Am I being dumb? - Rachel borrowed £14.3M and paid £13M on loan repayments in February? Really? That's borrowing from Peter to pay Paul isn't it? Who are these lenders and why do they lend to such a numerically illiterate and fiscally irresponsible country? Why not cut out the middle man (which is Rachel) and just pass the money from their left to their right hand? How is this in any way "running the country"? My husband just shrugs his shoulders and says that's how the system works - what a really stupid system. What happens when these idiot lenders decide not to lend or Rachel has an emergency which means she misses a repayment?
You’re not being dumb at all – the numbers do feel like “borrowing from Peter to pay Paul”. The key difference is that governments roll over old debt and issue new gilts all the time, so the £13bn is interest plus refinancing costs on a stock of almost £2.9 trillion, while the £14.3bn is the extra borrowing just for this year’s gap.
Well it looks like the government/Rache from accounts has taken her fiscal leads from the failed Birmingham Council and is leading us all to the same final outcome of bankruptcy…
That Birmingham comparison is sadly apt – you can get away with weak underlying finances for a while, until the moment you can’t. The UK still has the advantage of its own currency and a deep gilt market, but the direction of travel is similar: ever more borrowed just to stand still, rising debt interest, and very little to show in terms of stronger private‑sector growth underneath. That’s why I keep stressing that this isn’t “investment borrowing”, it’s day‑to‑day overspending that steadily narrows the room for manoeuvre when the next shock hits.
You’re right to sense that the headline numbers don’t match people’s lived experience. That’s really the core of the piece: we’re taking on a lot more debt, but it’s not translating into stronger growth, better services or higher living standards for most people – which is why so many feel “the money never comes our way”.
What we use for money is govt IOUs (BoE says so, March 2014 Bulletin, PDF). When you return an IOU to its issuer, it's nulled. Buying gilts then is really an asset swap, non-interest bearing Govt IOU (money) for interest bearing Govt IOU (bond). The money disappears when Govt gets it so it can't spend it. There's no borrowing going on here, just people showing faith in Govt by (they think) depositing money with it. When Govt pays out, it does so by creating new money.
Yes Bill. This is correct the MMT explanation of the convoluted machinery behind the flow of money in and out of government and commercial Banks via BoE and treasury. It’s a product of circumstances that has evolved over time but more pertinently over recent decades. But it’s a failure of the majority by the few.
Of course money has to be produced first. That’s been the case since money was first produced. It’s been that way for millennia.
But we are in a global economy. Where we are judged by others as to the value of our money.
It has to be seen to be in lock step with the rest of the top nations currency. It’s for that reason political decisions have consequences and the main one is devaluation if we are seen to be out of control or out of lock step.
The biggest mistake of MMT in my view is it skirts over money in the hands of the productive economy. It’s in it or it should be.
Whatever the amount produced at one end is supposed to be a swap for work effort. The driver for our productive economy. If trillions are produced, the time span it’s out there has to be put to good use. Not sat on or unused. Idle or unspent. All before the MMT cycle concludes.
It’s this interesting pathway of the need for money to freely flow once produced us the key to our success or failure. Not the production if more money one end to 6 into bank accounts if the rich bond holders by way of interest! In such vast sums we the majority are devoid of it. The few are just destined to get richer if we can’t see money has to be used for its true purpose as a swap for work effort.
Money isn’t for holding as a value for very long. It’s an implied contract if receive and spend. Not just receive and not spend!
The point orthodoxy and MMT alike miss is that money can be turned over to increase flow and production as each contract is fulfilled. The receipt and SPEND of money back to those who provided the reward of work effort. It’s a chain or a conveyor belt not to be slowed, stopped or interfered with. That reduces and prevents our ability to pay each other ir to be paid ourselves. For the majority of people not the lucky few who earn so much they can’t possibly spend it so they don’t! They are the ones who can afford the bond purchases. Using money that in my view should be either back in the productive pot of productive economy or in the hands of our government to spend in that time crucially to keep the money flowing in our direction not the direction of the already mega rich who seem to get more as they lend it instead of having to SPEND it.
Bill. It’s not that clever to see a path for money. It’s a pathway we are used to seeing.
It’s political will of changing the present to one that is better. That fulfils its wish to have a surplus from tax instead of a deficit of shortfall. That will inevitably give us the system we could have.
I think MMT misses this fact by assuming the answer is to produce more money and the ‘ we can’t afford it’ retort is a complete fallacy. Both are true. But they don’t have to be! They can both be both true without over production of money to either make the rich richer or poor poorer y that greed and also be ‘ we can afford it’ instead of the one way we have now.
Spending is the answer and the key. Not on bonds but on stuff! Buy the efforts of others. By all means earn as much as you are worth.
I’m no communist.
But unless we can see that, that’s just one side of the coin that the other side is to EXCHANGE that money for the work of others! To complete the implied contract of money as payment. You in turn have to SPEND it back in the same time frame. This completes the exchange cycle. Work for work at the same time. That’s what MMT misses.
It wrongly assumes that production itself of money is the answer. A shortfall is easily cured. Without the need for fair exchange of work bus just, SPENDING it back to fulfil the swap.
If we did that, we could still afford all we need, increased production of commerce and earn more! without the danger from devaluation by others from overproduction of money.
In essence MMT and orthodoxy explains the same failing system. Not a new one. I have that answer.
Thank you Jamie. You have grasped the increase in our government borrowing.
It is as clear as day that the politicians have no idea how to affect our economy to increase growth.
For well over the 25 years of sustained deficit the growth of our economy has NOT happened in sufficient amounts to avoid the need for government borrowing.
That sustained ignorance to our nations need to earn more so we can afford to pay more tax is the reason why we are where we are today. And will still be in over the next 25 years if nothing constructive is achieved.
The rich of this world, the ones who buy those gilts inevitably get richer with the interest we pay them as they get even more money to lend back to us for that shortfall instead of us receiving it naturally from just them SPENDING it back.
So this becomes an ever fulfilling prophecy for them and us. As our debt rises they earn more. They earn more they lend more by buying gilts. It’s not a mathematical calculation more an observation.
The general rule these days, is that inflation is bad. So the BoE must strangle a growing economy to stifle inflation, to keep inflation down. But all that does is stifle our economy!
Inflation is not bad. As long as incomes keep up with it. Inflation is a fact of life. It’s the natural rise in costs. In things that become scarce after being plentiful. Or raw materials that we run out of that we then import like oil and gas. Once we had it and now we don’t so to speak.
And whoever said you can’t buck the market was right! You can’t keep costs down forever. Or pretend a price is a price forever.
But when the need is there, to resupply the total money in circulation to cover the inflationary effects to give an equal supply to counteract that rise we fail ourselves! By NOT resupplying money Jamie.
I’m not convinced that a MMT is the answer. Just by adding even more digits to what we need. As we all know the more digital money we produce the more we and the rest of the world devalue it’s worth, its value and its ability to swap for effort in a fair exchange of work effort.
So why don’t we just work with what money coin notes and digital is already out there!!??
Our money that we spend has to go somewhere, it doesn’t disappear. Someone has it! It gets withheld and out of our reach unless we borrow it back. And this is the issue. We are forced to borrow it instead of getting it back in fair and full exchange via SPENDING it back.
This is where the government gets it wrong. It’s our money. Not for them to keep hold of. It must be returned sharply by the few, to our majority productive economic pot. We need velocity of speed and weight of money being spent to fulfil the exchange. The implied contract by which they receive that high reward in the first place. I’m all for earning more but unless it’s spent back then how can the system keep working?
We already spend our money in fair exchanged for what we want, food energy you name it. But we allow the few to keep hold of vast sums that are withheld from our productive economy that remains unexchanged.
But our government must make better rules to make whoever gets it, SPEND it back. Not tax it but spend it all back to create the necessary hike in velocity we need for growth.
We need it all back so we can get the resupply of money for our economy to grow! Yes it must grow to restock, resupply for us all to re-SPEND. But growth is not limitless. It will grow to its optimum and then stop growing, it should then be sufficient to avoid the need to borrow it back. In other words we have replaced debt with the actual money being held by those who buy gilts. It’s a simple balanced equation Jamie.
And not forgetting. When they SPEND they get equal goods or asset in fair exchange. And when tax taken nothing is exchanged. That is the power of full SPENDING. It resupplies money to the masses.
This is all in the governments remit. To at last track and trace money. Make it move back by those who have hold of it by making them SPEND it rather then hold it to ransom and make us borrow our own money back!
Brian, thanks for such a thoughtful comment – you’re absolutely right to focus on the long stretch of persistent deficits and the way that rewards gilt‑holders while leaving the real economy stuck in low‑growth mode. I agree that the core problem is not “inflation per se” but a failure to generate broad‑based income growth and to recycle money productively back through the economy rather than treating high asset holdings as an end in themselves. Where I’d add a nuance is that, in a small open economy like the UK, there is a limit to how far we can rely on higher money growth without running into currency and confidence problems, which is why I keep stressing the need for genuine investment that lifts productivity, rather than just ever‑larger flows of interest to the already wealthy.
That’s correct Jamie. I think we’re on the same page.
The word GROWTH worries me. As does INVESTMENT. And I’ll try and explain why.
Growth is a bit of an enigma. It’s a happening rather than anything meaningful. If it were meaningful we could precisely calculate it. We could project it based on specifics. And we could understand what generates it and what amounts are required to obtain it. But we can’t be sure on anything.
To Rachel Reeves it’s specific. It’s a growth of tax revenue of tax take. That’s why she has increased taxation to obviously bring more in.
But to an economist growth is GDP, whatever that is! To a banker Growth is deposits. And to a businessman it’s profit. To the economy it’s money. The money pot needs to grow. Either by adding more or using more of the percentage that’s already out there but, not used. For example, a ratio say of 60/40. 60 not being spent in a month and 40 that is being spent in a month. Growth from that could mean a 50/50 split. Whereby spending ratio increases to 50 making unspent money decrease to 50. Thus the money supply has increased from spending while no added funds have taken place. In other words growth is using more of our money that hitherto has not been used.
So you see Jamie, using a word to sum up need is not as accurate as we think or need. And those who use it don’t understand its variations.
Same too with investment.
Investment to a business is more money to spend. But at a higher cost. Investment by a bank or fund is also more money, profit! The more debt sold the more profit earned. And investment may be effort not actually money. For example, Working harder for less. Or working longer hours. And so on. So investment is another all encompassing word that misrepresents its use. Investment sounds professional. Precise but it’s far from it. As at what cost? And in allowing investment it misses the point that, money should be freely available by normal flow to supply that demand. The mere fact that it’s now ‘investment’ means the system has not freely supplied that income stream to be replaced by money at cost and full repayment of future revenue instead of a fee stream if money supply. In that use it proves money is NOT in supply sufficient for its need. And that’s because the investor has not freely spent their money but withers it causing the flow to stop! Making the borrower have to take on an investment! It’s crazy. It needs to be flowing freely. Investment is the unhappy result of a failed system that stops cash flowing, stops money moving freely. It’s not the answer it’s not an answer. It’s the symptom of a poor and failed system of money flow and resupply.
I don’t like those terms. They are vague and misleading and lazy in their use.
So too is ‘WE THE TAXPAYER’. It’s lazy and vague and misrepresented.
The assumption being, tax is paid by some and not others! Well that assumption itself is a sign of confusion. It’s a sign of a misunderstood statement and its assumption. In short it’s naive.
Just by saying it means they don’t really know or understand tax at all! Let me explain.
All people pay the same taxes. And they are VAT and DUTY. As we SPEND they are triggered. If we SPEND 100% of income we pay as much tax as we can possibly pay. All people pay this. Not done ALL. Whether you are Workers, non workers, children, adults, employed or unemployed even the unemployable! Disabled non disabled. Pensioners or non pensioners. It’s the same tax of the same percentage. There is no them and us!!
The real difference is SPENDERS and NON SPENDERS. That’s the them and us! Not we the tax payer, we the SPENDER should be the mantra.
Spenders pay 100% to tax and all 100% to revenue and all 100% to the resupply of money back to the collective pot.
Non spenders don’t pay their fair share. They pay less pro rata if tax and contribute less as a result to the/our economy and its resupply of money. So they don’t result the pot. They are the problem! They are the tax avoiders. And in some cases pay NO TAX at all! And contribute nothing to the resupply of our collective revenue base and stream to the economy. This is another problem. No tax is triggered by unspent money. So there is no incentive to SPEND. And therefore no incentive to contribute to us as a collective population and contribute nothing to our governments tax take.
So if 100% of income is unspent then nothing in tax is triggered. Whether they work or not. So the ‘we the taxpayer’ opinion is flawed!
Furthermore, tax and Nic are NOT paid by workers. They are paid by businesses from the profits and revenue received from the SPENDING of us all. Not from working per se.
Despite the fact it has income in the heading it’s only calculated on income paid. And despite the worker being liable for it tax is not triggered by work. It’s triggered by the SPENDING of the business on the employee. So it’s the employer who pays tax not the worker! This is yet another misrepresentation.
The business pays wages and taxes. Not the worker. Not the employee.The employer. The trigger is their SPENDING on wages for taxes to trigger.
And businesses are conduits for money flow. They receive SPENDING and pass on that SPENDING to trigger income tax and Nic.
And who pays for the revenue and tax collected by business? We ALL do! So there is no them or us. It’s all of us.
So, again we the taxpayer is everyone’s! There is no them and us. It’s everyone. Not unequal. But equally!
So Jamie, my point. … At last!… is wording is fatally wrong. Growth. Investment and we the taxpayer are all misconstrued and misunderstood. Not by some. By all.
Taxation is presented to us as an illusion. Unknown amounts of vat and duty are taken, so we don’t see what we pay.
known amounts are taken before receipt. So they are an illusion to think they are gained. They are not. So a complete re-understanding is required to see show and know that our taxes are triggered by SPENDING. Which we all do.
Except those who have too much income from need. As they don’t have to SPEND. And there is the problem.
We are led to believe that, non workers take. No, recipients of money who keep it are the culprit to a system that needs money flowing.
Anything or anyone that stops the flow or doesn’t contribute to returning money freely by spending it back, are causing the flow to stop, delay or keep it and take more by doing so.
The fingering blame shouldn’t be to the poor. They spend all their incomes. No it must be at those who don’t spend.
It’s a government that has the ability to make money move when they don’t choose to move it themselves. Only a government can penalise those not spending, not by taxing that money or taxing their wealth but by taking the whole income back if not spent.
My view is we need all money flowing all the time automatically and perpetually.
Make all money digital. Track and trace all money in house. Reinstate exchange controls. Don’t allow money to leave. Goods yes. But not money. Put a spend by date on that digital money. Make all money move or have it taken by government for their own and our collective spending needs.
In one instant action make money flow to its optimum, rely solely on vat. No other tax is needed.
If all our money is spent. It could raise trillions. As there is apparently £19 trillion pounds out there. In cash coin and digital money. If all that were spent once in one whole year. We could expect £3.8 trillion in tax take from vat alone.
That’s four times our tax take now from all taxation. Now that’s growth Jamie.
We won’t need to borrow. We won’t need to run a deficit. Wages would rise so too state pensions. We won’t need credit or gilts. Banks would facilitate the movement of money not stop its flow or keep it.
Import exporters must hold uk accounts on same rule. Spend it or lose it. They’ll make an equal position if goods in goods out. And all money stays.
That’s my answer Jamie. No need for the city slickers All we need is people with well earned incomes who willingly spend it all the time. Getting fair exchange for effort. We don’t need private sectors or public sectors. Any sector fuels the other by spending directly on each other. Symbiotic.
Investment Jamie is a sign of a drip feed. A withholding of money to gain more money. And control, not just interest but future profits. That’s not required if the system fuels itself.
It’s a lot more simple than we all think, it’s just cash flow.
I’m all for people earning more. Reward themselves. But they must spend the money back in fair exchange if we want the system to perpetuate.
That was a strategic default deliberately done to illustrate the impossibility of the reparations imposed on Germany which by design were vengeful rather than practical. It worked, too. Try reading the book by Hitler's banker, Hjalmar Schacht, The Magic of Money for more. The Wiki had a good section on the Rentenmark too, which is hopefully still there.
Bill I somehow knew you would stick to script. Of course government produces money. It always has. It has to produce it first. I don’t have to google it Bill.
I’m not saying different. That’s your confusion. But as you say money is created and tax wipes it out.
But it doesent. Tax receipts are never enough to wipe it out Bill. And that’s the problem with MMT. It doesent address that fundamental flaw. When tax receipts cause a surplus it’s great! All debts are wiped out. The issue comes unstuck when receipts from tax are insufficient causing gilt sales.
The fear of debt applies to governments as much as it does to Joe blogs in the street.
The thing is Bill, our systems and understanding of it is one thing. Our ability to make a better system is another.
Normal people in the street are sold the deception that tax and spend is the system. When you and I know it’s not.
But I happen to like the idea of a tax and spend system. I think it’s clean and clear cut. And as most people believe it to be true let’s not try and sell a different story to them. Let’s just make a tax a spend system work better. Better than MMT has to offer.
If we had 12 good men and (women ) true, and if we had a court of popular opinion all 12 would side with a tax and spend economy. Thats the thing with laws they can be interpreted differently. So can monetary systems. I’m a ‘spirit’ of the law kind of guy. Let’s make the system In the spirit of togetherness. As we are all in it together Bill.
So I will, once more endeavour to present my alternative and hope you can restrain from the confines of MMT.
MMT refuses to recognise devaluation from over production of created money that’s a big problem for me.
If course money has to be produced. It had to be made or printed first. It’s the natural order Bill for centuries. But more recently with the advent of digital banking it’s now just created and credited, to the recipients by the issuer. Our Government.
It’s a natural progression not a good one Bill, in my view, because the treasury and BoE have produce the bewildering and convoluted method to allow this to occur on paper. In a way that is lawful to them but in fact masks its pathway to all but MMTers.
Politicians still describes this to the public in ways that purport to be a tax and spend economy and that’s not being truthful. I agree Bill.
This situation is totally unacceptable.
It’s unacceptable because it’s a deception but moreover because it just doesent cure our need for a fully working autonomous and perpetual economy.
MMT says that we are limited by production. That we could not supply all the goods services or assets for people to make or achieve them and resources are limited.
But I think that’s not the case. I believe We are limited by money not passing through our productive economy. We are underperforming and underfunded. I say we have lots of spare capacity to achieve better. If only the money supply was there to provide the payment for this to occur. It’s limited because we allow money to be withheld from the productive economy by those who can keep money unspent. They are the few not the majority.
Those vast sums don’t get back to us. Those vast sums mainly bypasses us and rotate around the pathways that MMT describe and just keep lining the pockets of the rich and the rich get richer whilst we pay for interest on gilts and line banks pockets by being forced to borrow money from those who withhold it. To keep paying them the few, ever more sums instead of bettering ourselves.
Bill MMT isn’t the answer. I’m sure of that. It’s a description, of the system we already have. it fails to provide a pathway of money back into the working productive economy. And it’s a waste of a good argument.
Just as orthodoxy is a failure or a household budget understanding by deluded politicians. It the wrong argument regardless of its merits.
So Bill, please open up your mind to a system of tax and spend.
Money is already out there! Cash coin and digital, so let’s just use it, as it matters not how it got there. It’s now out there in play!….or rather it should be!!
There is £19 trillion pounds out there apparently. You Google that Bill. If that were to be spent just once in one whole year it would raise £3.8 trillion by vat alone.
Bill that’s nearly four times our present tax take from all taxation. A puny £1.1 trillion pounds from all present SPENDING from all taxes and taxation.
FOUR TIMES from one tax only. Just think what you could do with four times your income Bill?
That’s the power of money being spent Bill. It’s VELOCITY Bill. Velocity denotes speed and weight of money moving. It moves in our system from SPENDING, Bill. Velocity that’s too slow or if it’s too little in weight isn’t giving the best velocity. And that’s what is happening now. Too little money and in too slow a time is the system flow we have suffered.
At present we only take 1.1 trillion from all taxation! So what in your view would be the best velocity? Or the best system?
You can’t ignore 26 years of deficit either. Under my theory the high velocity from a tsunami of increased SPENDING will never produce a deficit! Only surpluses!
So the ability to redistribute over and above money that’s now presently being moved by us all can be increased. Monumentally!
What’s your thoughts on my system Bill? Not MMT. Mine.
MMT only provides more money up front! It will still go to line the rich just as money does now. Because you still haven’t tackled the problem of vast untapped and unspent pits of money idle snd out of the reach of our productive economy.
The present levels of taxation don’t work and will never work. It will never provide sufficient for a surplus. Not for us. £1.2 trillion is insufficient now, hence the deficit.
I’ve shown that a higher turnover and higher velocity can easily provide more than sufficient levels that will create huge surplus’s but moreover provide more turnover in our pockets to keeping our businesses going with huge amounts of money supply.
So Bill as good as MMT is it’s not better than my theory. Of putting a spend by date on money, to automatically and perpetually make money revolve to give us all more reward of gain and give our governments the money Sufficient to fill potholes and build homes. Green or otherwise.
I’ll argue until it sinks in. MMT is right! Money gets produced first and tax reduces that production, so what, I say?
It’s a different explanation of a failure of a system that allows money to be held way beyond the fair exchange of my work for your work this week!
What can you add Bill? Can you really ignore history and the devaluation of currency that’s over produced to a point it’s worthless as a token of work exchange? Can you really think that all we have to do is create more digital money without consequences? Do you really argue that if so much money were to be available by having to spend vast sums that commerce wouldn’t be able to step up and supply the effort to take that money on offer so redly?
You can’t know until the money starts rolling. But we can see the equation for it.
MS=R money multiplied by SPENDING equals revenue. And as we know the more money spent the higher the velocity and the more revenues the higher the tax take! It’s so obvious Bill. Surely you can see that? Mathematics don’t lie. Politicians do. MMT isn’t wrong it’s just not right either. It’s not best. Money moving, cash flow that’s the best way to get more production and get more done. Green agenda costs do let’s get the money in to strive to keep our planets resources intact as best we can. It won’t happen if most our money is being held by a few who drip feed it back via lending it to us instead of spending it back in exchange for our goods and services.
“Of putting a spend by date on money, to automatically and perpetually make money revolve to give us all more reward of gain and give our governments the money Sufficient to fill potholes and build homes. Green or otherwise.“ They tried that already, demurrage, there was that small Austrian town called Worgl where they used stamp scrip as local currency. I dunno if it would upscale…
It’s ironic that we had our defence Secretary resign today because of a lack of available funds. It’s getting critical now. Despite billions of pounds expenditure it’s just not sufficient for our governments spending that has to be made.
Fast forward twenty six years and it’s been a borrowing every month in that time to cover our deficit. We need an increase in tax take to make ends meet and give us all the spending we need as a nation.
If we cut anymore we won’t get anything done. Councils are under severe strain. Government is, NHS schools defence you name it it’s dire.
So we have enormous debt, underfunded government and an economy that will come to a halt as people tighten spending because of a lack of flow. Businesses are hanging on by their finger tips.
The orthodox want cuts. But cuts won’t give us more money! It’ll just cut the borrowing a bit! So if we want a working economy cuts are not going to cut it Bill! Excuse the pun!
MMT say just print more or rather conjure up more for government to spend. But yo be truthful that still won’t be covered by taxes as we won’t get the benefit of it yo increase our tax payments they require for a surplus.
So I’ve got a third way. And it will work.
By the few who hold super amounts of indent money we need that money to flow back to us the majority. It’s mainly the bulk of that money. Not all. It is mathematically possible to keep it to a high percentage of total money but it needs to be rotated through our daily economy to pay extra wages for the tax producing part of our economy, us!
Not just once like a tax. But time and time again rotating many times through SPENDING on a monthly cycle. Not a yearly tax cycle. It needs to flow fast not slow.
That’s the only way to get growth. We need more money that is idle in banks and wealth funds and banks abroad and off shore accounts. To cone back not once but allow it to be rotated time and time again paying millions of people time snd time again and again. As it revolves tax is triggered. From spending! Not from NOT SPENDING.
It’s the failure of our system. Described as orthodoxy and MMT that neither guarantee flow in and around the vast majority of our economy. The majority without that vast sums.
It’s got so serious we need a proper cash flow via increased flow and speed velocity of spending money. Giving the growth in tax take that, our governments needs to pay for all our needs!
"Fast forward twenty six years and it’s been a borrowing every month in that time to cover our deficit." The deficit's a feature, not a bug. There's no need to cover it, in fact, if the defence guy's quit as there's not enough money, then the deficit clearly needs to be bigger.
f you want to stir money out of savings accounts, would negative interest rates do that/ You have to pay the banks so much to store your money it's cheaper to spend it & keep spending it? How could you enforce that internationally & wouldn't people flee into commodities?
Yes Bill. Negative interest rates or even negative rates would certainly do that. But it’s still not SPENDING into our part of the economy. Us being the workers and the needy who require money flow each month. It’s such a sorry state that it’s easily forgotten that the world shouldn’t be revolve around banks! I think it’s the problem not the cure Bill. Like an old western bank. Built to protect money, it’s the first rung in the ladder of not SPENDING!
The reason why the rest of the town had to borrow was because the money wasn’t revolving! So everybody had it time and time again to give them their reward. From a stable lad or milkmaid to the sheriff. Each needed their reward. But if it’s stuck in the bank nobody gets their dues. They get less because they are made to wait or it’s withheld.
It’s a very simple need Bill. All people need incomes. Some more done less but unless we get one we are buggered.
So isn’t it simply stupid not to ensure money revolves? If it’s taxed nobody gets a thing. It’s one single tax to the state. Whereas spending gets tax after tax after tax from spending it time and time and time again whilst we get equal value in stuff for it!
Surely that’s better to all than helping the few keep it all!?
Bill all the nonsense spouted out by economists and experts cover the associated nuances surrounding banks and borrowing and city slickers money instruments. When I say get rid of that hiatus.
Clear it all out Bill.
First we must reintroduce exchange control regulations that keeps currency in house in the issuing nation. Don’t let money escape. It’s did the use of the nation.
Second swap all old money cash coin and digital for a new digital only currency.
Then put a SPEND by DATE on that money to make it flow. In a monthly cycle.
Taxation will come from one tax. A sales tax. No other tax is necessary. The increased flow of spending will ensure enough tax for a permanent surplus.
Put that in place and we will be changed overnight. So much money will move all wages will increase so much that most burrowing will be a thing of the past. Mortgages or cars can be bought monthly as we do now. The bank is the one state bank that facilitates that. It ensures they too have to use their receipts monthly too!
Government surplus means no more state borrowing from those who let’s face it withhold the money from us now! The musks of this world. They buy the bonds they sell. Or at least the non spenders do. As they are the ones holding the money who can afford to buy them.
But let’s do away with that need.
The reason we save us because we are told we can’t get it again! Well I have news. With this new certainty we will get it back and mute every month. So no need to worry. It’s guaranteed by 100% spending. Every month.
Take the heat out of money by making it move and not sat on unspent and useless to us.
Money not spent (as spending it all isn’t compulsory just whatever is indecent by the recipient) is automatically taken by government so they spend it that month.
It’s completely autonomous and perpetual. I think it will make people come to the centre of the balance. Not needing to spend so much or giving the poorer more do the balance becomes more central.
As for import export. Those businesses have to have an in house account where money is deposited or SPENT under the same rules.
If the tanks want our whisky and we want their beef the. It’ll be a parity of exchange as under the same rules money had to be spent in a month. Or it’s taken away. Parity of import export. Just what Trump wants!
Levels of work reward can be balanced between countries who do import export. So welders in one country will be rewarded as welders of another country. That’s how I feel it will pan out.
Bill it’s the movement if money that’s key.
Digital money isn’t meant to be kept. It’s always a token of work exchange. And exchange us at the heart of that implied contract.
But we can now police and enforce it automatically autonomously. And proteas now with digital money and payment cards.
Ironically Bill the rich will be wealthier. They can own more shirts or tables or cars or homes if they choose to spend it! And because of the tsunami of flow they can have loads! If they want them!? They don’t have to!! They can key money be taken if they feel they own enough.
That’s my way of ensuring an optimum economy based on money do available no business can be bankrupted by a lack of cash flow. There will be so much spending nobody will be left out of the money supply then.
On the contrary Tony, I want a well funded well paid society. Not an under funded and hyper inflation economy.
Printing money just to devalue it is not what’s needed.
But we should want more or all of our existing money to rotate around from those holding it to those who don’t. In a fairish exchange for our work effort it needs. Tax gives nothing in return. Spending gets you goods assets etc. in fair exchange.
But without money returning then our system becomes devoid of it. As we are now.
I’m not a communist or indeed a fascist. I just want to be properly and better paid by there being a ready supply of citizens holding money to spend having received it from others spending. It’s all about spending and cash flow Tony.
Money has to have a way to return or the system fails. Our preferred method is receiving from spending and spending ourselves. It’s a sure fire winner to keep the resupply of money that, we all need.
Germany in the twenties didn’t want to spend. They wanted to not spend. So they just kept printing to give the resupply. But all it did was to make the money worthless.
The governments answer to insufficient tax take from money not moving via spending was to keep printing it to fill the deficit. Much better to enforce spending to keep us all in funds and give governments more than enough to pay their way too.
Taxes don't fund public services, govt money creation/spending does. Govt creates Supply & Appropriation Bill (see Hansard) & under the Exchequer & Audit Dept Act 1866 (Google it!) BoE creates money to pay it (see major bank sites for how banking works).
In a fiat economy like ours, Govt spending creates money while taxation deletes it. Taxes don't go into any govt kitty or public purse. If tax feels like it simply vanishes when it's paid, that's because that's exactly what happens to it!
Am I being dumb? - Rachel borrowed £14.3M and paid £13M on loan repayments in February? Really? That's borrowing from Peter to pay Paul isn't it? Who are these lenders and why do they lend to such a numerically illiterate and fiscally irresponsible country? Why not cut out the middle man (which is Rachel) and just pass the money from their left to their right hand? How is this in any way "running the country"? My husband just shrugs his shoulders and says that's how the system works - what a really stupid system. What happens when these idiot lenders decide not to lend or Rachel has an emergency which means she misses a repayment?
You’re not being dumb at all – the numbers do feel like “borrowing from Peter to pay Paul”. The key difference is that governments roll over old debt and issue new gilts all the time, so the £13bn is interest plus refinancing costs on a stock of almost £2.9 trillion, while the £14.3bn is the extra borrowing just for this year’s gap.
Well it looks like the government/Rache from accounts has taken her fiscal leads from the failed Birmingham Council and is leading us all to the same final outcome of bankruptcy…
That Birmingham comparison is sadly apt – you can get away with weak underlying finances for a while, until the moment you can’t. The UK still has the advantage of its own currency and a deep gilt market, but the direction of travel is similar: ever more borrowed just to stand still, rising debt interest, and very little to show in terms of stronger private‑sector growth underneath. That’s why I keep stressing that this isn’t “investment borrowing”, it’s day‑to‑day overspending that steadily narrows the room for manoeuvre when the next shock hits.
Well the money is not come our way Britain.
You’re right to sense that the headline numbers don’t match people’s lived experience. That’s really the core of the piece: we’re taking on a lot more debt, but it’s not translating into stronger growth, better services or higher living standards for most people – which is why so many feel “the money never comes our way”.
What we use for money is govt IOUs (BoE says so, March 2014 Bulletin, PDF). When you return an IOU to its issuer, it's nulled. Buying gilts then is really an asset swap, non-interest bearing Govt IOU (money) for interest bearing Govt IOU (bond). The money disappears when Govt gets it so it can't spend it. There's no borrowing going on here, just people showing faith in Govt by (they think) depositing money with it. When Govt pays out, it does so by creating new money.
Yes Bill. This is correct the MMT explanation of the convoluted machinery behind the flow of money in and out of government and commercial Banks via BoE and treasury. It’s a product of circumstances that has evolved over time but more pertinently over recent decades. But it’s a failure of the majority by the few.
Of course money has to be produced first. That’s been the case since money was first produced. It’s been that way for millennia.
But we are in a global economy. Where we are judged by others as to the value of our money.
It has to be seen to be in lock step with the rest of the top nations currency. It’s for that reason political decisions have consequences and the main one is devaluation if we are seen to be out of control or out of lock step.
The biggest mistake of MMT in my view is it skirts over money in the hands of the productive economy. It’s in it or it should be.
Whatever the amount produced at one end is supposed to be a swap for work effort. The driver for our productive economy. If trillions are produced, the time span it’s out there has to be put to good use. Not sat on or unused. Idle or unspent. All before the MMT cycle concludes.
It’s this interesting pathway of the need for money to freely flow once produced us the key to our success or failure. Not the production if more money one end to 6 into bank accounts if the rich bond holders by way of interest! In such vast sums we the majority are devoid of it. The few are just destined to get richer if we can’t see money has to be used for its true purpose as a swap for work effort.
Money isn’t for holding as a value for very long. It’s an implied contract if receive and spend. Not just receive and not spend!
The point orthodoxy and MMT alike miss is that money can be turned over to increase flow and production as each contract is fulfilled. The receipt and SPEND of money back to those who provided the reward of work effort. It’s a chain or a conveyor belt not to be slowed, stopped or interfered with. That reduces and prevents our ability to pay each other ir to be paid ourselves. For the majority of people not the lucky few who earn so much they can’t possibly spend it so they don’t! They are the ones who can afford the bond purchases. Using money that in my view should be either back in the productive pot of productive economy or in the hands of our government to spend in that time crucially to keep the money flowing in our direction not the direction of the already mega rich who seem to get more as they lend it instead of having to SPEND it.
Bill. It’s not that clever to see a path for money. It’s a pathway we are used to seeing.
It’s political will of changing the present to one that is better. That fulfils its wish to have a surplus from tax instead of a deficit of shortfall. That will inevitably give us the system we could have.
I think MMT misses this fact by assuming the answer is to produce more money and the ‘ we can’t afford it’ retort is a complete fallacy. Both are true. But they don’t have to be! They can both be both true without over production of money to either make the rich richer or poor poorer y that greed and also be ‘ we can afford it’ instead of the one way we have now.
Spending is the answer and the key. Not on bonds but on stuff! Buy the efforts of others. By all means earn as much as you are worth.
I’m no communist.
But unless we can see that, that’s just one side of the coin that the other side is to EXCHANGE that money for the work of others! To complete the implied contract of money as payment. You in turn have to SPEND it back in the same time frame. This completes the exchange cycle. Work for work at the same time. That’s what MMT misses.
It wrongly assumes that production itself of money is the answer. A shortfall is easily cured. Without the need for fair exchange of work bus just, SPENDING it back to fulfil the swap.
If we did that, we could still afford all we need, increased production of commerce and earn more! without the danger from devaluation by others from overproduction of money.
In essence MMT and orthodoxy explains the same failing system. Not a new one. I have that answer.
Thank you Jamie. You have grasped the increase in our government borrowing.
It is as clear as day that the politicians have no idea how to affect our economy to increase growth.
For well over the 25 years of sustained deficit the growth of our economy has NOT happened in sufficient amounts to avoid the need for government borrowing.
That sustained ignorance to our nations need to earn more so we can afford to pay more tax is the reason why we are where we are today. And will still be in over the next 25 years if nothing constructive is achieved.
The rich of this world, the ones who buy those gilts inevitably get richer with the interest we pay them as they get even more money to lend back to us for that shortfall instead of us receiving it naturally from just them SPENDING it back.
So this becomes an ever fulfilling prophecy for them and us. As our debt rises they earn more. They earn more they lend more by buying gilts. It’s not a mathematical calculation more an observation.
The general rule these days, is that inflation is bad. So the BoE must strangle a growing economy to stifle inflation, to keep inflation down. But all that does is stifle our economy!
Inflation is not bad. As long as incomes keep up with it. Inflation is a fact of life. It’s the natural rise in costs. In things that become scarce after being plentiful. Or raw materials that we run out of that we then import like oil and gas. Once we had it and now we don’t so to speak.
And whoever said you can’t buck the market was right! You can’t keep costs down forever. Or pretend a price is a price forever.
But when the need is there, to resupply the total money in circulation to cover the inflationary effects to give an equal supply to counteract that rise we fail ourselves! By NOT resupplying money Jamie.
I’m not convinced that a MMT is the answer. Just by adding even more digits to what we need. As we all know the more digital money we produce the more we and the rest of the world devalue it’s worth, its value and its ability to swap for effort in a fair exchange of work effort.
So why don’t we just work with what money coin notes and digital is already out there!!??
Our money that we spend has to go somewhere, it doesn’t disappear. Someone has it! It gets withheld and out of our reach unless we borrow it back. And this is the issue. We are forced to borrow it instead of getting it back in fair and full exchange via SPENDING it back.
This is where the government gets it wrong. It’s our money. Not for them to keep hold of. It must be returned sharply by the few, to our majority productive economic pot. We need velocity of speed and weight of money being spent to fulfil the exchange. The implied contract by which they receive that high reward in the first place. I’m all for earning more but unless it’s spent back then how can the system keep working?
We already spend our money in fair exchanged for what we want, food energy you name it. But we allow the few to keep hold of vast sums that are withheld from our productive economy that remains unexchanged.
But our government must make better rules to make whoever gets it, SPEND it back. Not tax it but spend it all back to create the necessary hike in velocity we need for growth.
We need it all back so we can get the resupply of money for our economy to grow! Yes it must grow to restock, resupply for us all to re-SPEND. But growth is not limitless. It will grow to its optimum and then stop growing, it should then be sufficient to avoid the need to borrow it back. In other words we have replaced debt with the actual money being held by those who buy gilts. It’s a simple balanced equation Jamie.
And not forgetting. When they SPEND they get equal goods or asset in fair exchange. And when tax taken nothing is exchanged. That is the power of full SPENDING. It resupplies money to the masses.
This is all in the governments remit. To at last track and trace money. Make it move back by those who have hold of it by making them SPEND it rather then hold it to ransom and make us borrow our own money back!
Brian, thanks for such a thoughtful comment – you’re absolutely right to focus on the long stretch of persistent deficits and the way that rewards gilt‑holders while leaving the real economy stuck in low‑growth mode. I agree that the core problem is not “inflation per se” but a failure to generate broad‑based income growth and to recycle money productively back through the economy rather than treating high asset holdings as an end in themselves. Where I’d add a nuance is that, in a small open economy like the UK, there is a limit to how far we can rely on higher money growth without running into currency and confidence problems, which is why I keep stressing the need for genuine investment that lifts productivity, rather than just ever‑larger flows of interest to the already wealthy.
That’s correct Jamie. I think we’re on the same page.
The word GROWTH worries me. As does INVESTMENT. And I’ll try and explain why.
Growth is a bit of an enigma. It’s a happening rather than anything meaningful. If it were meaningful we could precisely calculate it. We could project it based on specifics. And we could understand what generates it and what amounts are required to obtain it. But we can’t be sure on anything.
To Rachel Reeves it’s specific. It’s a growth of tax revenue of tax take. That’s why she has increased taxation to obviously bring more in.
But to an economist growth is GDP, whatever that is! To a banker Growth is deposits. And to a businessman it’s profit. To the economy it’s money. The money pot needs to grow. Either by adding more or using more of the percentage that’s already out there but, not used. For example, a ratio say of 60/40. 60 not being spent in a month and 40 that is being spent in a month. Growth from that could mean a 50/50 split. Whereby spending ratio increases to 50 making unspent money decrease to 50. Thus the money supply has increased from spending while no added funds have taken place. In other words growth is using more of our money that hitherto has not been used.
So you see Jamie, using a word to sum up need is not as accurate as we think or need. And those who use it don’t understand its variations.
Same too with investment.
Investment to a business is more money to spend. But at a higher cost. Investment by a bank or fund is also more money, profit! The more debt sold the more profit earned. And investment may be effort not actually money. For example, Working harder for less. Or working longer hours. And so on. So investment is another all encompassing word that misrepresents its use. Investment sounds professional. Precise but it’s far from it. As at what cost? And in allowing investment it misses the point that, money should be freely available by normal flow to supply that demand. The mere fact that it’s now ‘investment’ means the system has not freely supplied that income stream to be replaced by money at cost and full repayment of future revenue instead of a fee stream if money supply. In that use it proves money is NOT in supply sufficient for its need. And that’s because the investor has not freely spent their money but withers it causing the flow to stop! Making the borrower have to take on an investment! It’s crazy. It needs to be flowing freely. Investment is the unhappy result of a failed system that stops cash flowing, stops money moving freely. It’s not the answer it’s not an answer. It’s the symptom of a poor and failed system of money flow and resupply.
I don’t like those terms. They are vague and misleading and lazy in their use.
So too is ‘WE THE TAXPAYER’. It’s lazy and vague and misrepresented.
The assumption being, tax is paid by some and not others! Well that assumption itself is a sign of confusion. It’s a sign of a misunderstood statement and its assumption. In short it’s naive.
Just by saying it means they don’t really know or understand tax at all! Let me explain.
All people pay the same taxes. And they are VAT and DUTY. As we SPEND they are triggered. If we SPEND 100% of income we pay as much tax as we can possibly pay. All people pay this. Not done ALL. Whether you are Workers, non workers, children, adults, employed or unemployed even the unemployable! Disabled non disabled. Pensioners or non pensioners. It’s the same tax of the same percentage. There is no them and us!!
The real difference is SPENDERS and NON SPENDERS. That’s the them and us! Not we the tax payer, we the SPENDER should be the mantra.
Spenders pay 100% to tax and all 100% to revenue and all 100% to the resupply of money back to the collective pot.
Non spenders don’t pay their fair share. They pay less pro rata if tax and contribute less as a result to the/our economy and its resupply of money. So they don’t result the pot. They are the problem! They are the tax avoiders. And in some cases pay NO TAX at all! And contribute nothing to the resupply of our collective revenue base and stream to the economy. This is another problem. No tax is triggered by unspent money. So there is no incentive to SPEND. And therefore no incentive to contribute to us as a collective population and contribute nothing to our governments tax take.
So if 100% of income is unspent then nothing in tax is triggered. Whether they work or not. So the ‘we the taxpayer’ opinion is flawed!
Furthermore, tax and Nic are NOT paid by workers. They are paid by businesses from the profits and revenue received from the SPENDING of us all. Not from working per se.
Despite the fact it has income in the heading it’s only calculated on income paid. And despite the worker being liable for it tax is not triggered by work. It’s triggered by the SPENDING of the business on the employee. So it’s the employer who pays tax not the worker! This is yet another misrepresentation.
The business pays wages and taxes. Not the worker. Not the employee.The employer. The trigger is their SPENDING on wages for taxes to trigger.
And businesses are conduits for money flow. They receive SPENDING and pass on that SPENDING to trigger income tax and Nic.
And who pays for the revenue and tax collected by business? We ALL do! So there is no them or us. It’s all of us.
So, again we the taxpayer is everyone’s! There is no them and us. It’s everyone. Not unequal. But equally!
So Jamie, my point. … At last!… is wording is fatally wrong. Growth. Investment and we the taxpayer are all misconstrued and misunderstood. Not by some. By all.
Taxation is presented to us as an illusion. Unknown amounts of vat and duty are taken, so we don’t see what we pay.
known amounts are taken before receipt. So they are an illusion to think they are gained. They are not. So a complete re-understanding is required to see show and know that our taxes are triggered by SPENDING. Which we all do.
Except those who have too much income from need. As they don’t have to SPEND. And there is the problem.
We are led to believe that, non workers take. No, recipients of money who keep it are the culprit to a system that needs money flowing.
Anything or anyone that stops the flow or doesn’t contribute to returning money freely by spending it back, are causing the flow to stop, delay or keep it and take more by doing so.
The fingering blame shouldn’t be to the poor. They spend all their incomes. No it must be at those who don’t spend.
It’s a government that has the ability to make money move when they don’t choose to move it themselves. Only a government can penalise those not spending, not by taxing that money or taxing their wealth but by taking the whole income back if not spent.
My view is we need all money flowing all the time automatically and perpetually.
Make all money digital. Track and trace all money in house. Reinstate exchange controls. Don’t allow money to leave. Goods yes. But not money. Put a spend by date on that digital money. Make all money move or have it taken by government for their own and our collective spending needs.
In one instant action make money flow to its optimum, rely solely on vat. No other tax is needed.
If all our money is spent. It could raise trillions. As there is apparently £19 trillion pounds out there. In cash coin and digital money. If all that were spent once in one whole year. We could expect £3.8 trillion in tax take from vat alone.
That’s four times our tax take now from all taxation. Now that’s growth Jamie.
We won’t need to borrow. We won’t need to run a deficit. Wages would rise so too state pensions. We won’t need credit or gilts. Banks would facilitate the movement of money not stop its flow or keep it.
Import exporters must hold uk accounts on same rule. Spend it or lose it. They’ll make an equal position if goods in goods out. And all money stays.
That’s my answer Jamie. No need for the city slickers All we need is people with well earned incomes who willingly spend it all the time. Getting fair exchange for effort. We don’t need private sectors or public sectors. Any sector fuels the other by spending directly on each other. Symbiotic.
Investment Jamie is a sign of a drip feed. A withholding of money to gain more money. And control, not just interest but future profits. That’s not required if the system fuels itself.
It’s a lot more simple than we all think, it’s just cash flow.
I’m all for people earning more. Reward themselves. But they must spend the money back in fair exchange if we want the system to perpetuate.
What’s your thoughts Jamie?
Weimar Germany is what you want!
That was a strategic default deliberately done to illustrate the impossibility of the reparations imposed on Germany which by design were vengeful rather than practical. It worked, too. Try reading the book by Hitler's banker, Hjalmar Schacht, The Magic of Money for more. The Wiki had a good section on the Rentenmark too, which is hopefully still there.
Bill I somehow knew you would stick to script. Of course government produces money. It always has. It has to produce it first. I don’t have to google it Bill.
I’m not saying different. That’s your confusion. But as you say money is created and tax wipes it out.
But it doesent. Tax receipts are never enough to wipe it out Bill. And that’s the problem with MMT. It doesent address that fundamental flaw. When tax receipts cause a surplus it’s great! All debts are wiped out. The issue comes unstuck when receipts from tax are insufficient causing gilt sales.
The fear of debt applies to governments as much as it does to Joe blogs in the street.
The thing is Bill, our systems and understanding of it is one thing. Our ability to make a better system is another.
Normal people in the street are sold the deception that tax and spend is the system. When you and I know it’s not.
But I happen to like the idea of a tax and spend system. I think it’s clean and clear cut. And as most people believe it to be true let’s not try and sell a different story to them. Let’s just make a tax a spend system work better. Better than MMT has to offer.
If we had 12 good men and (women ) true, and if we had a court of popular opinion all 12 would side with a tax and spend economy. Thats the thing with laws they can be interpreted differently. So can monetary systems. I’m a ‘spirit’ of the law kind of guy. Let’s make the system In the spirit of togetherness. As we are all in it together Bill.
So I will, once more endeavour to present my alternative and hope you can restrain from the confines of MMT.
MMT refuses to recognise devaluation from over production of created money that’s a big problem for me.
If course money has to be produced. It had to be made or printed first. It’s the natural order Bill for centuries. But more recently with the advent of digital banking it’s now just created and credited, to the recipients by the issuer. Our Government.
It’s a natural progression not a good one Bill, in my view, because the treasury and BoE have produce the bewildering and convoluted method to allow this to occur on paper. In a way that is lawful to them but in fact masks its pathway to all but MMTers.
Politicians still describes this to the public in ways that purport to be a tax and spend economy and that’s not being truthful. I agree Bill.
This situation is totally unacceptable.
It’s unacceptable because it’s a deception but moreover because it just doesent cure our need for a fully working autonomous and perpetual economy.
MMT says that we are limited by production. That we could not supply all the goods services or assets for people to make or achieve them and resources are limited.
But I think that’s not the case. I believe We are limited by money not passing through our productive economy. We are underperforming and underfunded. I say we have lots of spare capacity to achieve better. If only the money supply was there to provide the payment for this to occur. It’s limited because we allow money to be withheld from the productive economy by those who can keep money unspent. They are the few not the majority.
Those vast sums don’t get back to us. Those vast sums mainly bypasses us and rotate around the pathways that MMT describe and just keep lining the pockets of the rich and the rich get richer whilst we pay for interest on gilts and line banks pockets by being forced to borrow money from those who withhold it. To keep paying them the few, ever more sums instead of bettering ourselves.
Bill MMT isn’t the answer. I’m sure of that. It’s a description, of the system we already have. it fails to provide a pathway of money back into the working productive economy. And it’s a waste of a good argument.
Just as orthodoxy is a failure or a household budget understanding by deluded politicians. It the wrong argument regardless of its merits.
So Bill, please open up your mind to a system of tax and spend.
Money is already out there! Cash coin and digital, so let’s just use it, as it matters not how it got there. It’s now out there in play!….or rather it should be!!
There is £19 trillion pounds out there apparently. You Google that Bill. If that were to be spent just once in one whole year it would raise £3.8 trillion by vat alone.
Bill that’s nearly four times our present tax take from all taxation. A puny £1.1 trillion pounds from all present SPENDING from all taxes and taxation.
FOUR TIMES from one tax only. Just think what you could do with four times your income Bill?
That’s the power of money being spent Bill. It’s VELOCITY Bill. Velocity denotes speed and weight of money moving. It moves in our system from SPENDING, Bill. Velocity that’s too slow or if it’s too little in weight isn’t giving the best velocity. And that’s what is happening now. Too little money and in too slow a time is the system flow we have suffered.
At present we only take 1.1 trillion from all taxation! So what in your view would be the best velocity? Or the best system?
You can’t ignore 26 years of deficit either. Under my theory the high velocity from a tsunami of increased SPENDING will never produce a deficit! Only surpluses!
So the ability to redistribute over and above money that’s now presently being moved by us all can be increased. Monumentally!
What’s your thoughts on my system Bill? Not MMT. Mine.
MMT only provides more money up front! It will still go to line the rich just as money does now. Because you still haven’t tackled the problem of vast untapped and unspent pits of money idle snd out of the reach of our productive economy.
The present levels of taxation don’t work and will never work. It will never provide sufficient for a surplus. Not for us. £1.2 trillion is insufficient now, hence the deficit.
I’ve shown that a higher turnover and higher velocity can easily provide more than sufficient levels that will create huge surplus’s but moreover provide more turnover in our pockets to keeping our businesses going with huge amounts of money supply.
So Bill as good as MMT is it’s not better than my theory. Of putting a spend by date on money, to automatically and perpetually make money revolve to give us all more reward of gain and give our governments the money Sufficient to fill potholes and build homes. Green or otherwise.
I’ll argue until it sinks in. MMT is right! Money gets produced first and tax reduces that production, so what, I say?
It’s a different explanation of a failure of a system that allows money to be held way beyond the fair exchange of my work for your work this week!
What can you add Bill? Can you really ignore history and the devaluation of currency that’s over produced to a point it’s worthless as a token of work exchange? Can you really think that all we have to do is create more digital money without consequences? Do you really argue that if so much money were to be available by having to spend vast sums that commerce wouldn’t be able to step up and supply the effort to take that money on offer so redly?
You can’t know until the money starts rolling. But we can see the equation for it.
MS=R money multiplied by SPENDING equals revenue. And as we know the more money spent the higher the velocity and the more revenues the higher the tax take! It’s so obvious Bill. Surely you can see that? Mathematics don’t lie. Politicians do. MMT isn’t wrong it’s just not right either. It’s not best. Money moving, cash flow that’s the best way to get more production and get more done. Green agenda costs do let’s get the money in to strive to keep our planets resources intact as best we can. It won’t happen if most our money is being held by a few who drip feed it back via lending it to us instead of spending it back in exchange for our goods and services.
“Of putting a spend by date on money, to automatically and perpetually make money revolve to give us all more reward of gain and give our governments the money Sufficient to fill potholes and build homes. Green or otherwise.“ They tried that already, demurrage, there was that small Austrian town called Worgl where they used stamp scrip as local currency. I dunno if it would upscale…
Yes thank you Bill, I am aware of that trial.
It’s ironic that we had our defence Secretary resign today because of a lack of available funds. It’s getting critical now. Despite billions of pounds expenditure it’s just not sufficient for our governments spending that has to be made.
Fast forward twenty six years and it’s been a borrowing every month in that time to cover our deficit. We need an increase in tax take to make ends meet and give us all the spending we need as a nation.
If we cut anymore we won’t get anything done. Councils are under severe strain. Government is, NHS schools defence you name it it’s dire.
So we have enormous debt, underfunded government and an economy that will come to a halt as people tighten spending because of a lack of flow. Businesses are hanging on by their finger tips.
The orthodox want cuts. But cuts won’t give us more money! It’ll just cut the borrowing a bit! So if we want a working economy cuts are not going to cut it Bill! Excuse the pun!
MMT say just print more or rather conjure up more for government to spend. But yo be truthful that still won’t be covered by taxes as we won’t get the benefit of it yo increase our tax payments they require for a surplus.
So I’ve got a third way. And it will work.
By the few who hold super amounts of indent money we need that money to flow back to us the majority. It’s mainly the bulk of that money. Not all. It is mathematically possible to keep it to a high percentage of total money but it needs to be rotated through our daily economy to pay extra wages for the tax producing part of our economy, us!
Not just once like a tax. But time and time again rotating many times through SPENDING on a monthly cycle. Not a yearly tax cycle. It needs to flow fast not slow.
That’s the only way to get growth. We need more money that is idle in banks and wealth funds and banks abroad and off shore accounts. To cone back not once but allow it to be rotated time and time again paying millions of people time snd time again and again. As it revolves tax is triggered. From spending! Not from NOT SPENDING.
It’s the failure of our system. Described as orthodoxy and MMT that neither guarantee flow in and around the vast majority of our economy. The majority without that vast sums.
It’s got so serious we need a proper cash flow via increased flow and speed velocity of spending money. Giving the growth in tax take that, our governments needs to pay for all our needs!
"Fast forward twenty six years and it’s been a borrowing every month in that time to cover our deficit." The deficit's a feature, not a bug. There's no need to cover it, in fact, if the defence guy's quit as there's not enough money, then the deficit clearly needs to be bigger.
f you want to stir money out of savings accounts, would negative interest rates do that/ You have to pay the banks so much to store your money it's cheaper to spend it & keep spending it? How could you enforce that internationally & wouldn't people flee into commodities?
Yes Bill. Negative interest rates or even negative rates would certainly do that. But it’s still not SPENDING into our part of the economy. Us being the workers and the needy who require money flow each month. It’s such a sorry state that it’s easily forgotten that the world shouldn’t be revolve around banks! I think it’s the problem not the cure Bill. Like an old western bank. Built to protect money, it’s the first rung in the ladder of not SPENDING!
The reason why the rest of the town had to borrow was because the money wasn’t revolving! So everybody had it time and time again to give them their reward. From a stable lad or milkmaid to the sheriff. Each needed their reward. But if it’s stuck in the bank nobody gets their dues. They get less because they are made to wait or it’s withheld.
It’s a very simple need Bill. All people need incomes. Some more done less but unless we get one we are buggered.
So isn’t it simply stupid not to ensure money revolves? If it’s taxed nobody gets a thing. It’s one single tax to the state. Whereas spending gets tax after tax after tax from spending it time and time and time again whilst we get equal value in stuff for it!
Surely that’s better to all than helping the few keep it all!?
Bill all the nonsense spouted out by economists and experts cover the associated nuances surrounding banks and borrowing and city slickers money instruments. When I say get rid of that hiatus.
Clear it all out Bill.
First we must reintroduce exchange control regulations that keeps currency in house in the issuing nation. Don’t let money escape. It’s did the use of the nation.
Second swap all old money cash coin and digital for a new digital only currency.
Then put a SPEND by DATE on that money to make it flow. In a monthly cycle.
Taxation will come from one tax. A sales tax. No other tax is necessary. The increased flow of spending will ensure enough tax for a permanent surplus.
Put that in place and we will be changed overnight. So much money will move all wages will increase so much that most burrowing will be a thing of the past. Mortgages or cars can be bought monthly as we do now. The bank is the one state bank that facilitates that. It ensures they too have to use their receipts monthly too!
Government surplus means no more state borrowing from those who let’s face it withhold the money from us now! The musks of this world. They buy the bonds they sell. Or at least the non spenders do. As they are the ones holding the money who can afford to buy them.
But let’s do away with that need.
The reason we save us because we are told we can’t get it again! Well I have news. With this new certainty we will get it back and mute every month. So no need to worry. It’s guaranteed by 100% spending. Every month.
Take the heat out of money by making it move and not sat on unspent and useless to us.
Money not spent (as spending it all isn’t compulsory just whatever is indecent by the recipient) is automatically taken by government so they spend it that month.
It’s completely autonomous and perpetual. I think it will make people come to the centre of the balance. Not needing to spend so much or giving the poorer more do the balance becomes more central.
As for import export. Those businesses have to have an in house account where money is deposited or SPENT under the same rules.
If the tanks want our whisky and we want their beef the. It’ll be a parity of exchange as under the same rules money had to be spent in a month. Or it’s taken away. Parity of import export. Just what Trump wants!
Levels of work reward can be balanced between countries who do import export. So welders in one country will be rewarded as welders of another country. That’s how I feel it will pan out.
Bill it’s the movement if money that’s key.
Digital money isn’t meant to be kept. It’s always a token of work exchange. And exchange us at the heart of that implied contract.
But we can now police and enforce it automatically autonomously. And proteas now with digital money and payment cards.
Ironically Bill the rich will be wealthier. They can own more shirts or tables or cars or homes if they choose to spend it! And because of the tsunami of flow they can have loads! If they want them!? They don’t have to!! They can key money be taken if they feel they own enough.
That’s my way of ensuring an optimum economy based on money do available no business can be bankrupted by a lack of cash flow. There will be so much spending nobody will be left out of the money supply then.
On the contrary Tony, I want a well funded well paid society. Not an under funded and hyper inflation economy.
Printing money just to devalue it is not what’s needed.
But we should want more or all of our existing money to rotate around from those holding it to those who don’t. In a fairish exchange for our work effort it needs. Tax gives nothing in return. Spending gets you goods assets etc. in fair exchange.
But without money returning then our system becomes devoid of it. As we are now.
I’m not a communist or indeed a fascist. I just want to be properly and better paid by there being a ready supply of citizens holding money to spend having received it from others spending. It’s all about spending and cash flow Tony.
Money has to have a way to return or the system fails. Our preferred method is receiving from spending and spending ourselves. It’s a sure fire winner to keep the resupply of money that, we all need.
Germany in the twenties didn’t want to spend. They wanted to not spend. So they just kept printing to give the resupply. But all it did was to make the money worthless.
The governments answer to insufficient tax take from money not moving via spending was to keep printing it to fill the deficit. Much better to enforce spending to keep us all in funds and give governments more than enough to pay their way too.
Taxes don't fund public services, govt money creation/spending does. Govt creates Supply & Appropriation Bill (see Hansard) & under the Exchequer & Audit Dept Act 1866 (Google it!) BoE creates money to pay it (see major bank sites for how banking works).
In a fiat economy like ours, Govt spending creates money while taxation deletes it. Taxes don't go into any govt kitty or public purse. If tax feels like it simply vanishes when it's paid, that's because that's exactly what happens to it!