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Case Study – British IMF loan 1976 – Part 4

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text during 2013 (to be ready in draft form for second semester teaching). Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.

Previous parts:

Case Study – The British IMF loan in 1976

I have been immersed in primary documents all day today and am still piecing the story together. I am a relative expert now on the Suez Crisis, well, relative to what I was yesterday. While all this research is indeed a lot of fun, it is delaying the completion of the Case Study and the detail is clouding the aim – to show that the 1976 episode was an illustration of the failure of the government to comprehend its own capacity given the changes in the monetary system in 1971.

So next week there will be significant (streamlined) progress once I distill all the data (information) I have.

Suffice to say, the Case Study will be heavily edited in its final form.

I have also been constructing a new homepage for the text book and that has been taken some effort.



I plan to complete this case study up to 1976 next week.

To make up for lack of text

Just to keep you occupied and keep your minds concentrated on the early 1960s here is the first single released by the fabulous vocal band, The Wailers (Junior Braithwaite, Beverley Kelso, Bob Marley, Cherry Smith, Peter Tosh, and Bunny Wailer) with backing from the ska band, The Skatalites. It went to No. 1 in Jamaica in early 1964. A classic produced by the famous engineer Clement “Coxsone” Dodd.

Lets dance a bit and forget the Case Study until next week.

Saturday Quiz

The Saturday Quiz will be back again tomorrow. It will be of an appropriate order of difficulty (-:

That is enough for today!

(c) Copyright 2013 Bill Mitchell. All Rights Reserved.

This Post Has 5 Comments

  1. Not to assign you another Herculean task such as this one, but since we’re on the subject of “the failure of the government to comprehend its own capacity”, I’m curious on your take on the 1998 Russian default, which I understand was unnecessary, and foisted on them by the “Chicago Boys” orthodoxy. I’m particularly interested in the selling off of state assets, as that seems to define Russian politics today. (Maybe a day’s topic if you’re looking for one.)

  2. I see the decline of the UK in favour of the South of England beginning especially after 1970 when the UK first started to import coal & later shut down its nuclear industry.

    It simply refuses to engage in state backed nuclear and its coal mines continue to be shut down.
    Why ?
    These industries are far more labour intensive.
    A checking of labour rather then capital holders accounts would destroy the south of England economy now.

    The final phase of globaization post 1970 /80 must be seen through a UK perspective as the financial complex only benefited the south of England
    Back in 1970 /80 internal goods were cheap , external goods expensive relative to cash flow.
    This of course changed over time.
    Internal goods & energy became expensive relative to cash flow and external goods & energy cheap.
    Now both internal and external goods are expensive relative to cash flow………a breakdown event follows.

    Remember up to 1970 the UK did not import any however.

    Provisional UK energy trends June 2013 covering Q1 2013.

    “Provisional figures for the first quarter of 2013 show
    that coal production (including an estimate for slurry)
    at 3.9 million tonnes was 6.9 per cent lower than the
    first quarter 2012. The decrease was a result of the
    mothballing of Maltby Colliery and the closure of Daw
    Mill Colliery as a result of a fire during February 2013,
    forcing the mine to close the following month.
    Imports of coal in the first quarter of 2013 were 15.0
    per cent higher than in the first quarter of 2012 at 12.1
    million tonnes”

    The domestic production decline continues to this day as England cannot afford to pay people in Sterling to do real work…….only to recycle a external surplus via “services”

    UK Coal Indigenous production
    Y2011 : 18,627 Thousand tonnes
    Y2012 : 16,788p

    Y2011 Q1 : 4,773
    Y2012 Q1 : 4,155
    Y2013 Q1 : 3,869

    The UK black hole is now not only affecting European physical primary industry but the US also as it uses it influence to encourage the US final dash for gas ….thus exporting US coal to the UK.

    “Steam coal imports originating from the USA in

    quarter 1 2013 more than doubled in comparison to

    the same quarter in 2012 to 2.9 million tonnes”

    LNG imports have imploded on a massive scale.

    LNG imports

    Y2011 : 270,733

    Y2012 :147,879

    Y2011 Q1 : 78,370

    Y2012 Q1 : 38,645

    Y2013 Q1 : 15,986

    This after the coldest UK March in 50 years !!!

    So much for the LNG Mirage…………..its back to coal (external coal now)

    Because Gas is too expensive to export and far too valuable (a higher quality fuel with less transformation loss ) not to burn at home.

    The UK objective is to plug into the Gulf of St. Lawrence and the rest of the eastern Sea board so as to save itself from its own now giant anti production engine.

  3. @Dork of Cork, don’t forget that Drax is getting £1B a year in subsidies for being “renewable” by burning wood (imported from the USA) alongside coal.

  4. @Stone

    I could not imagine it that much !!! , but it is no doubt a very silly policy which I think has slowed this past year as they simply need masses of coal to fill the nat gas void 24 /7.

    Anyway the quarterly Energy trends publication is for me the bible of what remains of the UK physical economy.
    I imagine Its the sort of thing that appears on those BIS like real no bull reports.

    Although I guess they must put some sort of spin on stuff like this classic line from the latest 2013 Q1 report.

    “Demand for aviation fuels decreased by 7.7 per cent.
    Whilst passenger numbers remain robust, indications
    were that increasing fuel efficiency and some
    rationalisation of routes (including greater numbers of
    passengers per plane and route sharing between
    airline operators) have contributed to this decrease”


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