I'm sorry, but I believe your understanding of the creation of new money is totally wrong.
ANY GOVERNMENT EXPENDITURE REQUIRES THE CREATION OF NEW MONEY BY THE BANK OF ENGLAND. (Central Bank)
This money is then recovered from the economy by taxation.
For a more complete and thorough explanation please see the work of Richard J Murphy - YouTube, & SubStack and also Prof Steven Keen - YouTube, Facebook etc.
The common story.. we have no money...is a lie.
Richard Murphy explains how we could raise £90 BILLION without wealth taxes, using the current tax system and taxing wealth at the same rate as income. (Author of the Wealth Report 2024 available to download)
Hi Wayne, yes I've read both Richard and Steve, I think Steve is one of the best economists working today. Others have different interpretations of how money is created from yours, Ann Pettifor and Frances Coppola for example. The fact remains that, as they did with QE, central banks can create new money at the push of a button, just as commercial banks do. The only issue then is how they and the government account for it, and whether they insist it is 'paid back'.
Spot on, thank you! Modern mainstream economics, as taught in universities, is based on fantasy. As you point out, Richard Murphy and Steve Keen are two experts who are good at explaining why it's nonsense, but there are many others. Their school of thought is Modern Monetary Theory (MMT) which is notable for providing an explanation of the mechanism of money, as distinct from policy or ideology. Once you understand the actual mechanics you can make policy that is sensible and effective - something which is not being done at all at present, hence the mess we're all in.
Thanks Rick. Whether you subscribe 100% to MMT or not, I think we can agree that ignorance over how the monetary system works is a key factor in our current problems.
🤔 I don't think that helicopter money works like that. A great idea but inflation itself is a form of helicopter money. Fifty five years ago I borrowed twice my salary to buy a new three bedroom house at £3,450 but now, in retirement, bought a one bedroom flat for £455,000 which is about 45 times my pension and less accommodation. If I want three bedrooms I would need to double that capital. Friedman's idea sounds good but doubt it is more than an interesting talking point. There is no real alternative to increasing tax income to pay for the health of us old folk. Then, of course, we have the idiotic ideas of the Reform lot to cut taxes and report 600,000 immigrants to guarantee nurses and doctors will need to be robots, building companies will have no labour to recruit and shops, restaurants and utilities will not have enough labour. My grandchildren have a lot of our mess to solve!
Thanks Richard. Helicopter Money is very much a though experiment: whatever you call it, central banks can create money, and they already do. The rest of what you say I agree with 100%
King’s has a rooftop helipad you know.
Fractional reserve banking is utter nonsense. Loans create deposits, this is why the Global Financial Crisis (2008) happened.
The Bank of England has admitted this:
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
Orthodox economics is a religion rather than a science so the practitioners ignore all evidence.
Thanks Matthew. I agree.
I'm sorry, but I believe your understanding of the creation of new money is totally wrong.
ANY GOVERNMENT EXPENDITURE REQUIRES THE CREATION OF NEW MONEY BY THE BANK OF ENGLAND. (Central Bank)
This money is then recovered from the economy by taxation.
For a more complete and thorough explanation please see the work of Richard J Murphy - YouTube, & SubStack and also Prof Steven Keen - YouTube, Facebook etc.
The common story.. we have no money...is a lie.
Richard Murphy explains how we could raise £90 BILLION without wealth taxes, using the current tax system and taxing wealth at the same rate as income. (Author of the Wealth Report 2024 available to download)
Take a read (and listen) and come back.
👍😃
Hi Wayne, yes I've read both Richard and Steve, I think Steve is one of the best economists working today. Others have different interpretations of how money is created from yours, Ann Pettifor and Frances Coppola for example. The fact remains that, as they did with QE, central banks can create new money at the push of a button, just as commercial banks do. The only issue then is how they and the government account for it, and whether they insist it is 'paid back'.
Spot on, thank you! Modern mainstream economics, as taught in universities, is based on fantasy. As you point out, Richard Murphy and Steve Keen are two experts who are good at explaining why it's nonsense, but there are many others. Their school of thought is Modern Monetary Theory (MMT) which is notable for providing an explanation of the mechanism of money, as distinct from policy or ideology. Once you understand the actual mechanics you can make policy that is sensible and effective - something which is not being done at all at present, hence the mess we're all in.
Thanks Rick. Whether you subscribe 100% to MMT or not, I think we can agree that ignorance over how the monetary system works is a key factor in our current problems.
🤔 I don't think that helicopter money works like that. A great idea but inflation itself is a form of helicopter money. Fifty five years ago I borrowed twice my salary to buy a new three bedroom house at £3,450 but now, in retirement, bought a one bedroom flat for £455,000 which is about 45 times my pension and less accommodation. If I want three bedrooms I would need to double that capital. Friedman's idea sounds good but doubt it is more than an interesting talking point. There is no real alternative to increasing tax income to pay for the health of us old folk. Then, of course, we have the idiotic ideas of the Reform lot to cut taxes and report 600,000 immigrants to guarantee nurses and doctors will need to be robots, building companies will have no labour to recruit and shops, restaurants and utilities will not have enough labour. My grandchildren have a lot of our mess to solve!
Thanks Richard. Helicopter Money is very much a though experiment: whatever you call it, central banks can create money, and they already do. The rest of what you say I agree with 100%