[Politics] Liz Truss **RESIGNS 20/10/2022**

[BenGarfield]

And these are the economists who think the Government doesn't need tax in order to fund spending and that they could abolish Gilts altogether, are they

Yes, the concept that governments which have their own sovereign fiat currency don`t have to either borrow by issuing gilts nor receive tax in order to spend, is one of the tenets of modern monetary theory to which these economists adhere. They argue that spending comes first and that is the point at which money is created. Traditional neo liberal economics is fundamentally wrong in this respect. MMT advocates maintain that bonds can only be purchased and tax paid once the money has first been issued by central government, either directly or via bank borrowing. Banks are licensed by the government to issue money when they raise a loan, and are thus acting as agents for the government. Gilts/Bonds/Tresuries are a relic of when currencies were on the gold standard

Not all MMT economists call for the complete abolition of bonds, however, as Stephanie Kelton points out in her best selling book "The Deficit Myth" - "There`s nothing inherently dangerous about offereing a safe, interest bearing way for people to hold onto dollars. If we choose to live with`em (bonds) we should come to grips with the fact that the thing we call the national debt is nothing but a footprint from the past"

 

[Bakero]

I wasn't asking you to do anything. I wasn't referring to you.
I was always referring to [MENTION=38012]BenGarfield[/MENTION], who claimed that many eminent economists agree with his analysis. Hold that thought.

However, reading back through the comments, I can see where the confusion arose. It's my fault. I could have been a lot clearer in post #2124. Then my attempt at clarification was too brief in #2127, and was probably taken as confirmation by you that I was referring to you in #2124. Lesson learned.

A bugbear of mine is that some people (not you) make a daft claim, and then fail to back it up with any supporting evidence. Now that you know this context, do you see that your advice to me to google the answer (which would normally be good advice), didn't actually help?

My advice didn't help as, presumably, you didn't follow it. I could see what Garfield was getting at so pointed you in the right direction as I had neither the time nor inclination to write a long post about it. A quick skim over the MMT wiki page would've given you the key info including the names of the economists that advocate it.

 

[beorhthelm]

Yes, the concept that governments which have their own sovereign fiat currency don`t have to either borrow by issuing gilts nor receive tax in order to spend, is one of the tenets of modern monetary theory to which these economists adhere. They argue that spending comes first and that is the point at which money is created. Traditional neo liberal economics is fundamentally wrong in this respect. MMT advocates maintain that bonds can only be purchased and tax paid once the money has first been issued by central government, either directly or via bank borrowing. Banks are licensed by the government to issue money when they raise a loan, and are thus acting as agents for the government. Gilts/Bonds/Tresuries are a relic of when currencies were on the gold standard

Not all MMT economists call for the complete abolition of bonds, however, as Stephanie Kelton points out in her best selling book "The Deficit Myth" - "There`s nothing inherently dangerous about offereing a safe, interest bearing way for people to hold onto dollars. If we choose to live with`em (bonds) we should come to grips with the fact that the thing we call the national debt is nothing but a footprint from the past"

explain why you would want to give interest to people to hold bonds, and how this all works with the Euro (where we break the currency link to nation state). does Germany have a real national debt while UK doesn't?

 

[Bakero]

how this all works with the Euro (where we break the currency link to nation state). does Germany have a real national debt while UK doesn't?

I believe Stephanie Kelton has been sceptical in the past about the application of MMT in the eurozone. However, it could be argued that PEPP and the EU Next Gen funds are MMT in action.

 

[WATFORD zero]

Yes, the concept that governments which have their own sovereign fiat currency don`t have to either borrow by issuing gilts nor receive tax in order to spend, is one of the tenets of modern monetary theory to which these economists adhere. They argue that spending comes first and that is the point at which money is created. Traditional neo liberal economics is fundamentally wrong in this respect. MMT advocates maintain that bonds can only be purchased and tax paid once the money has first been issued by central government, either directly or via bank borrowing. Banks are licensed by the government to issue money when they raise a loan, and are thus acting as agents for the government. Gilts/Bonds/Tresuries are a relic of when currencies were on the gold standard

Not all MMT economists call for the complete abolition of bonds, however, as Stephanie Kelton points out in her best selling book "The Deficit Myth" - "There`s nothing inherently dangerous about offereing a safe, interest bearing way for people to hold onto dollars. If we choose to live with`em (bonds) we should come to grips with the fact that the thing we call the national debt is nothing but a footprint from the past"

So I spend what hasn't been created ? I'll have a bit of a read of those economists and use that at Sainsbury's this week

I can see I'm going to get nowhere with this so good luck with your studies

 

[WATFORD zero]

If only someone could have seen the three stooges coming

Liz Truss approval ratings reach new lows after Tory conference
Liz Truss’s personal ratings are now even worse than those recorded for Boris Johnson at the height of the Partygate scandal, according to another Observer poll which will cause alarm among Tory MPs.
https://www.theguardian.com/politics/2022/oct/08/liz-truss-approval-ratings-reach-new-lows-after-tory-conference

No 10 sidelines Suella Braverman in bid to relax immigration rules in fresh cabinet split
No 10 is attempting to sideline home secretary Suella Braverman in order to loosen immigration rules, exposing a damaging cabinet split over how to kickstart the economy.
https://www.independent.co.uk/news/uk/politics/suella-braverman-immigration-cabinet-truss-b2198378.html

Kwasi Kwarteng’s champagne reception may have broken ministerial code
The head of the civil service is facing calls to order an investigation into whether Kwarteng breached the ministerial code by attendeding a champagne reception with hedge fund managers after his mini-budget.
https://www.msn.com/en-gb/news/uknews/kwasi-kwarteng-s-champagne-reception-may-have-broken-ministerial-code/ar-AA12KSjN?ocid=mailsignout&pc=U591&cvid=6b89fd8739534a719065f12ae024ad2e

Still, only another 2 and a bit years to go

 

[Bakero]

So I spend what hasn't been created ? I'll have a bit of a read of those economists and use that at Sainsbury's this week

I can see I'm going to get nowhere with this so good luck with your studies

[MENTION=396]WATFORD zero[/MENTION] you're smart enough to know your household budget isn't comparable to government finances. Unless you print your own Watford dollars?

 

[WATFORD zero]

[MENTION=396]WATFORD zero[/MENTION] you're smart enough to know your household budget isn't comparable to government finances. Unless you print your own Watford dollars?

I don't think economics existed back when I was at school, but my son studied Politics and Economics and he comes out with all this rubbish too

 

[Eric the meek]

My advice didn't help as, presumably, you didn't follow it. I could see what Garfield was getting at so pointed you in the right direction as I had neither the time nor inclination to write a long post about it. A quick skim over the MMT wiki page would've given you the key info including the names of the economists that advocate it.

That would have been good advice, pointing me in the 'right direction' providing me with 'key info', had I been interested in debating MMT or interested in finding the names of the economists who support the theory, but I'm afraid none of those things apply.

My aim was very different.

Instead, I was trying to raise the bar, and said exactly that in one comment. I was interested in getting Ben Garfield to understand the value of supporting evidence and provide his own list of economists. He has since done so, providing a list of 20 odd economists. Ben Garfield took the hint, and in an instant, he gave weight to his argument.

Life isn't always as you see it.

 

[Bakero]

I don't think economics existed back when I was at school, but my son studied Politics and Economics and he comes out with all this rubbish too

The MMT advocates are undoubtedly heterodox thinkers and there are legitimate criticisms of one of their core principles. However, a bit of fresh thinking and challenging the status quo is always a good thing in my book. I recommend reading up on it. It may well not convince you but I'm sure you'll find it interesting.

(NB. the assertion that your household budget is not the same as the government's is very much mainstream economics. No matter what some politicians would like the plebs to think)

 

[beorhthelm]

I believe Stephanie Kelton has been sceptical in the past about the application of MMT in the eurozone. However, it could be argued that PEPP and the EU Next Gen funds are MMT in action.

not a matter of application, the MMT proponents claim this is how money works. despite their overlooking all monetry systems other than Dollar and Sterling. application implies some choice, a proposed model, very different from stating it is the current monetary model.

 

[Bakero]

That would have been good advice, pointing me in the 'right direction' providing me with 'key info', had I been interested in debating MMT or interested in finding the names of the economists who support the theory, but I'm afraid none of those things apply.

My aim was very different.

Instead, I was trying to raise the bar, and said exactly that in one comment. I was interested in getting Ben Garfield to understand the value of supporting evidence and provide his own list of economists. He has since done so, providing a list of 20 odd economists. Ben Garfield took the hint, and in an instant, he gave weight to his argument.

Life isn't always as you see it.

So you had no interest in his response but wanted him to provide it "to raise the bar"?

Sure, in an ideal world everyone would provide sources and supporting evidence with every post but that's not likely to happen on a football forum. Some of us have jobs, hobbies and other things to be doing.

 

[Half Time Pies]

I believe Stephanie Kelton has been sceptical in the past about the application of MMT in the eurozone. However, it could be argued that PEPP and the EU Next Gen funds are MMT in action.

MMT is just a description of how the system actually works for countries that are monetary sovereign.

If you accept that the description is accurate (which it is) then it challenges the long held view that many economists have of 'balancing the books' and that countries need to tax or borrow first in order to spend. Once you accept that a country that is monetary sovereign spends first, and will never go broke, then it leads you to look at the economy from a different perspective.

EU countries are not monetary sovereign as they use the Euro, which is why Greece defaulted on its debt.

 

[Bakero]

not a matter of application, the MMT proponents claim this is how money works. despite their overlooking all monetry systems other than Dollar and Sterling. application implies some choice, a proposed model, very different from stating it is the current monetary model.

But they say it's how it works in monetarily sovereign countries with their own fiat currency.

 

[Sid and the Sharknados]

Instead, I was trying to raise the bar, and said exactly that in one comment. I was interested in getting Ben Garfield to understand the value of supporting evidence and provide his own list of economists. He has since done so, providing a list of 20 odd economists. Ben Garfield took the hint, and in an instant, he gave weight to his argument.

That list of names certainly convinced me.

 

[Half Time Pies]

explain why you would want to give interest to people to hold bonds, and how this all works with the Euro (where we break the currency link to nation state). does Germany have a real national debt while UK doesn't?

Think of Bonds as the central bank providing a savings account for banks and other financial institutions. Bond issuance is really all about corporate welfare – to provide safe investment vehicles to private investment banks.

Germany's debt is denominated in Euro's so it's not monetary sovereign.

 

[Swansman]

Get a room

 

[Eric the meek]

Get a room

I hope you're not aiming for the number of opinions to be equal to the number of economists in the room.

 

[Baldseagull]

Yes, the concept that governments which have their own sovereign fiat currency don`t have to either borrow by issuing gilts nor receive tax in order to spend, is one of the tenets of modern monetary theory to which these economists adhere. They argue that spending comes first and that is the point at which money is created. Traditional neo liberal economics is fundamentally wrong in this respect. MMT advocates maintain that bonds can only be purchased and tax paid once the money has first been issued by central government, either directly or via bank borrowing. Banks are licensed by the government to issue money when they raise a loan, and are thus acting as agents for the government. Gilts/Bonds/Tresuries are a relic of when currencies were on the gold standard

Not all MMT economists call for the complete abolition of bonds, however, as Stephanie Kelton points out in her best selling book "The Deficit Myth" - "There`s nothing inherently dangerous about offereing a safe, interest bearing way for people to hold onto dollars. If we choose to live with`em (bonds) we should come to grips with the fact that the thing we call the national debt is nothing but a footprint from the past"

You can argue that MMT describes how things work, what you cant argue is that things could work differently, unless you can show an example where a Government has just printed all the money it needed without creating debt, and without causing massive problems.

 

[Baldseagull]

Again, could you explain in a little more detail why you disagree with what I said. I`m really interested in learning from other people who might have greater knowledge in this area than I.

Oh - just a few of the economists etc in reply to your earlier post:- Professor Stephahie Kelton, Warren Mosler, Professor Randall Wray, Professor William Mitchell, Professor Marrtin Watts, Richard Murphy, Professor Steve Keen, Pavlina Tcherneva, Dr Dirk Ehnts, Professor James Galbreath, Dr Phil Armstrong, Professor John T Harvey, Professor Phil Lawn, Professor Eric Tymoigne, Professor Asad Zaman, Professor Fadhel Kaboub, Professor Robert Hockett, Dr Sam levey, Brian Romanchuck, Agustin Mario, Dr Steven Hale

Which of these guys told you Taxes are just to create demand for the currency or persuade us to not buy cigarettes?