The Fight for the NHS/MMT economics

[Heckyman]

But that’s not all you said, the end of your sentence was, “(aka printing money) in order to allow for an increase in public spending.”.

Again, you state again that MMT supports the theory that governments purchase debts to fund spending, but again, does it? Where does it state that support?

it should also be noted that you went on to finish that sent an e with, “(aka printing money) in order to allow for an increase in public spending.”. Where does MMT say that spending needs to be pre-paid for? Surely the opposite is true, MMT a say that government does not have to be paid for in advance.

Ah, I see. Perhaps my wording was clumsy. I was just referring to the standard process (not disputed by MMT, AFAIK): government issues debt (bond), central bank buys bond, government gets new money.

We are not (yet?!?) at the stage where Johnson gets a BofE current account that starts from 0 and goes as far into the minus as he can get away with!

 

[ks.234]

I’m sure there is much truth in that. It is a clear and no doubt diverse group of stakeholders in any future. To my mind the future direction has to come up from the ground up and it has to destroy the existing two-headed Westminster dinosaur. That is step one. I have pretty much given up endorsing the existing system with my vote. For the time being I will continue voting Green just to be counted as an anti-establishment and environmental voice on the national voteshare, though if there was a ‘none of the above’ option I’d likely go for that instead. The most interesting things in UK politics at present are unquestionably pressure groups such as Extinction Rebellion, Black Lives Matter, Good Law Project etc along with new academic theory such as MMT. It all needs to gain traction through whatever pathways it can, and social media will undoubtedly be a big part of that (which is almost certainly why the two-headed dinosaur wants to regulate and control it). The very last thing MMT needs is to be diluted and absorbed into an obsolete slow-moving self-interested factionalised bureaucratic quagmire such as Labour.

Absolutely to everything there. I have come to MMT only recently from the same point of scepticism as others here, but the more I’ve looked into it, the more of those nagging doubts it addresses.

 

[ks.234]

We are not (yet?!?) at the stage where Johnson gets a BofE current account that starts from 0 and goes as far into the minus as he can get away with!

But that’s the point. Yes we are. We were at that stage decades ago. Government has a ‘current account’ from which it spends, which goes down as a negative because it does start at 0. Any income from tax reduces that negative. The difference between what Boris spends from this current and what he gets in is the deficit. The deficit is, in other words, the money left in the economy. The current economic model says that that deficit is a bad thing and needs to be taken out of the economy. MMT says that the money left over is not a deficit but is actually the money in the economy, the money in your pocket and mine. To take money out of the economy results to balance the books to create a government surplus is to create private sector debt.

Ive posted a picture that explains the relationship between government surplus and private debt better than a thousand words before, but here it is again

 

[Heckyman]

But that’s the point. Yes we are. We were at that stage decades ago.

We're all screwed then!

 

[MUTTY1]

At the beginning of the ‘deficient myth’ video upthread there is a montage that has the whole political spectrum expounding the opposite to MMT. How do you think this will be turned on its head? The markets didn’t like brexit so they devalued our currency overnight and it’s pretty much stayed there. We get 50% of our gas from ourselves yet we pay a price for it as if we had none. Just two uncomfortable examples of how we aren’t a closed system that the MMT theory seems to assume to be a given.

 

[ks.234]

We're all screwed then!

No. MMT is the only hope brother!

 

[Tony L]

How do you think this will be turned on its head? The markets didn’t like brexit so they devalued our currency overnight and it’s pretty much stayed there.

It all depends on how MMT gains traction. Based on what I’ve seen it is absolutely not incompatible with free-market economics. Brexit was obviously an economic disaster (and remains so), so the markets responded, but have largely picked up. Based on Stephanie Kelton’s graphs MMT ensures private business remains healthy, the things that kill it would appear to be times the state is running at a surplus. When I started looking at this I was expecting something far-left that assumes everyone works for the state and hates business. That is not what I saw at all. I’m a small business owner who would run from communism just as hard as I’d run from fascism and I didn’t see anything in her thinking that wouldn’t benefit me. I also didn’t see anything that would translate to authoritarianism, again quite the reverse. I’m obviously only a few hours into the concept (though I had certainly rejected the ‘household economics’ model as dumb/wrong many, many years ago). Markets benefit from business growth, this model looks to ensure it is never stifled by the state.

 

[Seeker_UK]

Yes. I have to wonder why Osbourne broke protocol? Did he feel that Thatcher’s mantra that there is no government money, there is only taxpayer was under threat? Did he release that note to reinforce the lie safe in the knowledge that Labour, also being complicit in the lie, couldn’t expose it?

IMHO, it was too good an opportunity to justify pursuing a certain monetary policy to stick to 'the unwritten rule'.

It seems to be the point that all of the norms of how politics used to be done got put in the dumper. Whether that's a good thing or not, who knows?

 

[MUTTY1]

I had certainly rejected the ‘household economics’ model as dumb/wrong many, many years ago).

As had most people capable of more than one thought after another, but it’s still a powerful polical sound bite as referenced in the video. It’s an interesting and persuasive idea but it will probably not reach the mainstream any time soon. Reminds me of a incredibly interesting diet that has a stack of science behind it but will remain niche because it excludes carbs and that means bread and potatoes to your average voter/dieter….

 

[Ponty]

Thinking about this and the complete mess we are in, it’s possible the govt is actually giving MMT a bit of a whirl. The #1 priority in terms of economic feel good factor is maintaining high house prices at any cost. This makes people feel wealthy and more likely to spend money on stuff they don’t need, plus it really helps with re election. They don’t want IR’s to rise too much, there is simply too much debt and house prices would fall. MMT would suggest controlling inflation by raising taxes, which is exactly what they are doing (NI, Corp tax). Just a thought.

 

[Tony L]

Thinking about this and the complete mess we are in, it’s possible the govt is actually giving MMT a bit of a whirl. The #1 priority in terms of economic feel good factor is maintaining high house prices at any cost. This makes people feel wealthy and more likely to spend money on stuff they don’t need, plus it really helps with re election. They don’t want IR’s to rise too much, there is simply too much debt and house prices would fall. MMT would suggest controlling inflation by raising taxes, which is exactly what they are doing (NI, Corp tax). Just a thought.

I think it is clear both here and in the US under Trump economics were functioning in for want of a better term a ‘post-truth’ manner. I guess they always have been. Looking back through history it is absolutely clear that the political right do not play by the rules they say they do. They never “borrow less” and they never “repay” national debt. They always maintain or increase debt by their own calculation metrics, and always fail to deliver infrastructure improvements with the money they create. Basically they divert that money upwards to bolster their party and its owners and donors rather than outwards to benefit society or state infrastructure. I am sure they are keeping a very careful eye on inflation, but doing the exact opposite of MMT with the unemployment parameter as certain funders of the party will have an interest in maintaining an artificially low wage low tax economy.

 

[ks.234]

I think it is clear both here and in the US under Trump economics were functioning in for want of a better term a ‘post-truth’ manner. I guess they always have been. Looking back through history it is absolutely clear that the political right do not play by the rules they say they do. They never “borrow less” and they never “repay” national debt. They always maintain or increase debt by their own calculation metrics, and always fail to deliver infrastructure improvements with the money they create. Basically they divert that money upwards to bolster their party and its owners and donors rather than outwards to benefit society or state infrastructure. I am sure they are keeping a very careful eye on inflation, but doing the exact opposite of MMT with the unemployment parameter as certain funders of the party will have an interest in maintaining an artificially low wage low tax economy.

Yes, inflation is an indicator of government overspending, unemployment is an indication of underspending.

As you say, Right wing governments over spend upwards and cause inflation in areas like yachts and high end house prices in London which has a knock on effect on other house price, while compensating with unemployment to keep the cost of labour low.

When it comes to deficits, debts, and borrowing, the right wing sets the agenda but does actually follow it, while it is the left that feels the need, or is pressurised, to prove it’s ‘fiscal responsibility’ by actually trying to balance the books and in so doing, turn a government deficit into a domestic and private debt.

I can’t help wondering if, had Corbyn got elected on his ‘costed’ manifesto, he would’ve had to show he was actually balancing the books which would’ve caused domestic and private debt. His spending would’ve been called “reckless” and blamed for economic turbulence, when in fact it would’ve been the very act of balancing the books that caused the problem. And Corbyn would not be able to point out the truth because he was part of the lie.

The Tories are in charge of the lie, so while they talk the language balancing the books, they never actually do.

The balancing the books mantra is a stick with which to control the left and keep government money away from public services while funnelling it upwards to reward the upholders of right wing interests. As an example of this flow of government spending we have seen £100b’s disappear into the pockets of Tory donors under cover of the Covid crisis without comment, but when a fraction of that amount for Health Care is mooted, it is preceded by wall to war headlines about ‘who’s going to pay?’ and an eventual answer that means it will be the poorest who pay.

 

[Tony L]

The Tories are in charge of the lie, so while they talk the language balancing the books, they never actually do.

That’s a good summation IMO. The Labour Party, even the tiny handful within who claim to be left wing are still complicit to this establishment orthodoxy, just as they are to right-wing nationalism, imperialism etc. They are never not one head of the dinosaur.

From an MMT perspective the threat of Corbyn or Sanders was likely as economically destructive as Clinton (who unlike the political right did actually clear the deficit and move the state into surplus). As stated it requires a whole new way of looking at the same pictures. Previously I’d have cited Clinton as an example that the left is always more economically competent than the right. I suspect that needs to be revised to ‘marginally less corrupt, but just as misguided’.

 

[ks.234]

That’s a good summation IMO. The Labour Party, even the tiny handful within who claim to be left wing are still complicit to this establishment orthodoxy, just as they are to right-wing nationalism, imperialism etc. They are never not one head of the dinosaur.

From an MMT perspective the threat of Corbyn or Sanders was likely as economically destructive as Clinton (who unlike the political right did actually clear the deficit and move the state into surplus). As stated it requires a whole new way of looking at the same pictures. Previously I’d have cited Clinton as an example that the left is always more economically competent than the right. I suspect that needs to be revised to ‘marginally less corrupt, but just as misguided’.

Yes. The Household Budget Myth is a lie that the Tories like to tell, but they don't believe it themselves. If they did, they would do it, they would make sure that the government runs a surplus. They don't because while public services would be cut first, to actually create a government surplus would just move to deficit to the private sector.

The real problem is that the electorate believes the lie -and let's face it we know from personal experience that realising the lie takes some effort, reading and research and not least, a willingness to turn out heads upside down - and any political party trying to tell the truth will suffer in the polls.

 

[ks.234]

Thinking about this and the complete mess we are in, it’s possible the govt is actually giving MMT a bit of a whirl. The #1 priority in terms of economic feel good factor is maintaining high house prices at any cost. This makes people feel wealthy and more likely to spend money on stuff they don’t need, plus it really helps with re election. They don’t want IR’s to rise too much, there is simply too much debt and house prices would fall. MMT would suggest controlling inflation by raising taxes, which is exactly what they are doing (NI, Corp tax). Just a thought.

I think the Tories have always known the truth of MMT, but as @Tony L says, they only deploy it when it comes to spending up. When it comes to bunging £b's to the top, balancing the books is not an issue. 'Printing Money' reigns supreme when it comes to spending upwards. The Household Budget Myth only applies when it comes to spending down, spending on public services that those at the top wish to strangle as much as possible in order to ripen the public services for privatisation and exploitability.

MMT is a description of reality, we can see it's a reality because we can see it describing spending up and working just fine during the Covid crisis

The Household Budget myth is a lie and we can see it's a lie because it is only ever applied when it comes to spending down

 

[Ponty]

I think the Tories have always known the truth of MMT, but as @Tony L says, they only deploy it when it comes to spending up. When it comes to bunging £b's to the top, balancing the books is not an issue. 'Printing Money' reigns supreme when it comes to spending upwards. The Household Budget Myth only applies when it comes to spending down, spending on public services that those at the top wish to strangle as much as possible in order to ripen the public services for privatisation and exploitability.

MMT is a description of reality, we can see it's a reality because we can see it describing spending up and working just fine during the Covid crisis

The Household Budget myth is a lie and we can see it's a lie because it is only ever applied when it comes to spending down

Furlough? I’d have thought that’s spending down rather than up.

The current inflation issue is certainly not limited to higher end goods such as yachts which you refer to in #132. It’s the staple, everyday things which are rocketing in price. Food, fuel, energy, building materials, cars (particularly ‘normal’ ones). Many wages are also up, which of course presents the risk of a price wage inflation spiral. It will be interesting to see the impact of higher taxes on consumer spending. As I’ve said on another thread, the more they spend, the less I do.

 

[Tony L]

The real problem is that the electorate believes the lie -and let's face it we know from personal experience that realising the lie takes some effort, reading and research and not least, a willingness to turn out heads upside down - and any political party trying to tell the truth will suffer in the polls.

The real problem is a) we don’t live in a democracy, and b) the “opposition” is just another facet of the same establishment and actively promotes its orthodoxy. This goes way, way beyond economics; it can be found in every aspect of government. Labour very actively oppose fair electoral representation and political accountability, they promote nationalism, the monarchy & religion, they actively enable the continuation of elite rule and never refuse establishment trinkets (honours etc). As such I don’t view any of this as a purely ‘Tory lie’ as Labour are right up to their necks in the same shit.

 

[Tony L]

Furlough? I’d have thought that’s spending down rather than up.

Maybe, though covid was a unprecedented event and our establishment are not daft, they fully grasp they are only a few square meals away from having their heads placed on spikes outside of Westminster! They have established we are happy enough to see the mentally ill freezing to death in shop doorways at night, but if middle England starts to go hungry they are done for.

 

[ks.234]

The real problem is a) we don’t live in a democracy, and b) the “opposition” is just another facet of the same establishment and actively promotes its historic orthodoxy. This goes way, way beyond economics; it can be found in every aspect of government. Labour very actively oppose fair representation and political accountability, promote nationalism, promote the monarchy & religion, they actively enable the continuation of elite rule and never refuse establishment trinkets (honours etc). As such I don’t view any of this as a ‘Tory lie’ as Labour are right up to their necks in the same shit.

It is Tory lie because it started with Thatcher and Milton Friedman’s Monetarism nonsense.

All parties have got caught up in the lie, LIb Dems, SNP*, Greens, Labour, the lot, and they’re caught up because if they do tell the economic truth, they will be ridiculed in the press and hammered in the polls. The lie will not be defeated from the top, the challenge is to get the MMT message accepted in the electorate as a whole. As we can already see, that will be difficult. People prefer a comfortable lie to the more difficult truth.

*In some ways especially the SNP. Sturgeon is unable to embrace MMT for electoral reasons, but if she doesn’t, if Scotland achieves political independence without it’s own Scottish Reserve Bank, it will not have economic independence. If it uses the English Pound or the Euro, it could find itself paying in much the same way as Greece.

 

[Joe Hutch]

The lie will not be defeated from the top, the challenge is to get the MMT message accepted in the electorate as a whole. As we can already see, that will be difficult. People prefer a comfortable lie to the more difficult truth.

I think it's more that people (especially those who find numbers 'challenging') are more able to understand a simple model (the household budget) than something more nuanced or complex. The household budget approach, which involves spending cuts and deteriorating infrastructure, is hardly 'comfortable'.