By how much should the Bank of England increase interest rates in a traditional monetarist economy

[Jim Audiomisc]

Maybe because it is so obvious that taxes do fund state spending.

'Obvious' often turns out to be a synonym for "wrong".

it is (was) obvious that the Earth is flat and the Sun goes around the Earth.

You can use a shovel to dig a hole. But it isn't the shovel that digs it, you do. Nor does it rule out any other uses of shovels, or of other ways to dig a hole.

Correlation != Causation.

 

[Jim Audiomisc]

Exactly. And a government can decide to temporarily create a budget deficit to increase spending, but thus increasing the National Debt, to give the "flywheel" of the economy an extra shove. But this can only be a temporary measure.

Government can also decide to employ people to build decent homes for social rent or sale. Thus employing people *and creating more homes*. The result can be increased availablity of *more affordable* homes. Thus easing the costs for *others* buying or renting homes elsewhere. Thus an investment in the people, and in lowering the costs of living. Which in turn reduces pressure on wages and inflation.

So as 'investments' some Government spending can reap what could be called a 'profit' for us all. Copy this across for things like training people to have useful skills, etc, and you get similar *economic* as well as social improvements.

Quite different from outsourcing and relying on profiteering companies who look only at their bottom line and their director's bonuses as they pocket tax cuts.

The irony is that after WW2 even the *Tories* understood this and did - to some degree - what was needed... until captured by the wealthy again.

 

[PaulMB]

I have strange feeling, as if I were being indoctrinated in Scientology.

 

[PaulMB]

I think two things here are being lumped together, wrongly.
A) That state spending and a consequent increase in national debt can be used to revive a flagging economy and/or alleviate social problems.
B) That conventional economic thinking needs to be abandoned in favour of an apparently illogical economic "new-think" to do so.

The first can, and has been (New Deal in the US, post WWII in the UK) done without "B."

 

[klfrs]

Sorry, don’t understand, what is the disadvantage of money creation?

Going around in circles again. For those who don't remember - post 2008/gfc BoE created a lot of money. The outcome? A number of predictable problems e.g. devaluation of sterling.

But you have objected, quite vociferously I might say, against MMT advocates, so it only seems reasonable to ask what that objection is.

Also circular - as explained before my objection is conscientious. Do you think some of your objections are also quite vociferous?

 

[Sue Pertwee-Tyr]

I think two things here are being lumped together, wrongly.
A) That state spending and a consequent increase in national debt can be used to revive a flagging economy and/or alleviate social problems.
B) That conventional economic thinking needs to be abandoned in favour of an apparently illogical economic "new-think" to do so.

The first can, and has been (New Deal in the US, post WWII in the UK) done without "B."

Not really. The first was done in the time of New Deal before the current ideology was even a thing, and hasn't been done since the current ideology became a thing. That suggests, to me, that you have it the wrong way round. It's the current ideology that is preventing A, not that A requires a 'new ideology.

 

[ks.234]

Going around in circles again. For those who don't remember - post 2008/gfc BoE created a lot of money. The outcome? A number of predictable problems e.g. devaluation of sterling.

It’s not circular at all. You keep asking if I remember what happened after 2008 and the answer is still, yes. My question was, how does tax fund our goverment spending? You are answering a question with a question and refusing to expand on what that question is directed at. If you are point to evidence that tax does fund spending, please say how.

Also circular - as explained before my objection is conscientious. Do you think some of your objections are also quite vociferous?

Not circular at all, if you have an objection that is conscientious or vociferous, or both, what you still haven’t said is, what that objection actually is and what it is you are objecting to. My position is that taxes do not fund our government spending, what is your objection? If the answer is a question about where spending after 2008, then want is it that that you object to? To much spending? Not enough? Are you suggesting that what happened after 2008 was the product of too much spending?

 

[klfrs]

It’s not circular at all. You keep asking if I remember what happened after 2008 and the answer is still, yes.

I think that's the first time you've answered me, hence circular.

My question was, how does tax fund our government spending? You are answering a question with a question and refusing to expand on what that question is directed at. If you are point to evidence that tax does fund spending, please say how.

I think that's the first time you've asked me. A family friend is CFO of a local authority. He opines the council tax we pay is used to finance council spending.

Not circular at all, if you have an objection that is conscientious or vociferous, or both, what you still haven’t said is, what that objection actually is and what it is you are objecting to.

Circular because we’ve gone around in circles on this. Odd, as you previously took issue about vociferousness.
Do you know what a contentious objector is? I ask as comprehension of this explains my objection.

My position is that taxes do not fund our government spending, what is your objection?

Taxes fund government spending.

If the answer is a question about where spending after 2008, then want is it that that you object to? To much spending? Not enough? Are you suggesting that what happened after 2008 was the product of too much spending?

It's a matter of fact that post gfc money creation had a number of undesirable consequences such as devaluation of currency. Appreciate this is awkward for advocates of MMT, so suggest you don't take it personally.

 

[ks.234]

I think that's the first time you've answered me, hence circular.

No, I have answered, the causes of 2008 were monetarist, the consequences were monetarist. QE is monetarist

I think that's the first time you've asked me. A family friend is CFO of a local authority. He opines the council tax we pay is used to finance council spending.

A local authority *is* contained by income, our central government is not

Circular because we’ve gone around in circles on this. Odd, as you previously took issue about vociferousness. Do you know what a contentious objector is? I ask as comprehension of this explains my objection.

A conscientious objector is someone who objects to something for a set of defined reasons. Why are you so shy about setting out the reasons for you objection?

Taxes fund government spending.

No. Please describe how you think that tax has a functional role in funding spending on, say, the NHS

It's a matter of fact that post gfc money creation had a number of undesirable consequences such as devaluation of currency. Appreciate this is awkward for advocates of MMT, so suggest you don't take it personally.

QE was not creation of money from government issuance, it had to do with selling bonds. Not the same thing. Not MMT. Not remotely awkward

 

[vince rocker]

'Obvious' often turns out to be a synonym for "wrong".

it is (was) obvious that the Earth is flat and the Sun goes around the Earth.

You can use a shovel to dig a hole. But it isn't the shovel that digs it, you do. Nor does it rule out any other uses of shovels, or of other ways to dig a hole.

Correlation != Causation.

Okay... he says cautiously.
This post has helped me to put my finger on my reservations about the MMT discussions recently. Economics isn't like the sun and the earth, or gravity or other natural laws. Economics is made by people taking decisions. The Chancellor (and others involved in economic management decisions) believes in monetarism not MMT and manages the economy on that basis. He believes that taxation funds spending, as @PaulMB says above. It doesn't matter if we know that belief is wrong - it's the belief that prevails and the way the economy is run in the real world.
What can we do to shift discussion away from the current orthodoxy? "Philosophers have hitherto only interpreted the world in various ways; the point is to change it"

 

[ks.234]

Okay... he says cautiously.
This post has helped me to put my finger on my reservations about the MMT discussions recently. Economics isn't like the sun and the earth, or gravity or other natural laws. Economics is made by people taking decisions. The Chancellor (and others involved in economic management decisions) believes in monetarism not MMT and manages the economy on that basis. He believes that taxation funds spending, as @PaulMB says above. It doesn't matter if we know that belief is wrong - it's the belief that prevails and the way the economy is run in the real world.
What can we do to shift discussion away from the current orthodoxy? "Philosophers have hitherto only interpreted the world in various ways; the point is to change it"

This is a thread about Monetarism, not MMT. The place for discussion about why MMT is correct is in the MMT thread.

Here we should be discussing the why’s, how’s and wherefore’s of how Monetarism is correct?

Bearing in mind all the hostility towards MMT, I’d have expected some passionate defences of Monetarism?

 

[Brian]

This is a thread about Monetarism, not MMT. The place for discussion about why MMT is correct is in the MMT thread.

Here we should be discussing the why’s, how’s and wherefore’s of how Monetarism is correct?

Bearing in mind all the hostility towards MMT, I’d have expected some passionate defences of Monetarism?

Maybe you aren't seeing passionate defence of monetarism because there is little to no hostility towards MMT? Any hostility is about the subject being raised across numerous threads, often where it is not relevant. The manner in which it is done is also poor.

That's my interpretation of many posts. I may be wrong.

Edit: By the way, I don't think the thread is about why and how monetarism is correct. Is anybody saying it is? istm people are saying it is the reality and are trying to get views on what could, should or will govt do in that reality. Again, perhaps I'm wrong.

 

[vince rocker]

This is a thread about Monetarism, not MMT. The place for discussion about why MMT is correct is in the MMT thread.

Here we should be discussing the why’s, how’s and wherefore’s of how Monetarism is correct?

Bearing in mind all the hostility towards MMT, I’d have expected some passionate defences of Monetarism?

Are you the Thread Police? It's the thread where the two posts I refer to are found. Take it up with @PaulMB and @Jim Audiomisc

 

[Sue Pertwee-Tyr]

Are you the Thread Police? It's the thread where the two posts I refer to are found. Take it up with @PaulMB and @Jim Audiomisc

Don’t get on ks’ case about this; the OP has repeatedly asked for MMT not to be raised.

 

[Joe Hutch]

I think the answer as to why no-one is defending monetarism, passionately or otherwise, is quite simply that few of us, self definitely included, have the intellectual ability, specifically with regards to mathematics and statistics, to mount a defence of it. To my mind, it isn't working, but I would bet that a monetarist economist could quickly counter my doubts and blind me with science. But the only actual economist that I'm aware of on pfm is matthewr, and he has been consistently critical of monetarism for as long as I can remember.

 

[ks.234]

Are you the Thread Police? It's the thread where the two posts I refer to are found. Take it up with @PaulMB and @Jim Audiomisc

No, not me. This is a thread where the OP has asked that MMT is not discussed.

 

[klfrs]

A conscientious objector is someone who objects to something for a set of defined reasons. Why are you so shy about setting out the reasons for you objection?

You asked for my position and I gave it. You didn't ask for defined reasons. Why am I a conscientious objector? For a start there have been many life changing injuries, and at least one loss, as a direct result of MMT just on this forum.

QE was not creation of money from government issuance, it had to do with selling bonds.

QE included BoE creating money, and with some of it purchasing uk gov debit.

 

[ks.234]

For a start there have been many life changing injuries, and at least one loss, as a direct result of MMT just on this forum.

What on earth are you talking about?

 

[klfrs]

What on earth are you talking about?

 

[ks.234]

Your response here to a question about your opinion on Monetarism, is exactly the same as your response when asked a question about your opinion of MMT. You are clearly incapable of forming an opinion one way or another