Why does Labour, when the Tories lie and lie and lie, keep on turning the other cheek? Hardly out of an excess of Christian charity, more because of cowardice in failing to confront the British people with the truth. Osborne, a snake oil salesman if ever there was one, began his time in office in 2010 by repeating over and over again that all the problems in the economy were all the fault of the previous Labour Government. So why didn’t Labour make the obvious riposte that it was actually the bankers, whom Osborne for some reason had somehow forgotten to mention? Why, even more worrying, has Labour failed to make even a bleep to counter these Tory lies over the whole of the last 4 years? It would have been so easy. The biggest budget deficit in Labour’s 11 years before the crash in 2008 was 3.3% of GDP whereas the Thatcher-Major governments racked up deficits bigger than this in 10 of their 18 years. Continue reading
Posted in Finance
How the government’s super-platinum credit card works
This brilliant, witty explanatory piece by Neil Wilson first appeared at 3Spoken three years ago but is never more applicable
Modern Monetary Economics shows us that monetarily sovereign governments (like the US, UK and Japan) are able to spend money before they receive any tax. That’s what puts the ‘fiat’ [Latin for “let it be done” – Ed] in fiat currency [which is a currency which derives its value from government regulation or law rather than a commodity such as gold or silver], but it appears at first glance to be counter intuitive. How can that be?
If you think about it most of us come into contact with this concept every day – its called a credit card. So if you imagine that a government does all its spending on its credit card, then you’ll have the structure about right.
There are differences though. A monetarily sovereign government is able to get the best credit card deal in the world. It is a super-platinum credit card with the following benefits:
It has no spending limit
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Tories buy election
Democracy is a great system, except that those in power do their uttermost to subvert it, circumvent it, and twist it to their own ends, and quite often succeed. Take the current state of play between the parties in Britain. In March this year the Electoral Commission recommended there should be no increase in spending limits for candidates between now and the general election on 7 May. It also proposed that there should be only an increase in spending of £2.9m for the ‘short’ 3-week campaign leading up to the election. So what did the Tories do? Ignoring the official recommendations of the Electoral Commission, they pushed through increases in permitted spending twice those proposed by the Commission. This works hugely well for them because they have amassed an electoral war chest vastly greater than Labour’s, and will now be able to turn most of it to their own unilateral advantage. Continue reading
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Labour views economy through the wrong end of a telescope
“There is no path to growth and prosperity for working people which does not tackle the deficit”. So said Ed Milliband last Thursday.
The Labour leader has finally succumbed to a baying media pack that insisted he commit himself to an economic goal set by Labour’s opposition: namely “tackling the deficit.”
I am no politician, but such capitulation to economically illiterate commentators, is surely both politically unwise as well as economically nonsensical. The reason it is politically unwise is that Mr. Milliband is succumbing to the Chancellor’s flawed and frankly dishonest framing of the public deficit as the biggest challenge facing Britain’s economy. But while Mr Osborne must be delighted at luring his opponents into a debate that cannot be won, he is plainly very, very wrong. Continue reading
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Banks’ culture is still fundamentally rotten
In a pre-election party political broadcast called the Autumn Statement, the Chancellor was at pains to tell us that his ‘long-term economic plan’, which he echoed 15 times like a demented obsessive perhaps to cover up that he doesn’t actually have one, was firmly on track. The economy had been saved from ruin and was now on its way to prosperity. It was like a surreal dream.
But one area of this magnificent future that he chose not to mention was the state of the finance sector, always the most dangerous and potentially explosive sector in a capitalist economy. Hardly surprisingly since the Tories get more than half their income each year from the banking and shadow banking (hedge funds, money market funds, etc.) systems and the whole finance sector remains wide open to abuse. Of course that will never be admitted, least of all by Osborne who likes to regale us with another of his canards that there has been a major clean-up exercise since the crash in 2008. There hasn’t. Continue reading
