.
A currency issuing govt is not a household, it doesn’t need to “balance the books”, it needs to balance the economy. If that means a bigger deficit, so what? 🧵

https://twitter.com/implausibleblog/status/1764262309810032796

The media and journalists like Kuenssberg are actors for the establishment who want to preserve their wealth and power. A few economists are beginning to report the truth about the money system…

Although Yanis’ is correct that the “credit card” analogy is an insidious fallacy when talking of UK govt finances, and abandoning Labour's £28bn pledge is utterly disastrous, he then goes on as though govt really is financially constrained.theguardian.com/commentisfree/… His argument then completely goes awry suggesting that the government will need to increase tax revenue and /or borrow and “find the money” to finance its spending. This thinking is as economically illiterate as the fallacious credit card nonsense he seeks to debunk.

1/7. It's important to understand the role of tax in the state's finances. Tax has several roles, but the only one that it isn't for is paying for government expenditure. Govt spending has no financial operational dependency on income tax as revenue for spending. 2/7. "Taxpayer money" was cemented in public consciuosness in 1983 by Margaret Thatcher. But it's a lie. "Return" and "revenue" have specific meanings. Taxpayers have no money of their own, and do not create money. Taxes return HMgov's money to the issuer—HMgov.

There’s no operational dependency between taxes and spending. Why would the monopoly issuer of the currency that creates £ when it spends have to tax currency users to fund itself? Taxes serve several purposes but funding govt spending is not one.
A short thread… 1/8 🪡 👇

https://twitter.com/theifs/status/1700147224859295980

So why do we pay taxes if the govt can just “print money”? The money story starts with the imposition of a tax liability on the currency using households and businesses. Govt requires the tax is paid in the currency it alone issues. Tax is what gives the govt’s currency value 2/8

1/6. This is a very useful and definitive thread of articles on #UBI.
Universal basic income part I: terms matter
bylines.scot/economics/univ… 2/6. Universal Basic Income Series – Part II: A Brief Look at Automatic Stabilisers and Their Function
bylines.scot/economics/univ…

1. The UK State Pension.
How much is in the "pot"?
How much can the govt afford to pay?
Should we contribute more to private pensions so the government can "borrow" those funds to fund a green transition? A wee thread...🧵👇 2. The state pension is paid based on years qualifying National Insurance Contributions (NICs) paid along with taxes deducted from the payroll. The tax and NIC process it outlined in this diagram and is described in the thread below

#UBI is becoming increasingly popular. You can explain it in a tweet or on the back of a postage stamp.
What could go wrong? Nothing so obviously beneficial could have a downside, right? You just give money to people who need it. It's fair, it's equitable, it's anti-poverty.
🧵👇 It solves a problem of not enough money. But it's the wrong solution. The problem is a distribution problem. Regressive taxation, laws that favour rentier wealth extraction, capital over labour, de-funding and privatising public services, remove wealth from the lower percentiles.

A wee thread on the quantity theory of money and inflation.🧵
MV=PT, or "Printing money" = inflation is wrong because:
1. It assumes newly "printed" money is immediately available to consumers, but doesn't explain how that happens (Friedman suggested a helicopter dropping ££) ... 2. The economy is at/ near full employment and productive capacity, so there is no capacity to absorb new demand or increase production.
3. If everyone is employed and all production is already being consumed, how can there be more demand? Surely it is already satisfied?

The concept of taxpayer funded government is incorrect. Taxes are paid using the government's currency. Taxes can only be paid once the government has created and spent into the economy enough money for people to pay taxes. The concept of "taxpayer money" creates an impression that government must have an income to fund its spending.
The 'household budget' model planted in peoples' minds makes it possible for government to declare certain spending is "unaffordable" and it "hasn't got the money".

https://twitter.com/malcolm_reavell/status/1593896003916136448

This is not how gilts work. Gilt sales are a drain of excess reserves accrued in the banking sector as a result of *prior* govt spending. The process is clearly defined here ucl.ac.uk/bartlett/publi…

https://twitter.com/Channel4News/status/1579888188499320832

Gilts we’re so called not just because they were valuable, but because the govt that issues them is a currency issuer and can never run out of £ or go bust. Ever. They’re called gilts because HMgov can always pay debts in the currency it issues.

"If instead we argue there is no limit on what we can spend, that we can simply borrow our way out of any hole, what is the point in us?" - @RishiSunak
The point is to hide the truth. If everyone knew how the money system really worked you would not be able to lie like this. 1/4 In a state money system taxes and borrowing don’t fund govt, govt issues the currency. People must sell their goods/ services to earn the state’s money so they can pay tax and buy gilts - AFTER govt has spent it into existence 2/4