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

Discussion in 'off topic' started by lawrence001, Aug 3, 2022.

  1. Jim Audiomisc

    Jim Audiomisc pfm Member

    '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.
     
    IanW and Sue Pertwee-Tyr like this.
  2. Jim Audiomisc

    Jim Audiomisc pfm Member

    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.
     
  3. PaulMB

    PaulMB pfm Member

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

    PaulMB pfm Member

    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."
     
  5. klfrs

    klfrs chill out

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

    Sue Pertwee-Tyr neither here nor there

    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.
     
    Covkxw likes this.
  7. ks.234

    ks.234 pfm Member

    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.
    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?
     
  8. klfrs

    klfrs chill out

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

    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.

    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.

    Taxes fund government 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.
     
  9. ks.234

    ks.234 pfm Member

    No, I have answered, the causes of 2008 were monetarist, the consequences were monetarist. QE is monetarist
    A local authority *is* contained by income, our central government is not
    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?
    No. Please describe how you think that tax has a functional role in funding spending on, say, the NHS
    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
     
    Sue Pertwee-Tyr likes this.
  10. vince rocker

    vince rocker pfm Member

    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"
     
  11. ks.234

    ks.234 pfm Member

    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?
     
    IanW and Covkxw like this.
  12. Brian

    Brian Eating fat, staying slim

    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.
     
  13. vince rocker

    vince rocker pfm Member

    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
     
  14. Sue Pertwee-Tyr

    Sue Pertwee-Tyr neither here nor there

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

    Joe Hutch Mate of the bloke

    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.
     
    Brian likes this.
  16. ks.234

    ks.234 pfm Member

    No, not me. This is a thread where the OP has asked that MMT is not discussed.
     
    lawrence001 likes this.
  17. klfrs

    klfrs chill out

    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 included BoE creating money, and with some of it purchasing uk gov debit.
     
  18. ks.234

    ks.234 pfm Member

    What on earth are you talking about?
     
  19. klfrs

    klfrs chill out

    [​IMG]
     
  20. ks.234

    ks.234 pfm Member

    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
     
    Last edited: Aug 6, 2022

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