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Want to save the planet? Have a go yourself.

Discussion in 'off topic' started by wulbert, May 20, 2022.

  1. ks.234

    ks.234 pfm Member

    No. Printed money is only a small fraction of the money in circulation. We currently have high inflation, it was not caused by printing money and to stop printing money would not bring that inflation down.
     
  2. mansr

    mansr Objectionist

    I meant printing in the extended sense of issuing currency, as I'm sure you understood, yet you chose to nitpick rather than make an actual argument. Perhaps you have none.
     
  3. ks.234

    ks.234 pfm Member

    I’m not nitpicking at all, just asking questions about the basis of your assumptions.

    Regardless, issuing currency has not caused our present inflation, nor will restricting it cure that inflation. The problem we have at the moment is the growing gap between prices and disposable income. Decreasing currency will only make that problem worse.

    My argument, as already stated, starts with the observation that a government such as ours that issues currency, cannot therefore run out of that currency. The constraint on spending therefore, cannot be a shortage of currency.
     
  4. mansr

    mansr Objectionist

    You still haven't explained how unlimited funding can be obtained.
     
  5. ks.234

    ks.234 pfm Member

    I wouldn’t use terms like ‘unlimited funding’. It isn’t a question of ‘obtaining’ something, it is a question of recognising the reality of where government spending comes from in the here and now. Government spending does not depend on a fund, government spending comes from the act of spending. Our government spends money into existence. A government such as ours as the issuer of currency cannot run out of that currency, it can supply whatever money is needed for a given need. If there is a need for, say, care workers, a government such as ours that spent money on care workers would not cause inflation. If it supplied more care workers than was needed, then there would be inflation, and that inflation could be controlled by increasing tax or reducing the number of care workers

    Likewise, making capital available to fulfil the need to tackling climate change would not be inflationary until the point at which government spending on tackling climate change overtook the availability of climate change resources.

    As things stand, the need for resources in Care and the Environment far outweigh the money government makes available for either, so the threat of inflation is some way off.
     
  6. mansr

    mansr Objectionist

    Have you offered your services to the Treasury? I'm sure they'd be thrilled to learn that they could simply pay off all public debt at any time.
     
  7. ks.234

    ks.234 pfm Member

    You asked for my argument, I have given it to you, shame you are not able to engage with it.
     
  8. ks.234

    ks.234 pfm Member

    Have you never wondered why the government sells debt as an interest bearing asset to some, but sells it as a liability to the taxpayer? Unless you are a Tory who believes spending on public services needs to be constrained for ideological purposes, you owe it to yourself to start asking yourself a few questions about economic assertions that do not add up once you do.
     
  9. mansr

    mansr Objectionist

    You're still making no sense. If the government could pay for anything it wanted simply by "printing" money, there'd be no need for taxes or budget debates.
     
    Wright likes this.
  10. ks.234

    ks.234 pfm Member

    The evolution of human activity comes from questions, only then do we reach towards answers. If you want answers, you first need questions.

    It wasn’t until Copernicus asked if the earth was the centre of the universe and observed that it was not, that Newton was able to develop some answers about how and why.

    However, the sarcasm in your posts suggests you are not ready to ask yourself questions about tax being at the centre of the economic universe. Just as the Priests and Theologians of the 15th century were convincing and wrong about the role of the earth at the centre of the cosmos, so the Blessed St Margret was very, very convincing but just as wrong about the role of tax

    The first question to probe learned assumptions is that question of logic already asked, how can a government run out of the thing it creates, and since we came off the gold standard, creates it from nothing?

    Another comes from an Oxfam Report Profiting from Pain released today and comes on the back of my previous question about government debt being an asset for a few and a liability for the many. Gabriella Butcher from Oxfam on Today this morning pointed out that during the pandemic a new Billionaire has been created every 30 hours, and the report tells us that Billionaire profits have increased as much during the last 24 months as over the last 23 years. This at a time when our Chancellor has raised tax on poorer people to ‘pay for the pandemic’.

    If tax is the fund of spending, where did all those new billionaire get their money from before the tax rise? Further, and more important, like debt, why was the Pandemic an asset for a few, but a Liability for the taxpayer? If the government bung to billionaires came from borrowing, who did the government borrow from? And why do the recipients of that loan not have to pay it back, but ordinary taxpayers do?

    The Pandemic proves beyond doubt that the government can create as much money as it wants when it wants. Before the Pandemic Theresa May told us that there was no money, yet come the Pandemic there is oodles. The truth that tax revenue is not the source of government spending should be clear from that observation. This is not a new observation and it is not controversial. Keynes famously said that government ‘can afford anything it can do’ and as long ago as 1943 the chair of the New York Reserve said that ‘Taxes for revenue are obsolete’.

    Taxes do not fund government spending but that does not mean that there is no need for taxes. The purpose of tax is the create demand for the issued currency, also they are needed to control inflation and to encourage or discourage certain types of desirable or undesirable activity. Likewise there would still need to be budgets and government spending would still need to be carefully controlled so as to avoid inflation, but it would be inflation, need and the availability of resources to meet the need, not tax, that is the basis of budgetary constraint.
     
    Last edited: May 23, 2022
  11. mansr

    mansr Objectionist

    If that is so (hint: it's not), then why did the UK national debt increase by half a trillion pounds over the last two years? All that money they spent on covid related things didn't come out of nowhere.

    And yet 90% of the UK government revenue is from various taxes.

    I'll grant you that governments are in a special position economically when compared to individuals or private companies. Everything else you've said, insofar I can decipher any meaning at all, is wrong.
     
  12. ks.234

    ks.234 pfm Member

    that you ask a question in such a way as to make it a non question is the problem
    The debt is an account of government spending

    Where do you think it did come from?

    The word ‘revenue’ means ‘to return’, that is money that is returned to government. It does not go into a piggy bank which funds government spending.

    If you can’t decipher what I’ve said, you cannot say with any certainty that it’s wrong. As you have so far only responded to my questions with sarcasm, I will leave you to the comfort of your certainties.
     
    Sue Pertwee-Tyr likes this.
  13. mansr

    mansr Objectionist

    Increased borrowing, for instance.
     
  14. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    If a government can create money, why would it borrow it? And if it can't create money, presumably the party that it borrows from has created it? If so, why can banks, or corporate investors 'create' money, if governments can't?

    My point, in case you think I'm being a bit obtuse, is that all your arguments on this thread of late tend to suggest that you haven't thought too deeply about how money actually comes into being, and where it goes when it is spent.
     
  15. mansr

    mansr Objectionist

    Are you saying you also believe that taxes are unnecessary (as income for the government), and that governments could simply issue as much money as they wanted with no ill effects? If that is the case, why don't they?
     
  16. ks.234

    ks.234 pfm Member

    Did the government need to borrow money for Covid before it spent it? Who did it borrow from?

    The answer is that it did not, it spent it first.

    ‘Borrowing’ comes after, and ‘borrowing’ is in fact selling government bonds, that is interest bearing IOU’s, to investors. When it comes to paying up on those bonds, it is done with the click of a keyboard.
     
  17. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    No, taxation is a useful balancing tool, AIUI, but it's not an essential component of government spending. As ks says, the spending comes before the taxation. And bear in mind that government debt, is fund holders' assets. If there's no government debt, who pays out when I claim my pension?
     
    ks.234 likes this.
  18. ks.234

    ks.234 pfm Member

    Yes. It is also worth bearing in mind that the Bank of England was set up specifically to buy up government debt 300 years ago. Selling government debt as an asset is the very genesis of modern money.

    Also instructive on the nature of money and tax is a story told by Warren Mosler. A long long time ago in a lecture theatre far away, Mosler asked the audience if anyone would clean the theatre for 5 of his business cards. The business cards were of course worthless and, obviously, nobody came forward.

    Then Mosler said that there were some very large men at the exits who would demand 5 of the business cards to let anyone out. The men on the door represent the tax man and suddenly there was a demand and a value for the business cards.

    Professor of Economics at University of Missouri-Kansas City, L Randall Wray took this idea further by introducing the Buckaroo at his university with interesting results
     
  19. poppop

    poppop pfm Member

    I think Im with you George. I dont "get" the real science on this but even the softer evidence from this year so far - hottest on record in Spain, earlier this month. Most severe hurricane on record to hit Mexico today. Was it Madagascar that was reported as the first climate famine country?

    And yet the human response as always is "nothing to do with me". Travel chaos as record numbers depart for holiday destinations - 720(?) flights leaving Gatwick today. Presumably 90% occupancy going "on holiday". Heard a guy on radio "oh Ive worked really hard during the last year and deserve a break"! Twat.

    We really do get what we deserve.

    Steve
     
    Dave Decadent likes this.
  20. Kirk

    Kirk pfm Member

    Interesting game, thanks for posting OP. Result below:

    Your planet is on course for 1.54C of warming by 2100 compared with the pre-industrial average. Extreme heatwaves will be about five times more likely and droughts twice as frequent, compared with the pre-industrial average, but your actions have averted the very worst effects of climate change. While the impact would have been milder at 1.5C, you still succeeded in achieving the less ambitious Paris agreement goal of limiting warming to “well below 2C”.
     

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