Comments on: QE, UK banks and the economy

By: michael roberts

michael roberts — Thu, 30 Aug 2012 15:16:58 +0000

Try my post on the mysticism of Keynesian economics. But Ill try and get to my view of money.

By: Edgar

Edgar — Wed, 29 Aug 2012 18:18:55 +0000

I am well aware of the state theory.

I was using the quote attributed to Ann Pettifor,

“money is not a commodity. It is not like oil or diamonds. It can be created out of thin air. It is a public good, like clean air or water. But unlike clean water, there is no limit to its creation.”

The limit to its creation are the number of printing presses for a start, unless we go away from money as a material substance and have it as some electronic token but even then you need the electronic equipment to maintain it. And there are limits to its creation, one of the factors the state will always take into account when printing money is how much should we print!!

By: Paul

Paul — Wed, 29 Aug 2012 17:18:17 +0000

This is, of course, correct. But it’s close to a straw man argument. If this is, indeed, what the post-Keynesian and MMT people were arguing, then you would be well within you rights to drowned them in laughter. It’s wrong, though. The MMT people follow the state theory of money, which maintains that fiat money is accepted because the monopoly issuer (the sovereign) accepts it at as payment for taxes, excises, or fines. So money, in this case, is directly liked to the ruling authorities power to imprison, abuse, or execute any subject. The story is as follows: the state announces a head tax on all subjects due by years end; failure to pay is punishable by imprisonment. Then the state issues its own currency – and, very importantly, the only currency which it will accept as payment of taxes – to purchase material goods and services. Banks are merely licensed to leverage this high powered money. This may be incorrect, but it is a very different thing than saying money is created out of thin air.

By: Mike Ballard

Mike Ballard — Mon, 27 Aug 2012 22:25:26 +0000

Ever wondered why it only took $300 to buy an ounce of gold back in the good old days when you were saving for retirement and why it takes $1,600 of those babies to buy an ounce now?

Printing money without the value to back it up is just another form of the commodity bubble.

By: Choppa Morph

Choppa Morph — Mon, 27 Aug 2012 14:51:05 +0000

Ah but Edgar… my dosh is red-hot, your dosh ain’t diddly-squat…

By: Edgar

Edgar — Mon, 27 Aug 2012 13:23:02 +0000

Money can’t be created out of thin air anyway, if it could we would all be creating it!

By: Choppa Morph

Choppa Morph — Mon, 27 Aug 2012 11:28:08 +0000

You write: “Radical Keynesian Ann Pettifor tells us that “money is not a commodity. It is not like oil or diamonds. It can be created out of thin air. It is a public good, like clean air or water. But unlike clean water, there is no limit to its creation.” ”
Could you tell us your view of money, Mike? Not to worry if you’ve already done so, I don’t think it will hurt to remind us…

By: Mike Ballard

Mike Ballard — Mon, 27 Aug 2012 01:42:42 +0000

QE would work if the money ended up in the pockets of the working class. The fundamental flaw in the rule of Capital are the capitalists themselves. After all, bourgeois definitions of freedom always end up negatively with the freedom of the class of wage-slaves sacrificed for the greater good of the capitalist class. This is what all the talk about the need for ‘austerity’ is about.

By: michael roberts

michael roberts — Sun, 26 Aug 2012 06:28:11 +0000

If you mean the Bank of England balance sheet, then the answer is no. Double entry bookkeeping means that the lefthand graph shows the assets side and the righthand graph shows the liabilities. Assets shows the BoE’s holdings on bonds etc and liabilities shows the funds found to pay for it. They equal each other.

Actually, the total national debt of the UK, private and public is way higher than £800bn. It’s about £3trn, and if you include financial debt (which would be double counting), it’s more like £9trn.

By: Catherine

Catherine — Sat, 25 Aug 2012 21:49:48 +0000

Does this mean if you add the two together you get nearly £800B in debt? Obviously, I am no economist though.