The transitory view of the current inflation episode is getting more support from the evidence.…
Multimedia Tuesday – London event and interview
I am heading south today to the periphery of the Eurozone and will spend the rest of the week down in the sun. We will see what I come up with. My next blog will come from the South – in deep austerity land! Today, though, I have little time. So I have posted the Presentation I gave in London last Thursday plus a Radio interview I did in London on Friday. They might be of interest to those who could not make it to the event on Thursday. We launched my latest book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – in Maastricht yesterday and a video record of the proceedings will be available in due course. But for now it is off to the beach!
Reframing the Debate: Economics for a Progressive Politics
This presentation – Reframing the Debate: Economics for a Progressive Politics – was presented in London on August 27, 2015 at an event hosted by the NHA Party.
The talk considers questions such as:
1. How can the debate on the economy be reframed around the things that really matter – people and the environment?
2. Does Modern Monetary Theory hold the key?
It was held at the University of London.
British film maker Paul Thomas filmed the event and produced this video. Thanks to him.
The video only covers my presentation.
The next video covers the input from the discussants, Ann Pettifor and Richard Murphy plus the general Q&A session that followed.
London Interview – Eurozone Dystopia, August 28, 2015
I did this interview in London on Friday, August 28, 2015. For more information – HERE.
The music selection was not my choice!
That is all I had time today. Off to an austerity field trip by the beach!
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.
This Post Has 24 Comments
Bill thankyou I just finished watching both clips and loved them. I can already say I’m confident and competent in all the fundamentals of MMT so the 1st talk was just reinforcing my knowledge. The 2nd part Q&A in particular I loved the discussions on framing etc and boy I got a feeling for how hard your job can be sometimes with the questioner expecting you to do all the framing. I really liked your answer in that other people’s skill sets roll be required to take in various roles as Richard Murphy will be doing on the political front hopefully in the UK. It’s definitely going to take an army of people to change the narrative. Awesome stuff!
Some thoughts that came up watching the Q&A was particularly in regard to the questioner from positive money. It may be outside your theoretical role in MMT but it does strike me as probably the biggest weakness currently for a political party in arguing MMT. If we do expect democracy to be working well or be a “perfect agent” as the questioner mentioned in the MMT model, what checks and balances may be required to make sure the government doesn’t spend beyond the economies capacity using MMT? Having a separate central bank and having government budgets and deficits seems to be the current Neo-liberal control on bad overspending government. I think as MMT progresses into mainstream discussion this will come up and to me seems to be something that will need to be thought through. How do we discuss or frame this? Is it just a case of it can’t be much worse than what we have now from the harmful effects of Neo-liberal policy on unemployment etc? I’ll keep pondering this but it strikes me as a very important part of getting MMT into the mainstream and I like to see problems early on so I can have good answers :-).
Some other very minor feedback you may or may not find useful. At the beginning of the original talk you talked of humiliating people who would put their hand up and be wrong. I understand why you would do that but I winced a little as negatives like that can force people to tune out and switch off potentially. Psychologically speaking we can get better results by rewarding good behaviour rather than punishing bad behaviour. I would emphasise anyone who didn’t put their hand up as being the ones to congratulate for example.
I’ll be sure to watch them again and See what else comes up. Enjoy the time down south. Hopefully the austerity hasn’t ruined the places too much.
Thanks for all you do.
“what checks and balances may be required to make sure the government doesn’t spend beyond the economies capacity using MMT?”
It’s called parliament and general elections.
In a democracy it is the people and their representatives that hold the government to account.
What Positive Money and all the rest of the Central Bank Uber Alles crowd want is an autocracy. A new set of ‘betters’ who can tell the ‘commons’ what they can and can’t do.
That these sort of people also want to abolish the House of Lords shows how inconsistent their belief structure is.
An elected government of the people should be able to trash the economy if it wants to – because then the people can get rid of them and try something else. When the bankers trashed the economy we weren’t able to get rid of anybody – many are still in most and many have been made whole again.
Democracy is the check and balance. Suggest anything else and you are arguing for something other than universal suffrage democracy.
The opening statement of the first woman set the tone of the debate.
She has a very rosy view of the fordist 1960s & 1970s.
With humans trading their time units in exchange for security.
Your zero waste of New Zealanders claim is quite instructive.
It is in fact a hypercapitalistic statement which harks back to the origins of ,modern capitalism in the 1500s and 1600s When labour had much more hidden value to be extracted ( no fossil fuel machines at that time)
This policy of exploitation carried through into the Victorian era until finally coming to a end during the Boer war when the British establishment could not use effective soldiers as a result of previous hyper efficient extraction.
Listen even Feminist marxists are embracing elements of distributionism .
Silvia Federici Caliban and the witch is a fantastic read (although I disagree with very much)
Tribes are naturally lazy.
Previously people used their brain to reduce work for some funny reason.
Your joy of work for works sake is extremely disturbing.
Are MMTers closet Victorians ?
Advocates of albeit clean and healthy workhouses for the surplus workforce …..
This is a very British debate , a centralized nightmare that we are all living with.
Bill , you did at least concede that ballot box democracy requires the need for state violence at 40 minutes ~ which was quite funny.
I am sorry but I still find the British mentality disturbing in the extreme as I am a primitive and proud of it.
Young Irish people have no conception of what the British state was and is given they have become the Borg but at least older Irish people have some idea of their past albeit distorted by Papal propaganda half truths that ironically filled the empty space during and after the Penal laws.
Anyhow t he British are lost people.
I have no faith in their capacity , they have been too long living inside the satanic mill.
Totally agree with Neil Wilson’s statement that the checks and balances on the government is democracy. We have got so used to ‘bad’ governments with the emphasis on top down dictatorial governing styles and a reliance on ‘experts’ that we have lost faith in current democratic practices. And more pertinent to campaigner’s like Positive Money, we have lost faith in ourselves as participators in democracy. It is time to take on the responsibilities of being citizens of democratic countries. When we take our responsibilities seriously, our governments will reflect our democratic will.
We are not dealing with people with decades old misconceptions but with centuries old puritan beliefs.
Francis cuppola belief that this level of savings /deferred consumption is somehow natural is quite extraordinary.
I do believe it is indivdually rational for a person to save under present hothouse scarcity policies but that’s it.
It seems likely that puritanism and capitalistic ranch style production are symbiotic in nature.
Given the major decreases in productivity per acre upon the destruction of peasant culture during the enclosure period people had no choice but to save to survive as there was less surplus to consume.
Forming over time a weird symbiotic relationship between protestant savers and Catholic spenders
The great question then and now is why are we forced to save such vast amounts in a system with a still huge industrial surplus.
Something is very wrong with the physical / monetary economy.
Monetary specialists such as cuppola for some reason cannot see the gravitational effects of this black hole in the physical economy.
Production is clearly not providing us with our human scale consumption needs.
This is a Jeff Wayne forever autumn economy folks.
The true costs of production is reflected in consumption ( not the capital goods destruction which some people call Consumption)
Thankyou Neil and Nell that helps. I’m probably just getting ahead of myself. If we can get enough of the population to lose the Neo-liberal framing then they will hold the governments to account as they should do. All we need is one good government to show the people the potential of what’s possible with MMT and likely any good progressive measure like a JG and it’ll be hard to go back to where we are now. I’m feeling more comfortable so thanks I’ll sit on that.
Neil Wilson’s above remarks about Positive Money and “autocracy” are total and complete nonsense. I’ve explained the reasons to Neil a dozen times, but he appears to be incapable of understanding. I’ll explain yet again, and would expect everyone reading this to understand – apart from Neil of course. Here goes.
Stimulus under the existing system comes in two forms: fiscal stimulus (done by politicians / treasuries) and monetary stimulus (done by central banks). However, the CB has the final say on the amount of stimulus because CBs (at least in the US, UK and some other countries) have ultimate responsibility for inflation. In short, under the EXISTING SYSTEM, repeat EXISTING SYSTEM, a bunch of technocrats have the final say on how much stimulus an economy gets. (Indeed, market monetarists, Scott Sumner in particular, take that point a bit further and claim that since the CB will inevitably counter any fiscal stimulus, it follows that fiscal stimulus is pointless. But that’s going too far in my view.)
In contrast under Positive Money’s system (which is essentially the same system as was advocated by Milton Friedman and several other leading economists), stimulus takes the form of printing base money and spending it, and/or cutting taxes. As to the TOTAL AMOUNT of that stimulus, that’s decided by a bunch of technocrats.
So…. pay attention Neil…. under both systems, the existing system AND PM’s, it’s technocrats who have the final say on the AMOUNT of stimulus. Ergo….pay attention….there is no difference as between the two systems so far as “autocracy” goes.
Keep paying attention…. as distinct from the TOTAL AMOUNT of stimulus, repeat TOTAL AMOUNT of stimulus, there are decisions to be made on how extra money is spent. Those decisions are clearly POLITICAL. Repeat POLITICAL. And under PM’s system it’s politicians and the electorate (quite rightly) who take those decisions.
And that’s it. To repeat: I expect almost everyone reading that to understand it, if not at first reading, then certainly on second reading. Apart from Neil Wilson, who I guess is never going to understand the above.
Ralph, and we keep explaining back to you. The Treasury has reserve powers over the BoE in the existing system, so what you are saying is false. That’s not an argument against the system you are proposing, but it does mean your system makes major changes (like making the BoE genuinely independent.)
I’ve explained it several times as well. Under the existing system the BoE and Treasury co-ordinate to allow the BoE to hit its interest rate target. It’s all an elaborate illusion that gives Right Wingers a nice fuzzy warm feeling without actually changing anything at all.
That’s what expectation management is all about. Trickery.
And of course the final amount of money that is spent is entirely within the remit of the private sector and how much they will borrow from banks. Because, of course, inflation targeting by adjusting interest rates doesn’t really work. It’s the plastic wheel in the back of the land rover. The three year old thinks they are driving the car, but they’re not really.
And as I have pointed out before we had a battle in 1910 between the “people’s budget” proposed by the commons and the House of Lords which didn’t want to spend that much. The House of Lords lost, and the Parliament Act introduced to declare once and for all that the Commons has precedence. The House of Lords will now not debate a Finance Act at all.
That is the nub of the issue. Does the PM crew and their supporters really believe that a bunch of True Believers (because they are regardless) should be able to say ‘no’ when parliament decides to build a few more hospitals than the ‘budget’ will allow.
If the answer is ‘yes’ then you are an autocrat. And we’ve seen how that works already when the ECB brought the *elected* government of Greece to its knees – completely unnecessarily and outside its remit – but in support of the ideology it believes in.
Until central banks are run automatically by robots, they cannot be independent. They are a political tool use by those in power in central banks to push their belief structure against any others.
And those that support the idea should be opposed by all democrats.
I’m just a foot soldier, but by and large I agree with Bob. I don’t buy that the CB really is independant. If Osborne suggests over dinner and a few glasses of bubbly with Carney that it would be politically expedient (for example so the Tories can win the next election), to stimulate the economy, Carney will stimulate the economy. If he doesn’t he can get on the next plane back to Canada.
You guys have both got views so I’d rather you sling mud at each other in public.
And Nell (that’s NELL) – first of all sorry to confuse you with Neil in a response a previous post, I ought to change the resolution of my VDU – I do hear what you say, but we live in a very imperfect democracy with our first-past-the-post system here in the UK. Having said that I did vote for FPTP in the referendum because I see how with PR you finish up with the sort of mish-mash you get in Italy. What we need is even-sized constituencies based on population rather than geographic borders. And we need to look at where political parties’ funding comes from. In a recent speech Corbin made a joke of the fact that he received no funding from big companies, but he didn’t mention the £100,000 that has been donated by three unions. So guess who’s pulling his strings. Political campaigns should be publicly funded.
BTW. I should have addressed my first comment to Ralph as well as Neil because he started it.
So the “Treasury has reserve powers” over the BoE, does it? Well I’ve got news for you: when push comes to shove, politicians have ABSOLUTE powers over the BoE. They could abolish it tomorrow. However, for the time being, UK and US politicians have given CBs ultimate responsibility for inflation, and powers to deal with inflation. That’s what’s called DELEGATION. Governments delegate all sorts of decisions to all sorts of committees and other bodies. I don’t have a problem with that.
“Under the existing system the BoE and Treasury co-ordinate to allow the BoE to hit its interest rate target.” Interest rates are not the BASIC target: the basic objective is the 2% inflation target, with interest rate adjustments being a MEANS to attain that objective. Anyone who has got half way thru an introductory economics text book knows that.
Secondly, what exactly is the “co-ordination” you refer to? Presumably the freedom the BoE has to buy or sell government debt with a view to adjusting interest rates. That’s not “co-ordination”: it’s simply politicians giving the BoE the tools needed to do its job.
As for your claim that “the final amount of money that is spent is entirely within the remit of the private sector”, what can I say but “hilarious”? Didn’t you know that GOVERNMENTS are responsible for about 40% of spending in developed countries nowadays?
Of course it’s true that private sector spending VARIES from year to year. Indeed that’s the main reason aggregate demand is sometimes deficient and sometimes excessive. And that’s why fiscal and monetary policy instruments are adjusted.
Re your point about the Houses of Lords and Commons your point is completely irrelevant. That was about whether total government spending should be determined by an elected chamber or an unelected one. I’m perfectly happy (as is Positive Money) with the idea that total government spending should be decided by a democratically elected chamber. As to the deficit, that’s a different matter. Possibly you don’t understand the difference between total government spending and the deficit.
Next you ask whether technocrats “should be able to say ‘no’ when parliament decides to build a few more hospitals than the ‘budget’ will allow.” To which my response is, “God give me strength”. I.e. I knew this would all be beyond your comprehension. But I’ll try (for about the twentieth time to explain).
Under PM’s system, technocrats do not, repeat not, repeat not, repeat not, repeat not have the power to tell government how much to spend on hospitals, roads or whatever.
What the technocrats do do, is to decide on the size of the DEFICIT. I.e. they decide on the size of stimulus packages. But technocrats ALREADY DO THAT. I repeat, technocrats already do that. I repeat, technocrats already do that – in that CB committees already have the final say on the size of stimulus packages, as Scott Sumner keeps reminding us.
I.e. your tear jerking claim that technocrats tell government how much to spend on hospitals confuses two issues: the total amount government spends, and second, the deficit. The deficit, since you apparently don’t know, is the DIFFERENCE between government income (via tax etc) and its expenditure.
I.e. under PM’s system, if government wanted to spend more on hospitals, there’s nothing to stop it: it could collect more tax and build them. But what it COULDN’T do is to get the money by running a bigger deficit / more stimulus, because the deficit / stimulus is decided (as it already is under the existing system) by technocrats.
“Until central banks are run automatically by robots, they cannot be independent.” Tell me, does that strange theory apply to other arms of government? I mean do head teachers in state schools have no degree of independence in making decisions without consulting the minister for education? And does the Foreign Office have no powers to make decisions for itself? Presumably you’re going to tell me that untill schools and the Foreign Office are run by robots, they cannot be regarded as having any degree of independence.
Most businessmen/women I come into contact with are too busy fighting rivals in the market to have much time to study political arguments effecting economic policy. The same applies in spades concerning monetary versus fiscal policy. That doesn’t stop them latching on to daily headlines that correlate with their prejudices, just like the ordinary employee in the street.
Those versed in MMT and free-market economics (so-called neoliberalism) at least stand a chance of discerning a path to righteousness. That minority are burdened with the task of persuading electorates of the appropriate virtue; democratic opinion is therefore in a sense, dependent upon the practical success of an economic ideology .
Even if the profound merits of MMT become widespread and redistribution of the economic cake reduces inequality, there will still be industrial confrontations as one group of workers consider themselves losers compared with other groups – some industries will prosper while others decline without adequate compensatory adjustments.
In a free-market economy failing industries face a brutal regime; the 1970’s and 80’s witnessed such a period, when conflict epitomised an era that was not totally dominated by Thatcher’s privatisation campaign. Industrial change is part and parcel of economic progress. The more that a government is drawn into the dilemma of how to soften the economic upheaval, the more likely it will try to solve the human problem instead of the economic one.
If the government gets it wrong – and here the outcome can be arbitrary – the result is likely to mean ignominy and loss of office, unlike when the culprit is the Market; an advantage of not having a human face.
Economics has always been a competitive contest. How long before someone wants to tackle that concept head-on; ecological issues might eventually be that trigger.
Your suggestion that Carney will do whatever Osborne tells him to do “after a few glasses of bubbly” is a very serious accusation. You’re suggesting that BoE so called independence is a complete and total charade.
Now if from the moment Carney was first approached as possible governor of the BoE he’d been told he was going to be Osborne’s poodle, there’s absolutely no way he’d have taken the job: he has the qualifications and experience to get himself a far more interesting and responsible job elsewhere (e.g. on Wall Street) a job which moreover pays ten times the salary of the governor of the BoE.
Alternatively, if he had been offered genuine powers at the BoE, and Osborne had then withdrawn them, Carney would indeed have been on the next flight to Canada, plus he’d probably have sued Osborne for breach of contract.
All in all, your theory is very far fetched.
But that’s not to say CBs are not under political pressure: clearly they are. So we’re talking shades of grey. However the OFFICIAL version of things is that the BoE has control of interest rates, QE etc. Untill I see GOOD EVIDENCE that the official version is nonsense, then I’m sticking to the official version, as indeed do about 90% of economists.
(Bill sorry to use your blog for a slagging match, I’ll be restrained).
I’ll give you that my suggestion that Carney is under the thumb of Osborne was unwarranted. I’m sure they do have discussions over a glass of bubbly but I was not meaning to imply any bribery or corruption. And I agree with what you say in your response to Neil that the government as it were delegates some of its responsibilities, quite rightly, to the BoE and its governor. Nevertheless, Carney will have taken his decision to accept the job on the basis that his powers will be limited. At the end of the day Osborne, or whoever is the Chancellor of the Exchequer, is the one who calls the shots. I could well see a day when Carney decides to pack his bag and depart for Wall Street. Unlikely but conceivable.
I am also not suggesting any coersion or worse conspiracy. There are those who like to make out that all the CBs are controlled by a small number of ultra-wealthy banking dynasties, but it’s easy to debunk that nonsense.
Can we please stick to having a reasonable debate? And not use capital letters and repeated phrases? I appreciate you are far more qualified than I am in the subject. But as I understand it so is Neil. I don’t know about Bob. I’ve got my views too. As I did say I am only a foot solder and I’m very happy to be corrected if I misunderstand.
BTW. You say: “Didn’t you know that GOVERNMENTS are responsible for about 40% of spending in developed countries nowadays?” This agrees with data I have found, but on your own website there is embedded a video of a talk by Richard Werner. You berate him for saying that banks don’t lend money, but that isn’t quite right because he does say that, but only to make the point that they just create credit. He then somewhat shoots himself in the foot by going on using the words “bank lending” for the rest of the talk. What he also says is that the banks create 97% of the money supply. If that is so it doesn’t fit in with our 40%, upon which we can agree, and also if so government spending would have a very minimal effect on the overall economy. Unless he is suggesting that the government has to raise taxes and borrow from the banks to fund its spending, which is not what MMT says.
I would be pleased if you would comment on the above, preferably omitting any capital letters.
Congrats to the film maker.
Superbly done. It can only add fuel to the fire.
“What the technocrats do do, is to decide on the size of the DEFICIT. I.e. they decide on the size of stimulus packages. ”
The size of the deficit is not under the control of the government or the technocrats – as Bill keeps reminding us. It is determined by the private sector’s net saving desires.
So what you are saying, in reality is that there is an overdraft limit set by somebody outside parliament.
So I say again if parliament decides that it wants to build more hospitals and it doesn’t want to tax because *it considers* there is no functional need will your committee of Solomons be able to bounce the cheque?
If the answer is ‘yes’ then you are proposing an autocracy, not a democracy and you are to be opposed. If the answer is ‘no’ then the whole thing is shown to be the complete waste of time and money that it is.
“I mean do head teachers in state schools have no degree of independence in making decisions without consulting the minister for education? ”
They have very little independence in reality and have to stick to the National curriculum. Tory head teachers certainly can’t thumb their noses at parliament and *stop a Labour controlled parliament doing what it was elected to do*. All they can do is resign and be replaced by somebody more in keeping with the new political climate.
And it should be the same with the central bank. It carries out the orders of the government based upon the rules set by parliament – in the same way as any other government department.
That should *never* include the right to bind the hands of the Commons over whatever it can do. That is the lesson of the 1910 People’s Budget. No more ‘betters’ telling the Commons how much money they can spend and how much they have to tax. The will of parliament must always prevail.
Bernanke’s quote on this, when he was head of the Federal Reserve, is of course pertinent: “we are the agent, of course, of the Treasury and it’s our job to do whatever they tell us to do”. That is the correct position of the central bank in the hierarchy.
Parliament decides. The executive directs. The service departments perform – including the Bank of England as a subsidiary of HM Treasury.
This silly trend to ‘independent’ committees of overpaid stuffed shirts needs to end. All of them should be fired as a waste of time. The committees in parliament are more than sufficient to hold the government to account and to budget.
Fairly new to MMT and really enjoyed your talk Bill and the Q&A after it.
I quite agree with you that “Carney will have taken his decision to accept the job on the basis that his powers will be limited.” I.e. central banks have some powers and not others. However, I flatly disagree with your claim that “the Chancellor of the Exchequer, is the one who calls the shots..” if by that you mean that it’s actually the chancellor who decides interest rate changes and how much QE to do. What you’re saying there is that central bank independence is one huge charade. That is a very way out bit of conspiracy theory with which I’d guess about 95% of economists and political commentators disagree. That is, those 95% are of the opinion that real powers have been delegated to central banks.
But if you’ve got any actual evidence to back your theory, I’m happy to look at it.
I quite agree with your debunking of the popular theory that central banks are controlled by Rothchilds and other shadowy figures, though there is SOME TRUTH in that in the US in that Fed committees are stuffed with Jamie Dimons and Lloyd Blankfeins.
Finally, the proportion of GDP grabbed by governments, which I said was about 40%, has absolutely nothing to do with what proportion of the money supply is issued by commercial, as opposed to central banks. The proportion issued by CENTRAL banks has actually shot up as a result of QE from roughly 3% to roughly 10% far as I can see. But that has no effect on government spending as a proportion of GDP.
You say “The size of the deficit is not under the control of the government or the technocrats – as Bill keeps reminding us. It is determined by the private sector’s net saving desires.”
The size of the deficit is very much controlled by government. If government chooses to go wild and print ludicrously large amounts of money and spend it, a la Mugabe, then government can do that. Mugabe did it!
Bill’s point (a point which most MMTers me included agree with) is that if the private sector decides to save more, then that reduces demand, ergo the state has to spend more (while not of course doing a “Mugabe”).
“So what you are saying, in reality is that there is an overdraft limit set by somebody outside parliament.” Yes. I’m saying that the DEFICIT (i.e. stimulus) is determined by a committee of economists outside parliament. But as I’ve already said about twenty times, that’s already the case in that central bank committees have the final say on how much stimulus there is. Ergo Positive Money’s system is no more “autocratic” than the existing system.
Re schools, I’ve never worked in education, so I’m not an expert on EXACTLY how much independence head teachers have. My basic point was that all arms of government have a measure of independence, and in the case of the BoE and the Fed that includes the right to determine interest rates, QE, etc (unless Nigel’s theory that it’s actually politicians that determine interest rates is correct).
Re your claim that the central bank should never “bind the hands of the Commons over whatever it can do”, that’s simply your personal political view. But you’ve got a huge problem there, namely that the majority of politicians are quite happy with an arrangement under which central banks DO BIND the hands of parliament to some extent. And if that’s what democratically elected politicians decide, then that’s democracy.
The person who is being “autocractic” is actually YOU. You seem to object to a decision taken by democratically elected politicians.
Finally you quote Bernanke as saying “it’s our job to do whatever they (the Treasury) tell us to do”. Yes, and one of the things the Treasury (and Congress) has told the Fed to do is to be thoroughly autocratic (shock horror) and be responsible for keeping to the 2% inflation target by using interest rate adjustments, QE, etc.
No I don’t have any evidence, just hearsay from other commentators. Plenty do say that the BoE’s independence is a sham. And thinking a bit further, actually Carney doesn’t even have the power to set interest rates – the Monetary Policy Committee does that. But I still think the Chancellor has a big influence. I find it hard to believe that the MPC would have reduced rates to near-zero in response to the GFC without some sort of political pressure. I don’t KNOW (excuse the capital letters), I just come to a conclusiom based on what I have read. I don’t even KNOW that MMT is right.
With that I’m moving on before Bill shuts me down.
Those following the discussion between Nigel, Neil and Ralph may be interested in an article in The Times yesterday 01/09/15 written by Paul Johnson, director of the Institute of Fiscal Studies, entitled “When it’s best to keep the politicians at bay”.
An extract states, “The decision of the New Labour government in 1997 to give the Bank of England the power to set interest rates free of ministerial interference has proved one of its most enduring and effective legacies”
It goes on to refer to the work of the Office for Budgetary Responsibility and the importance (as the author sees it) of independent and transparent input.
Bill, many thanks for your videos. Inspiring as ever. Please don’t be discouraged by the rather ignorant questioning at one point. I can assure you that awareness of MMT principles is growing. Not so much in the lowest educated groups in society, but among those with capacity to listen and understand, significant numbers are beginning to grasp things. Others will follow in time.
Neil and Jason
Neil has it exactly right imo – democracy is the ‘check and balance’ on the government, including its decisions on deficit spending under Functional Finance.
But I do think we need – and I argue for this in my online activism- a right of binding referenda whereby we (the People) can sack any or all public officials, at any time with no recourse.
If you will, this provides the democratic means whereby the Primacy of the People’s authority gets full expression. Without it, I believe such statements in Constitutions (or otherwise) claiming the People’s authority is the highest, are mere empty words. A government in power, unable to be removed for 5 years, is a mockery of such authority.
I believe a commitment to such referenda rights should be something that all citizens should demand of any candidates they might consider supporting in an election, whether left, right or centre.
It’s a simple thing that could really garner wide support I think.
Ralph the presumably rhetorical question you ask Neil
‘You know there is a difference between government spending and the size
of the deficit’
Gives an answer which refutes your assertion that some committee decides
the level of the deficit.The difference is of course tax returns .Tax returns
are determined by tax rates set by governments ,economic activity and
private sector compliance .No committee of technocrats in the BOE controls
the level of tax take in a given period or the level of government spending in
a given period .Under current arrangements they are tasked with issuing bonds
to cover any deficits,this is not remotely the same as controlling the level of the deficit.