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

[raymondo]

Believe that figure is now very outdated. They spent a bundle this morning on inflation-linked bonds, and at massive interest rates.

There's starting to be predictions that the entire mini-budget might be the next Truss u-turn, because they just can't see how it can funded in a way that will stabilise the markets.

But Shirley they can just put a wage freeze on public service workforce, and severely reduce funding of social services, NHS etc... that might help save their skins, I mean balance the budget

 

[raymondo]

Is it possible for the mini-budget to be reversed without the Chancellor being sacked / resigning ?

How could he carry on and have any market credibility ?

He's only a Quasi Chancellor, so it isn't really necessary to have any credibility

 

[rippleman]

And more good news.

The "no-fault" eviction policy - due to become law next year - may be dropped.

And if that wasn't enough, rules are to be relaxed regarding the obligation on developers to build "affordable" housing.

https://www.bbc.co.uk/news/uk-politics-63215265

That's the Tories for ya. I'm all right jack and **** the rest of you.

 

[Kalimantan Gull]

And more good news.

The "no-fault" eviction policy - due to become law next year - may be dropped.

And if that wasn't enough, rules are to be relaxed regarding the obligation on developers to build "affordable" housing.

https://www.bbc.co.uk/news/uk-politics-63215265

That's the Tories for ya. I'm all right jack and **** the rest of you.

they're not even pretending any more

 

[BBassic]

I can already feel "anti-growth coalition" becoming a hated phrase in my head. It's so transparent. And people will lap it up.

 

[beorhthelm]

As I understand it Argentina has always had huge problems with inflation (and at times a relatively worthless peso) this has led to a reliance on foreign currency and particularly the dollar. As soon as that happens a country no longer is monetary sovereign.

using foreign currency is a consequence of poor policy leading to inflation, devalued currency. if MMT holds, the presence of a central bank, with control of money and monetary policy, should be sufficent to have monetary sovereignty. the government can create money, use tax for contolling inflation right?

In terms of your thought experiment, as soon as a sovereign country shares a central bank then (from a MMT perspective) it gives up its monetary sovereignty. I think most MMT economists would probably therefore advise Scotland to adopt its own currency, and have its own central bank, if it were to become independent.

you dont see a little bit of a problem that a stoke of a pen, a tick of a clock, transforms a monetary system?

 

[Audax]

Believe that figure is now very outdated. They spent a bundle this morning on inflation-linked bonds, and at massive interest rates.

When I wrote this post earlier, I almost included a line (wrote it then deleted it) stating that I had a feeling the BoE wasn't using it's full budget more because the markets weren't engaging with it (a lack of gilts being offered for the bank to buy). That's actually now looking confirmed from reports this afternoon about today's activity: they bought nearly £2b worth of inflation-linked bonds this morning, a further £1.4b of regular gilts, and rejected offers to buy a further nearly £0.5b worth (BoE can either accept or reject depending on whether what's been offered as seen as suitable for maintaining orderly markets).

I suspect if the BoE had received a higher volume of offers it saw as suitable, it would have bought them - looks to me like BoE activity is being constrained by supply rather than demand. They'd buy more if more was offered, they're just not getting the offers.

 

[BenGarfield]

Also a very detailed explanation of how UK government finance actually works I recommend An Accountancy Model of the UK Exchequer published by GIMMS www.gimms.co.uk. This is a meticulous ground-breaking paper which examines exactly how governments finances actually work

 

[Half Time Pies]

using foreign currency is a consequence of poor policy leading to inflation, devalued currency. if MMT holds, the presence of a central bank, with control of money and monetary policy, should be sufficent to have monetary sovereignty. the government can create money, use tax for contolling inflation right?



you dont see a little bit of a problem that a stoke of a pen, a tick of a clock, transforms a monetary system?

MMT doesn't protect countries from poor financial management and exchange rate risk! If you think thats the case then you don't understand it, interest rates and inflation still have to be managed effectively.

If your currency devalues to the point when it loses its primacy and you have to effectively adopt another countries currency, then (from a MMT perspective) you have lost your monetary sovereignty. I really don't see that happening in the US, UK, Canada or Japan, do you?!

 

[drew]

All this detailed monetarist theory talk (MTT) is all well and good but can't this thread get back on track with the main theme being that Liz Truss is an ignorant unempathetic economy destroying cow (IUEDC)?

 

[BenGarfield]

All this detailed monetarist theory talk (MTT) is all well and good but can't this thread get back on track with the main theme being that Liz Truss is an ignorant unempathetic economy destroying cow (IUEDC)?

MMT analysis is fundamentally opposed to what she is doing so it’s entirely relevant

 

[usernamed]

MMT doesn't protect countries from poor financial management and exchange rate risk! If you think thats the case then you don't understand it, interest rates and inflation still have to be managed effectively.

If your currency devalues to the point when it loses its primacy and you have to effectively adopt another countries currency, then (from a MMT perspective) you have lost your monetary sovereignty. I really don't see that happening in the US, UK, Canada or Japan, do you?!

You’re absolutely right with regard to Argentina, they tried to create a currency board that implemented a one to one currency peg between the peso and the US dollar. It ended in disaster, primarily because politicians saw it as a short cut to enrichment and meddled so it did things that a currency board shouldn’t do. (Lend to government, bail out commercial banks etc.) Google “convertibility plan Argentina” if you’re interested.

For any nation with a poor economic history that is trying to attract investment, lenders may be choosy about the currency they choose to lend in. If your own currency has a history of hyperinflation then international lenders may only be willing to lend in USD or their currency of choice. Hence that country does not have monetary sovereignty.

In such a scenario, you’re fine while your domestic currency is stable and follows a similar growth profile to the USD, but if your currency plummets in value, and your USD reserves become depleted, you’re in a pickle.

Let’s hope this lot aren’t quite stupid enough to allow any of our debt to be priced in someone else’s currency.

 

[beorhthelm]

MMT doesn't protect countries from poor financial management and exchange rate risk! If you think thats the case then you don't understand it, interest rates and inflation still have to be managed effectively.

If your currency devalues to the point when it loses its primacy and you have to effectively adopt another countries currency, then (from a MMT perspective) you have lost your monetary sovereignty. I really don't see that happening in the US, UK, Canada or Japan, do you?!

no i dont think this, it is what you infer, when you dismissed a country with sovereign money from the discussion. saying a country using another's currency no longer has monetary sovereignty. its changeing the rules, the definitions, to step around the problem. they have control of their currency, so MMT must apply if it is valid.

its good to raise that MMT doesnt protect from poor policy, what does it say we should do right now?

 

[drew]

MMT analysis is fundamentally opposed to what she is doing so it’s entirely relevant

Whoosh.

 

[KZNSeagull]

All this detailed monetarist theory talk (MTT) is all well and good but can't this thread get back on track with the main theme being that Liz Truss is an ignorant unempathetic economy destroying cow (IUEDC)?

We already know that. I am quite enjoying learning something new, but each to their own.

 

[BenGarfield]

Whoosh.

Thanks and to appease the people who think I never comment about the Albion I think Mitoma is the best winger we’ve had since Tony Towner and Paul Brooker

 

[knocky1]

I've also looked into MMT and it seems very apt for the post Brexit Tory UK.

 

[BenGarfield]

Thanks and to appease the people who think I never comment about the Albion I think Mitoma is the best winger we’ve had since Tony Towner and Paul Brooker

Also Paul Macdonald and Bertie Lutton

 

[sparkie]

Can we ban all MMT Discussion on this thread and give it a dedicated thread please ?

 

[Half Time Pies]

no i dont think this, it is what you infer, when you dismissed a country with sovereign money from the discussion. saying a country using another's currency is no longer has monetary sovereignty. its changeing the rules, the definitions, to step around the problem. they have control of their currency, so MMT must apply if it is valid.

its good to raise that MMT doesnt protect from poor policy, what does it say we should do right now?

It's not a case of trying to change the rules it's simply that the description doesn't fit. MMT came about as a descriptor of the US system, its subsequently been found to apply in other countries with similar characteristics like Canada, UK and Japan. One of the reasons that these countries can always create money to pay debt liabilities is because all their debt is denominated in their own currency. Thats not the case in Argentina and thats why the model doesn't fit.

MMT doesn't say anything about what we should do now! I think an understanding of MMT changes the narrative and makes different policy choices possible. It doesn't however answer political questions or prescribe policy. It just explains how money works.