British House of Lords inquiry into the Bank of England’s performance is a confusing array of contrary notions
On November 27, 2023, the Economic Affairs Committee of the British House of Lords completed…
It is Wednesday, so a truly short blog. We have to proof read the final copy edit of our Macroeconomics textbook by the end of the next fortnight. Tough ask. But apart from a music journey today, the richest people living in Britain are planning journeys as I write (they certainly are not sleeping) because they are scared witless about what Jeremy Corbyn will do to them once he is elected. This fear is even greater than anything Brexit will bring and the proponents of this narrative have also admitted that Brexit will not alter Britain’s position as a “global wealth hub”. Pity about that. I was hoping they would take all their banks and dodgy financial companies with them. Anyway, I am an Australian, as I am being increasingly told these days by those who claim I should stay out of British debates. Primer: I am not uncertain about my nationality. And, I am fast becoming a major critic of Modern Monetary Theory … read on.
On the Macroeconomics text, I wonder why it has been even written.
I think I am going to become a major critic of Modern Monetary Theory (MMT) in the coming period.
I am starting to believe that it has become so flaky when you consider what it omits, although I haven’t been bothered reading much of the literature.
I stick to Twitter that is as deep as one needs to go to see how vacuous MMT is.
These MMT types claim that fiscal policy is very powerful.
They rave on about monetary sovereignty but it is obvious the government cannot build cities on Neptune, much less Mars?
The MMT academics have never considered resource issues that would be required to get to Neptune.
So we can easily conclude that the government is not sovereign because it can’t do everything, including ensuring all teams in the football win each week.
What? A team has to lose for another to win?
My you are an unpleasant person. I am going to block you immediately.
What? A currency-issuing government like Australia can buy whatever is for sale in its own currency, including all idle labour?
Ha, what happens if they want to buy a BMW car? Then they are screwed aren’t they?
They would have to stump up euros and everyone knows they don’t ‘print’ those.
What? You saw BMW cars are for sale in shops in Australia with AUD price tags?
That doesn’t mean the Australian government can buy one of them with its currency does it?
What? It does?
BMW cars are from Germany. Australia is Australia. How do they get here? Answer that one.
MMT academics have never considered that have they?
You are not only unpleasant but also incompetent.
Not that I have read their work on this issue. I refuse to read it. I just know they won’t have considered it because they are just cultists.
Show me on SnapChat where they have written about that in detail! Yeh, told ya!
What? The government just sends an order to the BMW shop for a car?
Idiot, don’t you know that most imports are invoiced in US dollars and the Australian government doesn’t ‘print’ those, does it?
What? The data shows that only 51.9 per cent of international currency usage is accounted for by US dollars and that settlements for cross-border transactions are often in local currencies, because the exporter desires local currencies to reduce risk exposure?
That sounds like the sort of nonsense that Mitchell would write about. Not that I have bothered to read up on it.
Show me on SnapChat where the MMT academics have written about that.
And, pray tell what happens to the money that the government might pay if it wanted to buy a BMW car in Australia?
The MMT academics haven’t worked that one out have they? It is very complex, well beyond their intellectual grasp. Cultists!
What? You don’t hand over US dollars to the BMW shop down on the corner?
That is what I would expect an MMT academic to say.
But who pays the invoice for the car to enter the port? That is what the MMT academics cannot tell you, can they?
What? You saw some claim that the Australian dollars never leave the Australian monetary system if they are deposited in Australian banks or Australian dollar-denominated accounts elsewhere?
What a load of bunk – what happens if they are deposited in a bank in Germany.
What? They can’t be?
I can deposit Australian dollars in my bank in Britain?
What? I can’t unless the bank accepts AUD deposits?
No, I let the bank convert them into pounds for me. They rip me off with a fee but I get my pounds sure enough.
What? You saw a government official in an official car that had the BMW logo on it?
Well if that is true, then the currency will crash. Almost immediately. No one in the forex markets will tolerate that.
What? Capital controls?
I thought these MMT academics wanted flexible exchange rates. How can they advocate capital control? It is simply nonsensical.
What? You can allow the exchange rate to float within a regulative environment that includes capital controls?
The MMT academics have never said that. Show me on Twitter where Bill Mitchell has written 2000 words on that topic.
What? There are many blog posts and tens of thousands of words where he has done that?
Well I don’t bother reading them anyway. They are too long for my attention span. And I deny they exist.
What? Don’t start me on the Job Guarantee!
I saw something about that the other day. First time I have heard of it. It is obviously ridiculous.
Not that I have read anything in detail. But it is obviously a very difficult thing to organise and I bet no-one has put their minds to anything like that. They just have some slogans like ‘full employment’ and expect us to believe them that it is possible.
What? Governments organise much more complicated systems than the Job Guarantee would represent – like the tax system, the systems of traffic lights in cities, putting a person on the moon 50 or so years ago?
But these are not ‘make work’ schemes where people just fill in holes they have dug, are they?
See, that is all the MMT academics would have been able to come up with. Make work schemes.
Not that I have read anything on SnapChat about it. I only heard of the concept 5 minutes ago but it is ridiculous anyway.
And getting back to the main topic, where on Twitter does Bill Mitchell show that the government can build cities on Neptune?
See, all this MMT talk of monetary sovereignty is just hot air.
When the Brexit referendum results were announced and I expressed public support for the Leave decision I was called
When British Labour announced its Fiscal Stupidity Rule I was called “incompetent” and a “cult leader”.
More recently, my shifting personas have accelerated.
I am now variously, a “poor economist”, the “most unpleasant person” (ever) and this morning I achieved the ultimate status of being an “abomination”.
And plenty of other descriptions in between.
Most of these compliments are from those who claim to be on the progressive side of the macroeconomics debate.
And all because I write about Modern Monetary Theory (MMT).
I call it progress.
Jeremy Corbyn must be quaking in his boots after the UK branch boss of a Swiss bank claimed that the prospect of the “left-wing Labour Party gaining political power in the U.K.” represented:
… a serious threat to the country’s super-rich.
Yep, you read it correctly.
The Bloomberg article last week (November 1, 2018) – Corbyn ‘Dangerous to Big Fortunes,’ Says Swiss Bank’s U.K. Chief – said it all really.
The London-head of a Swiss Bank (Pictet) claimed that:
Corbyn is very dangerous for big fortunes … is one of the main issues our clients are losing sleep over …
The poor darlings. Life is so threatening with Corbyn on the loose.
Bloomberg claimed that “the U.K.’s wealthiest individuals and families” have accelerated their plans to take their money and run (leave Britain).
… the U.K.’s top 1 percent is now more concerned about him than the fall-out of the country’s exit from the European Union
Now if you took all this seriously then you conclude that Brexit is a non-issue if Corbyn is all that is worrying this gang.
The article lists a number of cities where this lot are seeking refuge – Monaco, Jersey, Guernsey.
And, as I have noted before, the “crown dependencies” can only serve as a refuge from British tax regimes if the British government allow them to.
Many of the money laundering schemes operate ‘within’ Britain because the British government turns a blind eye.
Mr Corbyn will fix that won’t he.
So they better not go to Jersey for example. That little island will see a clear out of the richest people in no time at all.
This comes from a company (Pictet) that (Source):
… uses a letterbox company in Panama and a tax loophole involving investments in London to gain German millionaires as clients.
Adami, himself (with wife):
… hold two of three seats on the board of directors for a shell company in Panama called Odicel, through which Pictet routes large commission fees.
The arrangements included transferring massive amounts to Panama and “Adami himself oversaw these transactions personally.
Adami set up a scheme where a German would invest, say €1 million in a gold trading enterprise under British law, and then “count that purchase price as a fully tax-deductible business expense” against their German income.
The London loss offsets the German income.
When the gold is sold, only the profit is counted as taxable income in Britain and incurs no further tax obligation in Germany.
So an August outfit all round.
The Pictet boss, one Heinrich Adami, though did blow the whistle on all the scaremongering over Brexit that concerns the financial sector.
He told the media there were:
… 10 reasons why the U.K. will remain a global wealth hub, ranging from its high density of family offices to the quality of schools that wealthy families can send their children.
And the fact they all want to stay registered with the FTSE!
The problem is that the post-1976 Labour Party DNA believes the sort of nonsense that these rich characters are in some way influential.
It would be of no consequence if they packed their bags and sought ‘tax’ refuge elsewhere.
They are probably already laundering huge income flows in low tax regimes anyway. Corbyn and Co should also announce a huge land tax on ‘non-residents’ who own property in London. That would disrupt their sleep even further.
With one of the worst Presidents in history one would have thought the Democrats so-called ‘blue wave’ was a shoe-in.
Well it doesn’t seem to have happened even though the results suggest they will take the House of Reps majority.
Which means the progressive wing of the Party should start cleaning out the leadership as soon as possible.
You know the ones I mean – those politicians who think it is smart to rail against the fiscal deficit when employment growth is improving and more people are getting work.
I know a lot of the fiscal position is underpinning the Military-Industrial establishment. But that should be the issue rather than the size of the deficit.
Bad luck to Tim Canova in Florida.
This video is a ‘blue wave’ …
Regular readers may or not know that I love Hammond B3 organs. While I am not very oriented towards material things, two possessions would go down well: (a) and old Hammond with Leslie cabinet; and (b) a 1920s Steinway Grand Piano.
Here is a classic example of the beauty of the Hammond.
Lou Donaldson is the alto player who set out during the BeBop era, which means Charlie Parker is in his music.
He is thought of as the ‘father of funk’ given his albums of the late 1960s, which are among my favourites and on my often play list.
This album features some of the best jazz players:
1. Blue Mitchell on cornet
2. Lonnie Smith – Hammond
3. George Benson – guitar before he got the weird idea that he could and should sing.
4. Idris Muhammad – drums
9:44 of pure funk and soul the whole way.
This is one of the reasons I fell in love with the Hammond organ
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.