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UK National Debt

I'm sure that sentiment in international currency markets was driven by the commitments attached to the loan rather than the loan itself. Interesting to speculate what would have happened to the exchange rate if we had instead expressed an intention to create currency to fill the gap.
It would likely have engendered a panic in some quarters, though I assure you people right at the top of the market know exactly how spending is created. Your Warren Buffets and George Soros types are very aware of how the machinery of a monetary economy works with a sovereign issuer; this is why none of them ever worry about 'default' or payments being made.
The fact of the matter is that the 'creation of currency' is not an unusual strategy for an unusual situation, it is how such government spends all the time.
 
It would likely have engendered a panic in some quarters, though I assure you people right at the top of the market know exactly how spending is created. Your Warren Buffets and George Soros types are very aware of how the machinery of a monetary economy works with a sovereign issuer; this is why none of them ever worry about 'default' or payments being made.
The fact of the matter is that the 'creation of currency' is not an unusual strategy for an unusual situation, it is how such government spends all the time.
A number of MMT thinkers have come from a background working in the Market and were successful because they managed to use the 'inside knowledge' of how money actually works to make lots of money.

The biggest 'secret' of the market is out there in the open....Government Issues Currency. It Can't Run Out of the Thing It Creates.
 
A number of MMT thinkers have come from a background working in the Market and were successful because they managed to use the 'inside knowledge' of how money actually works to make lots of money.

The biggest 'secret' of the market is out there in the open....Government Issues Currency. It Can't Run Out of the Thing It Creates.
Looked at from this angle, City Speculators must rub their hands every time they hear a politician talking about ‘maxing out the nations credit card’ and ‘ironclad discipline’. Is that why it’s still a secret?
 
Looked at from this angle, City Speculators must rub their hands every time they hear a politician talking about ‘maxing out the nations credit card’ and ‘ironclad discipline’. Is that why it’s still a secret?
That said there are still quite a lot of middle market people (and not a few further up) who still don't know certain operational realities. I have a customer who works at a major bank in their policy section and he still thinks all governments borrow money from the markets. Granted he's relatively young and likely came into this under the EU system, but there's no excuse for not knowing how a sovereign government issuer is different. We had a very long conversation about this.
 
El Klassiko saw this elsewhere as El Klassiko does not generally watch interviews with Jacob Rees-Mogg, ;), but Rees-Mogg made a most interesting statement in this recent interview in the middle of a bunch of other London: The relevant part is at ~5:10 in this interview:


Jacob Rees-Mogg said:
If you look at the borrowing of the state at the moment, total borrowing, excluding the quantitative easing of 875 billion pounds, which is owed by the government to the government, so if you net that off, we under 60 per cent of GDP, I think that is a perfectly sustainable level.

It appears Rees-Mogg is disputing a central tenet of neoliberalism. :eek: Right after that statement from Rees-Mogg, Rees-Mogg and the interviewer jump straight into discussion of austerity policies. It's hard to be too difficult on the interviewer as most people are so economically ignorant that most people wouldn't see the connection between the two adjacent discussion points, but the natural question should have been why austerity is necessary given Rees-Mogg's earlier statement.
 
Because Rees- Mogg is a c*** who will seek to justify anything that suits him even if it contradicts what he has just said.
He is remarkably Johnsonesque in this regard.
 
El Klassiko saw this elsewhere as El Klassiko does not generally watch interviews with Jacob Rees-Mogg, ;), but Rees-Mogg made a most interesting statement in this recent interview in the middle of a bunch of other London: The relevant part is at ~5:10 in this interview:




It appears Rees-Mogg is disputing a central tenet of neoliberalism. :eek: Right after that statement from Rees-Mogg, Rees-Mogg and the interviewer jump straight into discussion of austerity policies. It's hard to be too difficult on the interviewer as most people are so economically ignorant that most people wouldn't see the connection between the two adjacent discussion points, but the natural question should have been why austerity is necessary given Rees-Mogg's earlier statement.
I assume your point is not that he discussed what the sustainable level of debt to GDP is, but that he said we can net off the QE holdings and treat the net figure as the genuine debt outstanding? This rather surprised me too. Also that he said the govt owed it to themselves rather than the independent Bank.

I noticed he also referred to "quantative easing" and he's usually a stickler for saying that right, so showing signs of stress at having to say such things to support the new policy I think.
 
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I'm sure that sentiment in international currency markets was driven by the commitments attached to the loan rather than the loan itself. Interesting to speculate what would have happened to the exchange rate if we had instead expressed an intention to create currency to fill the gap.

No need to speculate. The exchange rate of Sterling would have fallen through the floor.
 
But the real point is that as much as the IMF is neoliberal, the international currency are driven by much the same ideology.

Perhaps it is not ideology, but what works in practice. If the BoE prints more money it dilutes the value of Sterling and its exchange rate fall through the floor.
 
Perhaps it is not ideology, but what works in practice. If the BoE prints more money it dilutes the value of Sterling and its exchange rate fall through the floor.
I brought this point up several months ago but never really got a satisfactory answer I should try and find it.
 
Perhaps it is not ideology, but what works in practice. If the BoE prints more money it dilutes the value of Sterling and its exchange rate fall through the floor.
“Printing more money” is a trigger phrase. No one is talking about creating currency and throwing it out of helicopters randomly, what really happens is that government creates money to spend on things and it can choose want things it spends money on. Yes, if it just created money for the sake of creating money then there would be problems, but not if it spent money on, for example, training doctors and nurses and then employing them. That money going into the economy would be productive.
 
I brought this point up several months ago but never really got a satisfactory answer I should try and find it.
He answer I’ve given has been given before by others, as I have said, “printing money” is a trigger phrase meant to inspire images of wheelbarrows full of cash being wheeled about to buy a carrot in Weimar Germany. But it’s a flawed analysis.
 
It may or may not be a "trigger phrase," and that is not important anyway, but by "creating more currency" you are effectively printing banknotes and debasing the currency. There is no free lunch.
 
“Printing more money” is a trigger phrase. No one is talking about creating currency and throwing it out of helicopters randomly, what really happens is that government creates money to spend on things and it can choose want things it spends money on. Yes, if it just created money for the sake of creating money then there would be problems, but not if it spent money on, for example, training doctors and nurses and then employing them. That money going into the economy would be productive.

Just spoke to a friend who was an analyst for the Bank of Italy and knows what he is talking about. He says that what you say is correct, if the extra currency is used to create infrastructure that in future increase production. But it can only be a short-term measure. It also produces inflation, both domestic and imported, because imports will become more expensive in Sterling terms because of the weakening of the currency. One effect will be to reduce the National Debt in real terms, but it will also make future borrowing on the international markets more expensive, so in the medium term the National Debt will increase again.
 
But is it consistent BS?

No. As I said above, he is consistently erudite, well spoken and I suppose quite convincing if you don't actually examine the content of his bullshit. But he is totally inconsistent from an ideological/policy p.o.v. and just 'does a Johnson' in any given situation, attempting to justify and defend the indefensible in his own interests. Johnson consistently blathers and evades, Rees - Mogg consistently wraps bullshit in slimy erudition. Both are doing the same thing via different delivery styles.
 
Also that he said the govt owed it to themselves rather than the independent Bank.

Sí señor, that is the salient point. At least that is the salient point in Klassik's opinion, but surely lawrence001 must find it to be a curious statement at the very least. ;)
 
Just spoke to a friend who was an analyst for the Bank of Italy and knows what he is talking about. He says that what you say is correct, if the extra currency is used to create infrastructure that in future increase production. But it can only be a short-term measure. It also produces inflation, both domestic and imported, because imports will become more expensive in Sterling terms because of the weakening of the currency. One effect will be to reduce the National Debt in real terms, but it will also make future borrowing on the international markets more expensive, so in the medium term the National Debt will increase again.
Why do we need to borrow money on international markets when we can issue it?

And the National debt has been rising since 1684 without it causing any concern, why is that concern only raised when it comes to public spending?
 


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