Comments by "Curious Crow" (@CuriousCrow-mp4cx) on "Richard J Murphy"
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Absolutely. And selling these bonds into the financial market means that the Dealer Banks will be buying as much as they can at this discount, and will either sell or lend them out at a profit, or redeposit them in their reserve accounts at the Bank of England which ensures they meet their capital Reserve requirements quite cheaply, and get paid interest as well. It's another form of subsidy to banks that should be able to stand on their own feet. As Mark Blyth, the political Economist argues:
"First, it (the Labour government) could massively increase its fiscal space by telling the country’s central bank, the Bank of England, to stop paying interest on the commercial bank reserves that it holds to influence short-term interest rates. With the United Kingdom’s high interest rates, banks prefer to hold on to money and not invest in the real economy. As a consequence, they are expected to make around $286 billion in interest by 2033 by simply parking reserves at the central bank.”
That's nearly £218 billion a year to the banks in interest. And who benefits from that? Only the shareholders of the banks, because banks are not investing in the real economy, because that is more risky than selling debt and speculating. That's why Sunak was going after the UK pension funds to start taking more risk by investing in capital projects. So, ou pensions are going to be exposed to investments that banks aren't interested in. What could go wrong?
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But what you dont acknowledfe is that modern monetary systems are no longer solely run by government, because instead of national financial systems, weve been encourage to allow evolving away from that to a global financial system which produced the largest amount of money - bank credit - on behalf of sovereign states, multinational corporations, and financial institutions. The financial institutions need to be paid for creating this source of the cheapest capital on the planet for investors. So, the UK falling down the rabbit hole because of Brexit explains the disparity. And those cause the problem have used their money to buttress their power. I mean, even the US got downgraded in 2022.
So, trust is the basis of money as credit, and everyibe relies on it. And you should have provided the debt to GDP percentage and data about the US to provide some sort of benchmarking. Murphy knows how sovereign debt is used, snd he can caluate the analysis better than you or I. For instance, Germany has a low interest rate, but the differential between that abd the UK's doesn't correlate with their Debt to GDP ratios. Interest rates are subjective judgments on a debtor's riskiness, not on what they owe. I mean, Trump went bankrupt 5 times, but still got banks to lend to him. It was only after he screwed over Deutsche Bank, did that flow of cash dry up... Subjectively Trump was a risk, but it wasn't until it became a consensus in the banking industry, was the decision not to borrow to him an objective one. The same applies to yield rates for sovereign debt. But what's more important than individual rates, is yields relative to one's competition. And wirh Trump taking the presidency, alk bets are off. Why? His economic plan to reindustrialise the US won't boost the US' credit rating, because it's the consumer - who's already punch drunk - who will bear the costs in very direct ways. Americans will be living in very interesting times for the next 4 years,as will we as we all share the same broken global financial system.
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Starmer is coming across as a a bit of a Hot House Flower. Bought into the cold, ruthlessly sharp climate of front line politics, his foliage is being shrivelled. And his defensiveness is becoming the story rather than his political vision.
You Richard are a good communicator. You're used to transmitting complex ideas without oversimplyfying them. Whether one agrees with your conclusions or not, we understand much of what you say and why your saying it. The gift of being a good teacher I suppose. And you're not alone. There's Professor Mark Blyth of Brown University in the US, who is brilliant at putting ideas about political economy in developed countries. I discovered yesterday that he used to be a stand-up comedian, which explains somewhat his style. Both of you could be great politicians because of that. Lawyers are supposed to be good speakers and the best trial and appeal lawyers are excellent and engaging, but not every lawyer is good at being a trial lawyer. They're good at being administrators and managers of small teams, but they don't get enough practice at communicating to a wide audience. I fear Starmer falls into this group. He's not "mastered his brief" enough, and it shows. He's not incompetent, but he is inexperienced in getting a crowd of people engaged. He's too self-conscious, and he's not used to being challenged or heckled. I think Starmer never had to do that kind of communicating, where being challenged is to be expected, and you understand audiences. It normally takes a good while of having to deliver that kind of engagement regularly to become skilled at it. In Labour's early days, going out to working men's clubs, union meetings, and regular campaigning honed those skills 'on the stump." We don't have those opportunities so much today, and our politics is suffering because of it.
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How does Elon square importing foreign labour without training American citizens to do the work he wants migrants to do?
By now, you should be feeling a little unsettled, as you should be. Embrace that feeling and go where it leads you. It will remove the scales from your eyes about the nature of Musk, Trump, and all the post-truth authoritarian populist spivs who claim to represent "the people." They don't. They represent themselves, their kith and kin, and who is in their pack. And it isn't you, nor your loved ones, your peers, or your class. You think extortion can benefit you? Then why not elect a modern Al Capone? who is extracting his cut from you and your class right now. Your grievances are valid, but misdirected. Foreign corporations do not run your economy. They do not set the rules you live by. Nor to they tell you it's your fault that you are a failure according to their standards, when you have to go bankrupt to pay your medical bills. Did you ever watch the HBO series "Succession"? There's a line in the script of Season 1 Episode 9 where the wealthy media mogul Patriarch of the family says:
"I don’t like being outside the US for too long... There's a mercilessness I miss... Fucking without a rubber. Everywhere else feels soft... All of it. Slaves, cotton and sugar. This country was nothing but an off-shore factory for turning evil into hard currency ."
The last sentence was broadcast as:
"This country was nothing but an offshore factory for turning suffering into gold."
Suffering was almost always part of the deal until 1945, when America got "soft" as the means to prevent communism or socialism taking over. The GI Bill stopped the repeat of what happened after the end of World War I. Unions were allowed, and wages were allowed to rise so that Consumerism could be embedded, and American exports could flow outwards to the territories of the old world that was being rebuilt. American multinationals could walk in through the doors American politicians had kicked down as the price for fighting a 2nd world war. And American workers enjoyed the benefits that came. But, it was built on shifting sands. The American economic empire was a victim of its own success. It couldn't last when fighting communism was so damn expensive, even though American banks were in cahoots with British and European banks to get around US capital controls. Fear. Everyone needed USD and US Treasuries, but there were never enough. American bankers created securitisation of debt in an attempt to fill the gap, but as a consequence, put in place the foundations of the house of cards what would come crashing down in 2008. You know the rest. The postwar consensus was too expensive for elites to maintain, and a demographic and technological shift ensured it's demise. The American Dream, could not withstand reality. And all through that American elites did not care about you and yours. They did what they did for you to prevent you picking up the pitchforks. And so, using the insights of politics, economics, and psychology, they sought another method - the Enemy Within. Old wine in new bottles BTW. Every empire has used it in its old disguise as Divide and Rule, and America was no different. Blacks and immigrants, were always convenient scapegoats with thing went wrong. And the politicians could harvest your resentment and make political capital out of it. But, when things continue to go bad, you need new scapegoats to deny and deflect from the reality. So trans, BLM, Antifa, Immigrants, Blacks, and finally foreign corporations. How convenient.
What doesn't change is that American workers continue to suffer. Sufferings part of the deal. Nevermind the employees' slice of the GDP pie keeps shrinking year after year, whilst fat cats get fatter year after year.
Extortion rackets never end well, and the costs outweigh the benefits. Especially as your favourite elites like Musk and Trump will inflict the costs of those tariffs on consumers like you. So your standard of living will fall, as importers pass on the added costs of tariffs on to you, the consumer.
Now, with the fires in California, there's going to be an uplift in inflation, even before Trump can apply any tariffs, which add more inflation on top. If your feeling the pinch now, just wait until Easter if Trump starts throwing out tariffs like confetti in his first 100 days. If the more grounded analysis wins out, Trump will impose very few tariffs, and those will be symbolic. If it doesn't, you had better punch some extra holes in your belt, because it will need to cinch tighter to hold your pants up. Good Luck.
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Look, this is politics, a very human activity subject to human tendencies such as perception being more influential than truth, simply because truth, like thinking, is hard work, inefficient, and not always comfortable to sit with. Al lot of human problem stem from these limitations. What we want isn't always the absolute truth, but just enough truth we can be comfortable with or is useful. That's why maturity is the realisation that a lot of what you've been told is true isn't, and you come to a place of compassionate scepticism. In other words, you pick your battle. Strategically and probalistically, truth is a collaborative project. It relies on consensus to be accepted as true. And consensus isn't easy to get, or keep. Nevermind the reality that those within the consensus are limited, including you...
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Does anyone see breathing as work? Do you even know how many breathes you take in a minute? Hobbies and work is a false dichotomy. Both take, time, money, effort, and commitment to accomplish a goal. So its an us problem really. For example, take school teaching, or teaching as a profession.
People jump quite a few hurdles to get into that profession. Lots of exams to get their graduate qualification and mentored learning to become a qualified teacher. But notwithstanding their demonstrable focus, commitment, and dedication, new school teachers are leaving the profession after qualification within 5 to 7 years. And they're the ones that even finished their training. Only 24% of those starting teacher training actually go on to qualify. 76% drop out.
We have attrition in medicine and nursing too. At one time, according to the College of Nursing, the NHS had over 100,000 vacancies for nurses, which is why we have to get them from outside the UK, because we don't even have enough training places, never mind the student nurses we do have being so broke they eat the patients' left overs and use foodbanks.
Criminal barristers who are self-employed, were before their pay rise earning before deductions, expenses, and student loan repayments, around £15 per hour in a job where they have to travel to any court in England and Wales by their own steam to get there at short notice to attend court on behalf of their clients, and could be there for weeks. Their training is 7 years, to earn less than minimum wage.
When I was young, these were Professions with a capital P, but now, they're grist to someone's poltically entrepreneurial mill. And we are suffering accordingly. And if these professions have become difficult to stay in, what hope is there for everyone else? These professions and the institutions they work in are part of the glue that keeps our economy and the society in which it exists together and working. A democracy, yet over a few decades they are struggling to do their jobs.
To me, The Hostile Environment created in this country is not just for refugees. It's consequence of political entrepreneurs squeezing everyone else for their own gain. And as for the working people of this nation are going to be stretched to find enthusiasm in their work, if they can barely find a living wage in it.
Hobbies cost money, time, and effort, just like work. And if all you are doing is working just to meet your living costs, then hobbies become a luxury. Any work is done to meet a need, and pehaps we need to focus more on work and hobbies as means to meeting human needs, rather than just ends in themselves. I mean isnt that what an economy is actually for? Or am I missing something? Do human needs really matter in our society? Or we are just a society where we know the price of everything but hardly the value of anything?
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Free market capitalism makes no such claim. All it claims it that the winners win,whether the world benefits from that or not. In that framework, the market can then reject any product by simply not buying it. Of course, free market capitalism is unrealistic, because it disregards human nature, which is a fundamental flaw when people make up markets. Capitalism ultimately harnesses greed and fear - two emotions that helped us to survive, but are problematic in civilisation. Ignoring that fact, has led us to this messy time of ideological cul de sacs created for the benefit of the asset wealthy to excuse their failings, and prevent having to pay for the consequences. Of course, they want to persuade us that this is ok, whilst we get poorer and our children and grand children get even poorer.
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Why do you parrot that old trope without understanding what actually was going on? And why? It comes across as brainwashing. And to boot, MMT is not about money printing. Indeed, the term is deceptive in a world where 95% of money in circulation is "printed" in your words, by commercial banks making loans, and entering digits on a computer. Nobody complains about that, because they don't know that reality. The present reality is that of all the money in circulation, 95% is bank credit, 3% is central bank reserve credits, and the rest is currency as cash. The truth is that money creation is predominantly done by banks, with the government through their central banks being their safety net for the financial acrobatics. Historically, Germany's problems under the very short-lived Weimar Republic stemmed from not money printing but prior malinvestment that failed to create a bulwark of value and the burdens of war debt. Money Printing was a response, not the cause of its economic woes.
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The problem with your point is that it's is really stretching the meaning of democracy. Let's not forget that democracy as formed in ancient Greece did not solve slavery or poverty, did it? Why because you are conflating means with ends. Democracy is the means to decide who gets what. It doesn't decide what there is to get. Civilisation based on societies is even more complicated than ancient Greek city states, where only the oligarchs had a vote. In its current form in the Anglosphere, it's only been around for about a century. And that's nothing in human history. So democracy is still in its infancy. Can it be improved? Definitely. Will it be? Who's to say? Market ideology is en vogue, but is proving to be a false hope, and our oligarchs are trying very hard to cover up their mistakes. So our politics is negotiating the capture of our states by asset wealthy oligarchs who think - why I do not know - they can run whole nations better than the population. They dream of running whole states like principalities, just because they're rich. What the real issue is that Injustice and Illiberality exist, and the values to erode these are being eroded by the same elites who want to control everything. 'Don't be a citizen; be a consumer or a subject.' 'Don't be a member of society; just look out for your kith and kin.' we are being conditioned to look away from things that might remind us all is not well. And it is we who must look to our own values, and strive to arrive at shared values that are expressed through our shared institutions. That means not being complacent, and not thinking that's someone else's job to do. We have to talking and thinking together about shared values. And one could argue our overlords don't like that sort of independent action. They're too stuck in their ways. We shouldn't follow their example. We should dare to think how to evolve our society away from its current model which is actually endangering our society. We should be able to do better, but we're being encouraged not to do so. This why we need a state free of regulatory capture, and with the right priorities that ensures a basic standard of living to everyone. That's going to take time and effort, because ideas evolve faster than human beings. So we must keep working to improve things, because we can only go through. We can't go around.
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The Winter Fuel Allowance was not allocated efficiently or effectively. Efficient use of tax receipts doesn't give money to those who don't need it. So any government should ascertain a civilised standard of living for pensioners and people on benefits, and those who are above that standard should not get it. The problem is that the government standard of living for pensioners is too low. And that's an inherited problem, that can't be fixed anytime soon. The Cost of Living in the UK is going up strongly, and pensioners are not all loaded, but some are. And it unfair just to discribute limited funds willy-nilly. The basic living needs for pensioners needs to be addressed in a way that is clear and understandable. Nobody understands pensions at all. That's why the winter fuel allowance was poliiticised and paid as a bribe, but a serious number of pensioners were still needing to choose between heating or eating, whilst those who didn't need it, were getting it anyway. That should not be the case. That the state pension is still to low to live on, is another inherited situation, and pension Credit is still too low. That's the real issue, and for that you can blame a long line of givernment back to Thatcher who fiddled the National Insurance Fund and broke the link with wages. Google 'The Rape of The National Insurance Fund" by the late Tony Lines, and you'll see why pensions and the NHS ended up being squeezed for cash. The report is still online, and it ties into the Waspi Women as well. And the amount lost if adjusted for inflation are eye-watering. The fact is, the problem is too big now for any quick and easy fix, and it's only going to get worse. Political opportunism is only possible where people don't know what's really happened over nearly 5 decades. And labour can't fix it, because the accumulative problems has wrecked the potential for real growth in the UK.
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This is an opinion piece not a debate. Its upto you to challenge your own beliefs by looking for contrary opinions, and testing them against reality. The truth is that as only the government and institutions authorised by government can create money, there is no ownership of money beyond the government. Its very much like land, where sovereign governments have the right to structure and organise the distribution of land rights. In the UK, The Crown, in the form of the Executive in goverment has a sovereign - an overriding - right of possession and use of land, the area beneath land, and the air space above it. In the US, this right is called Eminent Domain. The same thing occurs with money. So there is no "taxpayers money" per se. Taxation removes money permanently from the system, much like a pump or lock gates control the flow of water in a watercourse. What the problem is that almost everyone is ignorant about the monetary system and the role of taxation in it. Worse tgey have been misled by political political entrepreneurs who have taught them to think negatively about taxation, and to lionise the private sector. As long as any institution - money or otherwise - is run by humans, they will occasionally make mistakes. No-one is immune to folly, but those who are not immune to folly, are not immune to the temptation to grift or self-deception either. So, ideally, we have to stop pretending that big business is somehow nore trustworthy than unions. Thats patent nonsense, because their human. Moreover, we need to make government better, and independent from both Labour and Capital. And we need to stop producing educated idiots as our politicians and oligarchs in charge of our institutions. In short, we're getting what we deserve, because we're less than sound or honest about things. Have real democracy, with devolved powers and sortition to choose who we devolved the powerr of the people too. Only until we stop settling for easy answers to hard questions, will things improve. Thats why populism has reaered its head again in mant developed countries, because their system of governance and practice of democracy is too stuck in the 19th century. And why our economics is brojen too.
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I think you need to read "Money" by David McWilliams. Then you'll actually understand the subject, because McWilliams is not a proponent of MMT, but understands the limitations of the theory in the real world. You don't in any real sense economically or politically. Why? If what you say was even just a little bit true, it would mean you love being "socially controlled." You like spending money, and don't mind receiving it. Hell, if you were to be paid to write comments like you have, you wouldn't refuse, would you? If you're writing these comments for free, then you are simply confusing the Map with the Territory. If you want to ground your critique in reality, rather than ideology, you need to study what Theory is. And you will then understand why MMT is nothing more than a map. It is not perscriptive, but descriptive. The whole thing about thing about MMT is not that it is incorrect. It is correct. But what does that mean for those creating monetary policy. Arguing ideologically about MMT is like arguing that a weather map shouldn't show where rain might fall. Not only is that iilliogical, it's pretty irrelevant. The only thing that matters to someone who using a map is what they should do about it. If there's a drought, then rain is to be welcomed. If there's too much rain, then that's a different matter. These are real world constraints, and every theory comes up against reality. It's reality that determines the applicability of any theory. For instance, two theories were tested by a charity - the first was Milton Friedman's assertion that Inflation is solely a monetary phenomenon, and the second was a theory of John Maynard Keynes, who argued that injecting direct money transfers to individuals would have a multiplier effect on overall economic activity, in that the benefits would cascade over time. A Randomised Control Study was carried out in Kenya, and Friedman's hypothesis (theory) was disproven, and Keynes was proven within a 30-month time scale. Fine. But what does these findings mean? and what are the implications? These are the real-world constraints on theories, which can be tested for. MMT has constraints, which haven't yet been tested for. Yet, the idea has been politicised, which doesn't help anyone. The truth is that MMT is a theory to describe only a very, very limited source of money creation. Indeed, it is the only source of money creation that governments have chosen to retain direct control of, but the amount of money produced accounts for less than 10% of the money in circulation. The other 90% is ledger money, aka Bank Credit in the private sector and created by banks issuing loans. So the idea that MMT is a form of Social control is just plainly wrong. It can't be, because it's impact is minimal. By outsourcing almost all money creation to the private sector, governments have reliquished control over the money supply. Indeed, the offshore money market is huge - $12trn market cap - but no government controls it. Until 2008, it operated outside government control, until greed and ambition wrecked it, throwing the whole global financial system into a crash, and governements agreed to bail it out, because every bank on the planet were involved. They used MMT to do that, instead of letting the whole system collapse, because there was no other source of money to do it on the scale it needed to be done. If governments had done nothing, there would be no money left in the private sector. That's the reality - they socialised private losses. Was that the right thing to do? Well, that's a debate that cannot be concluded, but how they did it, and what they didn't do impacts us to this day. The financial sector is more regulated, but banks can't make as much money, and that's a problem, when the demand outstrips supply, especially for USD, the global reserve currency. And the pandemic replicated those mistakes. MMT wasn't the source of those mistakes. People's ideas and beliefs were. And MMT is just pointing the finger at those. It doesn't say when or how money should be created by governments. People do thst, and their motivations need to be questioned, and MMT allows us to identify them and how people act upon them. It's not a prescription. It's a description, and the GFC and the pandemic showed the decisions made regarding monetary policy proved the description correct, but like good theories should do, it also raised important questions about policy decisions made, and the consequences. So, that's what you should be zeroing in on. A knife is only a tool, that can kill or cure depending on how it used. The theory that describes that truth is not to blame for it being used to kill or cure. It's the persons using it. MMT raises those fundamental questions that some people - very powerful people - would prefer remain unaddressed. They can't though, because the consequences are still with us, and will cause problems for those who follow us.
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Thank you for clinging to the truth. We know Farage is an opportunist, and is likely to faik. And we should worry then, because what would follow him. Like vampires, they can't harm you unless you invite them in and tolerate them in your space. So when Nigel fails politically - because he and his party embody the problems we're trying to solve - that in turn will open the door to a much smarter, and more ruthless political entrepreneur to say anything to get into power, and raid the kitty. The discontent is the fruit of what was done over nearly 5 decades of Neoliberal economics, and the pain imposed was a feature and not a bug. And that pain is being still imposed, by an alien and technocratic political and economic culture. So the frogs carefully heated of the last half century cannot do anything but try to jump out of the hot water. And anyone who's been scalded knows, that your mind isn't focussed on cause and effect rationality, but finding something, anything, to take the pain away. Brexit, the Red Wall Collapse, and the trouncing of the Tories are all attempts to find cold water. Nigel would get elected just because Starmer is unrelateable and technocratic, and people are still burning. And they would continue to burn whilst Nigel leaves the gas on. What else would he do? He was one who was happy to turn it up. He and his party are neoliberal to the core, and just want access to the kitty and the power. Farage, if elected would fail too, because neoliberal economics is a busted flush. And he would be elected because he has no other agenda than getting the keys to the kitty. So it's what would follow Starmer and Farage which could even be worse. Starmer needs to understand that his electorate is increasingly alienated, because his type of governing makes little or no sense to them anymore. Why would it, when the pain is still growing? They are angry because promises made back in 2008 have yet to be fulfilled, and seem unlikely to be any time soon. So, more of the same technocratic alienating approach is too alien to increasing numbers of voters. He needs to own his shortcomings, and address his and the ever growing political and economic dangers ahead, or see things get worse. He should not focus on saying anything to get power. He should be brave and develop a vision of the future that will stop Farage and others like him gaining traction. And then execute it forthwith. And "more of the same' isn't good enough.
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JP Morgan was being disengeuous, because credit is money. And he made his fortune by using bank credit. Why? Both currency and credit are commodities that have a financial value, and they can be bought, rented out, gifted, spent or sold. The vast majority of money in the modern age is credit. Get paid your wages by check or bank transfer into a bank account? That is credit. Take out a car loan or buy a house with a mortgage? That is credit. According to the Bank of International Settlement (BIS), 95% of financial transactions in the global economy are made by bank credit. Cash as currency, or specie such as gold and silver, are increasingly rarely used in the day to day business in the global financial system. Even China, allegedly buying gold as a hedge against inflation, don't send it to pay it's bills. They have to exchange it for cash or credit to use it's value.
Once technology made it easy to transfer information quickly or cheaply, the use of currency and specie began to decline in favour of bank credit. So now bank credit is the dominant form of money.
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Please name the emininent professor who said such a thing, because that statement doesn't quite match up the facts. Indeed, reading "England's Cross of Gold" which describes the economic thinking behind the UK’s Gold Standard Crisis under Winston Churchill's tenure as Chancellor of the Exchequer, find that Britain was worried because of its rivals in Europe and America having caught up with it industrially and economically. Not only would Britain be forced into protectionism because of its huge WWI debt to the US, it's trade earnings were being eroded by cheaper goods. That fear drove the government and the unions to agree to a too high value of Sterling under the Gold Standard. Not only did that make British exports uncompetitive, it also created the financial crisis which would lead to the 1926 General Strike. You see America's great leap forward, fuelled by it's industrialisation, and owning most of the war debt from WWI, gave it the power to set the Gold Standard, not Britain. The Gold Standard error would drag on until 1931 when Britain crashed out of the Gold Standard. Britain was rich on paper, but the reality was that it had fallen behind so much that it's economy became destabilised. And the British working class had really tough times in the 1920's. Hence the rise of the Labour Party, and the demise of the Liberals. And 1929 didn't help either. So... I want to know which eminent professor would assert such a opinion, because he's no economic historian based on your comment.
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Even ChatGPT4 acknowledges that, but it should be noted that actual or potential superpowers tend to throw their actual or implied weight around. So, the UK needs to start thinking for itself again, (i.e. Bulk up) because if the Trumpettes have their way, it will be all stick and no carrot. Indeed, an examination of the post-WWII debate between British and American economists on the future of the global economy was the last time Britain had a chance to shape things on a global scale, and the Americans gave them the bird. J. Maynard Keynes wanted an international currency union, with an international credit the Bancor, being used for international transactions. The Americans would have none of that. The wanted everyone to be dependent upon USD, and that's what happened. Looking from that perspective to now, the present rumblings in the global financial system are unsurprising. 'With great power comes great responsibility.' But people get bored too easily.
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