Wings Over Scotland

I’ll be honest, I don’t get the UBI thing. It sounds good but…

Maybe I better go away and educate myself a bit more.

@ yesindyref2

What YES needs is to educate the voter to understand how it works and as soon as most people know that.

The Budget deficit and national debt = everyones savings to the penny.

The narrative, language and framing will change. Those that have controlled the false naarative over the last 40 years will be finished.

All those office staff making life hell for claimants are unionised and pay a due to guess who.

galamcennalath says:
18 October, 2017 at 8:00 pm

Would lazy people simply not work? I reckon the vast majority of folk want to contribute to society, want to do something useful, want the dignity that comes with employment.

Just think of what could be done free of the constraints of having to find a job though, if what you wanted was to help keep our rivers and streams clean, or run a free cab service for elderly people living out in the wilds, or any number of other things that you couldn’t do if you had to do the 9-5.

And imagine the boost to morale for those who wouldn’t have to worry about being paid a pittance and working three jobs while trying to run a family too. A good life / work balance. Dignity. Less stress and fewer stress-related illnesses. Reassurance.

The possibilities are endless.

A few years ago. (UK Gov) in Scotland costs £16Billion. £10Billion welfare/benefits. £6Billion OAP’s. Scotland paid less (pro rata) because people on average die younger in Scotland. (UK Gov ) Pensions in Scotland (pro rata) cost less than the rest of the UK. The rest of the UK spent £78Billion on (UK) Gov pensions. Scotland 1/12 of the UK. The rest of the UK were spending £1/2Billion more pro rata.

Scotland pays (UK) Gov pensions from tax revenues raised in Scotland. £58Billion+ a year. The (UK) Gov pensions/welfare are paid from Scottish tax revenues raised in Scotland. Funding will be less on average because there is now higher employment levels. Less people will be relying on benefits. Now vulnerable people are being left with out money for up to six weeks.

The Tories are behaving, absolutely disgracefully. Starving people to death. Hope the Tories rot in hell for what they are doing to people. It is disgusting. The Tories never change. They just get worse. They will die off. Their members average age is now reported to be a 72 year old men. Young folk have no interest in the Tory party. Any left when Cameron got the dunt. For the disastrous EU policy. What a fool they make of themselves.

£3Billion looks lower than £10Billion. Or would it be part of the approx less than £10Biilion? spent on welfare benefits. payments. It could part of the basic, universal income system.

The Tory tax on the Oil & Gas sector is 40% since Jan 2016. The Tories have been running down the Oil and Gas sector down since 2010. One person is now doing three person’s former jobs. Amalgamation. More people are stressed and ahxiety. They vote Tory? After they lost their jobs.because of high Tory taxes. Corporation tax is under 20%. 120,000 jobs are lost. There could have been full employment in Scotland. There are 103,000 unemployed in Scotland.

Some say they don’t want to pay more taxes on six figure salaries. About £20 a week would help the NHS and Education. Most of them got a good education with lower fees and loan repayments. They also get good treatment when using the NHS. Everyone who uses the NHS appreciates the excellent treatment they receive. When people are ill or sick they appreciate the good treatment they get from the NHS.

Alex Clark @ 00:46,

One advantage I find particularly convincing is the aspect that RogueCoder @ 21:14 touched upon: under the current economic system, ever-increasing automation will push an ever-increasing proportion of the population into workless poverty. Not just a disaffected “underclass” of the poorly-qualified as is happening already, but encroaching into high-qualified professional sectors also.

UBI is the means by which everyone has a stake in society. A social glue. Rather like any other universal benefit.

The level can’t be too high or it would act as a deterrent to anyone seeking paid employment and it all has to be funded somehow, so the level it operates at, and the means by which it is funded, are probably the two most crucial aspects.

I note that in Stu’s Table-1 (and as galamcennalath @ 20:00 has already pointed out), no account appears to be taken of the potentially large saving in bureaucratic costs from not having to administer the current very complex gamut of means-tested benefits with all sorts of unintended consequences. This may be part of the attraction for libertarians, but not in of itself at all a bad thing, I would say.

@Derek Henry
“Job Guarentee v UBI

Job guarentee is far superior in every way.”

Can’t go with that one at all, it takes no account of the increasing move to automation and roboticisation.

Derek Henry – various posts.

I, and am sure many others would appreciate your posts if you could convert your points to diagrams which are easily understood, not only by us here but by the wider population.

I failed Economics twice in first year uni and my Advisor of Studies wisely counselled me to stick to language-based subjects which I did. My degree is English, French and Politics.

@Az
Perhaps the fact that it’s being talked about now means it’s closer to Independence tham many think. Cheer Down!

@ AZ

It shows you’ve never read the literature on it that’s been built up over the last 20 years.

All main points over the last 20 years are covered in this series. yes, including robots. A UBI does not reduce poverty ! A basic income guarantee is a neo-liberal strategy for serfdom without the work.

Is there a case for a basic income guarantee – Part 1

link to bilbo.economicoutlook.net

Is there a case for a basic income guarantee – Part 2

link to bilbo.economicoutlook.net

Is there a case for a basic income guarantee – Part 3

link to bilbo.economicoutlook.net

Is there a case for a basic income guarantee – Part 4 Robot edition

link to bilbo.economicoutlook.net

Is there a case for a basic income guarantee – Part 5

link to bilbo.economicoutlook.net

Once you’ve read those we can have plenty of fun debating it.

We can’t even agree what other basic incomes are as in pensions, child benefits, unemployment benefit because voters can’t accept people getting something for nothing and not contributing to the economic pie. These types of basic incomes get cut all the time.

I suppose the 3 questions along with reading the mini series above you have to answer is

1. Why should a person receive £75 per week for just surfing all day. When they provide nothing to the economic pie we all share and contribute to ?

2. Why shouldn’t a person get paid £375 a week for their families and will providing public purpose via a job guarentee that we all benefit from ? Who then have a better chance to get a better paid job in the private sector as the economy picks up again. As they’ve gained more skills than they would have learned on a UBI at £75 per week ?

3. What would have happened in 2007 during the financial crash if.

a) UBI paying £75 per week had been introduced in 2002 ?

b) A job guarentee paying £375 per week had been introduced in 2002 ?

Remembering that the automatic stabilisers pushed the defict to 10% of GDP which never targeted anything anyways. Apart from mainly paying unemployment benifit to the millions that lost their jobs.

Instead of the monopoly issuer of £’s using the £’s on the automatic stabilisers. Which would have been a better use of those £’s a) or b).

I’ve also posted links further up the thread that destroy the UBI each and every time.

Here they are again

link to medium.com

@ Still positive

The diagrams are in the links

@ AZ

We don’t need to be indpendent to create our own currency we can just copy what the Italians are doing

Italy is experimenting with giving tax-cuts to its citizens in exchange for public services?such as pulling weeds and cutting grass. Wow. What an amazing idea! The government issues a tax credit, and uses it to pay a citizen in exchange for the citizen’s services to the government. The government could even make this arrangement more formal by printing the tax credits on pieces of paper called “LIRIES” (or something like that) and paying for the weed-whacking services with this “cash.” That way the citizen who’s earned the “LIRIES” has the option of using them as payment to another citizen (who’d also like a tax-cut) for, say, a bag of potatoes. So, the first citizen pulls some weeds, gets paid in “cash” and then uses the “cash” to buy her dinner. If you thought about it, you could possibly run an entire economy in this fashion. The only thing you’d have to worry about, of course, is that the government might run out of the tax-credits it needs to pay the citizens to do the work! If that happened, where could the government possibly get more tax-credits? Could it collect tax-credits as “taxes”? Could it borrow them from all the street-sweepers and weed-whackers who’ve earned them? (In which case it would have to pay “tax-credit interest”?which just seems to exacerbate the problem!) Hmmm. I’m going to have to think about that one. But in the meantime, doesn’t this mean that any Eurozone country has the option to stay IN the Eurozone while at the same time operating its own local economy using its own local “sovereign” currency?

Italy, is now experimenting with paying for public services with tax credits. Presumably, this is happening because Italy doesn’t possess enough Euros to pay its citizens to provide all the goods and services needed to maintain and run the public sector of its social economy. And Italy can’t “create” the additional Euros it needs because that prerogative is the exclusive right of the EU Central Bank which Italy, even as a sovereign member of the EU, has no control over. But, as the news article explains, Italy still needs to have the grass mowed and the weeds pulled in its public gardens. So it has decided (out of desperation, the article implies) to pay the gardeners with tax-credits. The gardeners are willing to do the work in exchange for the government’s tax-credits, because it means the Euros they earn (in other ways) can then be used to purchase goods and services rather than for paying their taxes. So, in practical terms, it is “just like” getting paid in Euros.

This, in fact, is way more interesting than it seems. In fact, it might even be mind-expanding! Here’s why:

Presumably, the tax-credit payments described take the form of notations on the gardeners’ tax account. An hour’s worth of weeding is noted as 15 Euros worth of extinguished taxes. If the gardener has a tax liability of, say, €3750, her taxes would be completely paid after providing 250 hours of weeding and pruning. After that, obviously, she’d have no more incentive to provide any services in exchange for the tax-credits. So the amount of services Italy can obtain in this fashion is directly limited by the amount of tax liabilities it can impose on its citizens.

It would be possible, however, to structure the tax-credit payments in another way which would have a very different outcome. Instead of making the payment as a credit notation on a citizen’s tax account, the Italian government could issue paper tax-credits and pay them to the citizens for their gardening services. To be specific, this would be a piece of “official” paper, signed with an important signature, on which was printed something like the following:

The Sovereign Italian Government promises the bearer of this paper ONE EURO of credit on taxes owed to the Sovereign Italian Government.

This amounts to exactly the same thing as making a direct credit on a citizens’ tax account, but we now have set in motion a curious set of subsequent economic actions: Now, after an hour of weeding, upon receiving her 15 paper tax-credits?for convenience, let’s call them “PTCs” and give them the symbol ??the gardener can choose to do the following. She can put the PTCs under her mattress for safekeeping until the day her taxes must be paid. Or she can use the ?15 to purchase a lasagna dinner at her neighborhood trattoria. The owner of the trattoria is willing to accept the PTCs in exchange for the lasagna, garlic bread, and wine because he, too, has to pay taxes to the Italian government. So, for all practical purposes, receiving the PTCs is just the same as receiving Euros for him as well.

Now we have to ask an important question: Is the amount of services Italy can obtain by issuing and “spending” its paper tax-credits still directly limited by the amount of tax liabilities it can impose on its citizens? In other words, if every Italian citizen theoretically has received enough PTCs to pay their taxes with—either having received them directly from the government for providing public services, or having received them from other citizens in exchange for lasagna dinners—will the citizens’ willingness to exchange real goods and services in exchange for the PTCs come to a halt?

Crucially, the answer is No. This is because the act of “embodying” the tax-credits in exchangeable pieces of paper has given the PTCs a usefulness in addition to their usefulness as tax payments: This additional usefulness, of course, is the ability to use them to buy goods and services from other Italian citizens and businesses. Thus, the number of paper tax-credits in “circulation” could vastly exceed, at any given time, the total actual tax liabilities of the Italian citizenry. The PTCs would continue to be accepted for lasagna dinners, because the Trattoria owners know they can use the PTCs they receive to subsequently buy Italian shoes and motorcycles— in addition to using them to pay their taxes.

It will no doubt have dawned on most every reader that what we’ve just created is “money.” Specifically, we’ve created what is called “fiat money”—which happens to be the kind of money the world has been using now for the past half century (ever since the U.S. formally abandoned the gold-standard in 1971). Having thus conjured a rudimentary image of fiat-money to life we should quickly make some important (and perhaps startling) observations about it.

Observation 1: How does the PTC “currency” come into existence? The sovereign Italian government creates it. Paper tax-credits are not created by Italian banks, nor are they borrowed from China—or even the EU Central Bank. They are printed by the Italian government. Note: PTCs could also be created by the Italian government digitally—that is, with keystrokes that enter numbers in an electronic ledger of account. In either case, the point is ONLY the Italian government has the legal right to create them. Why? Because that is the prerogative of sovereignty and the definition of fiat money.

Observation 2: How many PTCs can the Italian government create and spend? Or, to rephrase the question more precisely, how many times can the Italian government promise to accept one of its paper tax-credits in exchange for a Euro’s worth of taxes owed? The answer is simple: as many times as it wants! It doesn’t matter if all the taxes have been paid in full—it can still issue and spend the promise over and over again. The citizens will continue to accept the promise in exchange for real goods and services for two reasons: first, they know other Italian citizens and businesses will accept the promise as payment for lasagna dinners and, second, they know for sure that taxes due will come around again—and soon.

Observation 3: If (as observation 2 suggests is possible) the Italian government just keeps issuing and spending its paper tax-credits (fiat money) to buy goods and services from its citizens, won’t the number of PTCs in circulation keep growing until, inevitably, the price of things in the Italian economy begins to skyrocket? A lasagna dinner that used to cost ?15 suddenly costs ?150! In other words: Inflation. The answer, of course, is Yes. So what can the Italian government do to keep a lid on the inflationary pressure created by its continued issuing and spending of PTCs? Two things:

The government can continue to collect taxes from the citizens (or, if necessary, even increase the taxes in collects). Taxes will remove PTCs from circulation, reducing the number of them available in the market-place to buy lasagna dinners and Italian shoes. Taxes, then, have a dual virtue in a fiat money system: they continuously reinforce the citizens’ desire to earn the government’s paper tax-credits—and they drain the paper tax-credits out of the market place, helping to keep prices stable.

2. The government can also create special savings accounts that citizens can put their excess PTCs in. The accounts would earn interest (paid by the government with new PTCs)—but the agreement would be that the citizen would leave their “old” PTCs in the account, untouched, for a period of time—say 10 years. This means a large number of PTCs which would otherwise be competing to pay for lasagna dinners would be replaced with a much smaller number of PTCs (the interest payments). The net result will be fewer PTCs buying goods and services in the market-place. If you want, you could call these special savings accounts “government bonds.”

Historical Note: When the U.S. was in the midst of mobilizing to fight WW2 it was issuing and spending historical quantities of U.S. paper tax-credits (fiat dollars) to pay U.S. citizens to build battleships and bombers—and to pay the recruits in its growing army and navy. Inflation was, indeed, starting to become a problem. So what did the government do? Two things: it increased taxes, and it issued War Bonds. It even imposed a requirement that workers take a percentage of their pay in War Bonds. By 1943, inflation was brought back under control.

Observation 3: What happens to the PTCs when they are presented to the Italian government as tax payments? The mind-money framework we learn from early childhood “tells us” that the taxes collected by a national government are what the government then uses to pay for public goods and services. Crucially, however, this IS NOT TRUE with a fiat-money system. Looking at the paper tax-credit system we’ve just described, it’s clear that (by logical necessity) the government FIRST issues and spends the paper tax-credit, then it accepts it back as a tax payment. At that point of taking it back, the tax-credit is of no further use to the government. It is simply cancelled: it becomes a particular citizen’s tax liability with a line drawn through it. If the government needs to spend another paper tax-credit, it simply issues a new one. (It is actually easier and more efficient to issue new tax-credits than to “recycle” old ones.)

Observation 4: Is it logical for a sovereign government to borrow the paper tax-credits it has issued? Please try, for a moment, to wrap your mind around this question! Here is something that ONLY the Italian government can create, and something it can create as many of as it needs, at any time it needs them. Why would it ever want, or need, to “borrow” them from the Italian citizens? It is, therefore, illogical to imagine the Italian government ever being “in debt” to its citizens! The Government Bonds we mentioned previously are not a “debt” the Italian government owes to anyone—they are savings accounts which hold the citizens’ excess PTCs for a specified period time. When the bonds “mature,” the PTCs are simply transferred back to the citizen. In a fiat money system, therefore, it is illogical (and irresponsible) to imagine or describe U.S. Government Bonds as being the government’s “debt”—or, more specifically, to talk about that “debt” as being “unsustainable,” or to suggest the government cannot pay its citizens to undertake and accomplish some important task because it will “increase the government’s debt.”

Having made these observations, it appears the Italian government has stumbled on an actual solution to the “austerity” it has been forced to impose on itself by the European Union. Except we must now confront the fact that the rules of the EU do now ALLOW Italy to issue and spend its own sovereign fiat currency! The only “money” Italy is allowed to use is the Euro—and the only way the Italian government can obtain Euros is either by collecting them as taxes from its citizens, or by borrowing them from the European Central Bank, which has the exclusive prerogative of issuing them. And these methods of obtaining Euros to spend are falling short of what Italy needs to pay its citizens to do. So…. Italy has decided to pay its citizens with tax-credits, and then (why not?) with paper tax-credits. And then, presumably, the EU says, “Whoa, hold on here! It looks like you are printing your own money, which is not allowed by our rules!”

We could then proceed to an International Court in which Italy claims it isn’t breaking the EU rules because it isn’t printing “money” but is simply issuing tax-credits. The EU would then have to argue that “tax-credits” are, in fact, what “money” is! In making that argument, it would be forced to explain everything we’ve just explained which would, in turn, reveal and establish not only the absurdity of the Eurozone monetary system, but also that the whole world (including the U.S.) is misunderstanding and mismanaging its money system—and unnecessarily making a vast majority of the world’s citizenry miserable in the process.

Inflation is a none issue because the job guarentee replaces the job of the automatic stabilisers.

If you really want to understand how a job guarentee would work in reality then you have pour a cup of tea and read this economic paper that is currently working its way through the European Parliament.

‘Maximizing Currency Stability in a Market Economy’ that Warren Mosler co authored with Professor Damiano Silipo.

link to docs.google.com

It is superb !

The real issue is understanding the difference between effective demand and aggregate demand.

Here’s an anology I like to use.

The problem of correctly watering my garden.

So let’s start in a depression era, and assume I’ve been away from home for a few days and it’s been really hot and sunny (in Manchester no less!). All my plants are dry and gasping for water, so I can whack the sprinkler on across the whole garden, immediately providing a much needed boost in aggregate water levels.

However, as I get near to the point of correctly watering all the plants, some start to saturate and waterlog. In some perfect theoretical construct of a garden, this would not occur – a combination of gravity and osmosis would ensure that as long as the aggregate volume of water was correct, water would disperse from the overwatered areas to the dry areas and everything would get just what it needs.

Unfortunately in the real world, this won’t happen. Some parts of my garden drain much better than others (damn Cheshire clay), some dry quicker depending how much shade they have, while some of my plants are much more susceptible to drying out than others – my tomatoes need water every day while fruiting, whereas the potatoes can survive days without.

The mainstream obsesses over the problem of waterlogging, and determines that it is vital that I turn the sprinkler off the second I sense any plant getting too much water. It posits that unfortunately there is a necessary trade-off between that and some plants dying of too little water, and suggests that in this scenario, any specific interventions I make in the garden will lead to disaster, and all I can do is encourage flexibility in the vegetable market.

Perhaps I can retrain my tomatoes to behave more like potatoes, or suggest they move from their nice sunny spot by the fence, to the shady spot behind the runner beans where there’s no shortage of water.

Meanwhile, academic vegeconomists all over the world spend thousands of fruitless hours devising ever more complex models to compute the absolute amount of water I should use, taking in to account their predictions of the weather (which they can never get right), the mix of vegetables (which changes from year to year and depends on the random germination of seeds – which they never get right) and the composition of the soil (which depends on the compost I’ve used this year – which they never get right). Despite the complexity of these models, all they ever come up with a slight variations as to how much I should leave the sprinkler tap on.

After that, my poor old tomatoes are left to their own devices. C’mon, I’ve incentivised you to be a potato!

But the targeted demand approach says we can do much better than that. It deals with the fact tomatoes are and always will be tomatoes and need the sunny patch by the fence to grow.

It still uses the sprinkler, and set at a level where waterlogging shouldn’t occur. But then rather than worrying about measuring the amount of water used, and comparing this to some notional target, it checks each plant individually to see if is getting enough water. If it isn’t, it tells me to pick up the watering can, and specifically water that plant. Happy tomatoes!

What’s more, if for any reason the run-off from my specific watering flows elsewhere in the garden, causing too much water in aggregate and I notice any saturation, I can always turn the sprinkler down a notch, safe in the knowledge if some other plants now lack water as a result, my targeting watering can will deal with the situation. Happy broad beans!

What’s more, because my garden is now much more stable, my vegetable growing is at maximum productive output and I’ve discovered making specific interventions in the garden isn’t the disaster the mainstream assured me it would be, and I can consider longer term structural changes. Perhaps building a run-off towards the tomatoes so they’re less likely to require the watering can intervention, or improving the drainage by the rhubarb so they won’t waterlog so quickly.

And of course, the garden never reaches a permanently stable equilibrium – there’ll always be jobs to do, and I’ll always need the watering can occasionally – but hey, it’s a lot better than the mainstream system and it gets me out the house.

Aggregate demand is a curve. Effective demand is a point on that curve where it intersects current aggregate supply. As you push for higher effective demand, it creates more supply until you become supply limited. That is the effective demand limit.

We’re always at effective demand, but not necessarily at the effective demand limit. A Job Guarantee adds extra supply of public goods as well as extra demand, which shifts the limit upwards because it is not constrained by profit optimisation.

Effective demand is the point D on the aggregate demand curve where it is intersected by aggregate supply. But the supply curve is an indication of preference, not a mechanism to force demand where it needs to be. So there may be potential supply for which there is no demand. The classic one being labour.

So just increasing demand isn’t enough. It has to be demand for which there can feasibly be a supply. In the labour market that means creating jobs for the people as they are where they are.

If you demand 1,000 doctors when all you have are care workers, then you’re not going to improve matters one jot. If you demand doctors in Cornwall, when the spare ones all want to live in London then you’re not going to help anything.

You have to manage both curves to get the dynamics to move them where you want them to go. They won’t shift all the way naturally.

Six minute gap dh dude.

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Nice script.

geeo @ 02:03,

I rather liked his first one @ 01:45. I found it quite illuminating, even if it didn’t in the end explain why several governments through the ages have nevertheless ended up presiding over periods of gross inflation and real economic collapse. People (and the governments which they necessarily populate) respond to more factors than pure economic theory.

His second epistle was a little too artificial an analogy for me, alas. If I understood it even a little, it seemed in the end to depend on intervention at a micromanagement level to function, and therein may, I suspect, lie its Achilles heel.

But it’s late.

(And I fear none of it will motivate anyone new to vote “yes” either…)

Annie did it on the magic number too.

I bequeath thee a mini-Wing:

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@ Geeo

The kid gloves approach simply doesn’t work.

Here, we are all these years later still trying to get independence because 90% of Scotland still believes taxes fund government spending and we can run out of £’s.

patronising as ever ?

I would replace patronising with ANGRY !

Unless of course you want to stay wrapped up in cotton wool and remain a currency slave to London ? I can treat you like egg shells if you like ? if that’s what you want ?

Apologies if this has been posted earlier…

“Uk should SUPPORT Catalan independence” says former uk diplomat !!

UK should support Catalonia independence, says former diplomat link to rt.com

@ Robert J. Sutherland

explain why several governments through the ages have nevertheless ended up presiding over periods of gross inflation and real economic collapse.

Very simple they borrowed in a different currency most of the time which is something you never do if you have your own currency.

As for the countries with high inflation I can explain 2 Zimbabwe and the Weimar Republic. The two the fiscal conservatives throw about all the time.

Maybe this inflation thing is harder to get going than it looks? And what did go on in the German Wiemar republic, where if you parked a wheelbarrow full of money thieves would take the wheelbarrow and leave the money? Turns out it was those pesky war reparations that caused government deficit spending to soar to something like 50% of GDP annually, with most of that whopping deficit spending used to sell the German currency and buy foreign currency to pay their war reparations.

As expected, that drove their currency down the rat hole in short order, and kept driving it down, causing that famous bout of hyper inflation that didn’t end until that policy ended. And when all that ended and policy changed the inflation stopped dead in its tracks. In one day.

So how about Zimbabwe? Turns out they had a tad of civil unrest that dropped their productive capacity by about 80%, but government spending stayed high and too much spending power with too few goods and services for sale drove prices through the roof. Not to mention rumors of insiders using the local currency to buy foreign currencies for personal gain (sound familiar). They gave all the productive farms to the soldiers who had no idea how to farm and farming collapsed but they were still spending the same.

Applying this to the US to replicate the Wiemar inflation Congress would have to increase the deficit to about $8 trillion a year and then sell those dollars continuously in the market place, using them to buy the likes of yen, euro, and pounds. And replicating Zimbabwe would mean some kind of disaster that wiped out 80% of the US real productive capacity and then continuing to spend federal dollars as if that never happened.

China gives us an interesting contemporary data point to consider. Deficit spending in China has been running over 20% per year when you include state lending to state owned enterprises, local governments, and other entities where repayment isn’t a factor, making that lending, for all practical purposes, pretty much the same as deficit spending. The only time the US deficit spending got that high, with pretty much the same growth rates, was during World War II. And while considered high, China’s inflation seems to have peaked at about 6%, a far cry form hyper inflation, also, interestingly, much like the US during World War II. And note during World War II, the Fed was entirely accommodative, much like the the Fed is today, buying Treasury securities to keep long term rates low.

What all this tells me is that run away inflation, whatever that might mean, isn’t something hiding around every corner waiting to pounce. In fact, it takes a lot of work to get there.

Japan, the US and the UK have spent gazillions trying to hit the 2% inflation target rate for decades now.

@AZ

It allows them to circumvent the 3% rule and the austerity that has been imposed on them. That’s the whole point.

@ Derek

I feel in that last response that you’ve overlooked the shrinking tax returns such a system must produce. That suggests the following year there will be even more people earning IOUs, and that phenomenon repeating year after year.

I should point out here that Italy recently reduced its national rate of corporate tax a whopping 3.5%, from 27.5% to 24% (with local corporate tax unchanged @ 3.9%). I’d politely suggest to them that they’re losing out on tax revenue in two ways. While I understand the motivations for CT reduction, I disagree with them.

@ Geeo

The SNP have been both stupid and bad. Let’s face it. It has only taken them 80 odd years to work out the only way independence will work is if we float our own currency and create our own central bank.

We approached Alex to help him with the currency question.

We being the UK MMT group and Professor Bill Mitchell from Australia. We never heard anything back and you saw how that went. It was a disaster we would have had Alistar darling crying. We have people at St Andrews, Cardiff and Leeds university. People from all walks of life.

We are on the verge of setting up MMT groups in England, Wales, Northern Ireland and Scotland It’s all being decided the best way to do it as we speak. At Univesrity College London last night. We’ve been on renegade inc.

We work closely with Stephanie Kelton who was Bernie Sanders economic advisor and on the US budget commitee and most of the US MMT group.

Dirk Ehnts from the Bard College in Berlin is making huge strides to get the truth out there.

They are all making great strides especially in the US and breaking into the mainstream media and they have a huge following because people are learning the truth how the monetary system really works.

MMT group in Italy is also getting bigger by the day.

Labour have started their own MMT group as Bill was at their conference. We’ve presented at a few Labour meetings around the London area.

Labour are really starting to run with the truth and starting to understand it. The SNP are oblivious to it all.

If you want to help start the Scotland MMT group then get involved with the UK MMT group.

You can join via a link at the bottom of this article

link to medium.com

@AZ

I think you are missing the crux of the article.

2 points

a)What the idea is trying to reveal is the fact that tax-credits are money! The U.K. pound is a tax credit good for the cancellation of one £’s worth of U.K. taxes. When the tax-credits are embodied as a “legal tender” paper currency?and subsequently in digital form as well?citizens can then use them to pay for things other than taxes.

Even if a citizen owes zero taxes to the sovereign government, that citizen can still use the paper tax-credits to buy the same lasagna dinner as he could if he did owe taxes. So all citizens have the same incentive to earn the paper tax-credits (money) whether they owe taxes or not.

b) Since no tax is levied on TC’s, the tax savings makes them an attractive alternative to Euros.

From an accounting perspective consider the business selling the lasagna dinner – on tallying the books for income tax assessment TC’s received through lasagna sales do not count as income. Given the costs of lasagna production remain accounted for in euros, the lasagna providing business will record a net EU loss on TC sales transactions, thus a (welcome) reduced income tax liability – and an incentive to buy supplies ‘local’.

From a business operation point of view, pay for stock/inventory in euros, sell in TC’s – pay minimal income tax, but live well on the ‘black’ economy. Carried to an extreme conclusion, no-one would need euros except to import necessities from other EU ‘states’.

Voila – one’s own domestic currency – now, as you suggest, for some ‘domestic’ inflation and corruption control they might just need an accounting system that flies below the EU currency accounting radar.

Perhaps an expiry date on the TC’s to expedite circulation/prevent accumulation.

Obviousley. the EU will clamp down on it and try and make it illegal and say italy is printing their own money. Because of the lost tax revenue and extra spending as they’ll smash the growth and stabilty pact.

However, then what an oppertunity italy has to show the rest of the country what a con job the Euro actually is. Then they’ll leave the Eurozone.

Or if we implemented the same thing here we could show what a farce the £ is and how it keeps us a currency slaves.

@DH
I forgot to say, try the links, they don’t work, which presumably means the whole idea didn’t work either. The idea came up 11 years ago.

@ yesindyref2

I’d love to do it.

I’ve apporached Robin Macalpine many a time. He’s just not interested.

He dosen’t get it. MMT goes against everything he was ever taught because he was taught that we still use a gold standard and still use fixed exchange rates. What students get taught now at Oxbridge and Harvard etc.

It’s like asking him to give up his lifetime of work.

He’s went with Ricahrd Murphy instead. We taught Richard MMT which he now uses. Bill schooled Richard on tax at a meeting in London and it is Richard who has wrote a book about tax. He wasn’t happy.

If you put Bill Mitchell Richard Murphy into youtube you can watch the whole debate. Ann Petifor was there as well.

I don’t have letters after my name which could be the problem when it comes to events like that in Edinburgh. It gives the speaker more authority.

I work in a bookies in Glasgow but could go toe to toe with most of them. I’m all self taught and it has taken me 6 years to get the understanding I have now.

Bill give me permission to use his weekend quizes to teach people.

link to bilbo.economicoutlook.net

I asked Rev If I could do a weekend quiz on here. He never got back to me.

Bill’s economic blog has a HUGE following and was voted one of the best last year worldwide.

He gives me permission to use his quizes on here and REV did not get back to me.

I mean c’mon what’s that all about ??

I’ve gave him Stephanie Kelton video’s to put up as a guest post. Heard nothing back.

REV would have voted for Bernie if he lived in the US.

He’s going to end up backing the wrong horse. Time will have passed him by. MMT is changing economic thinking world wide.

Stephanie came to London last year and got the bank of England to introduce the sectoral balances approach. Wynn Godly and Mark Lavoie came up with it at Cambridge before Thatcher closed the Cambridge economics department down.

Wynn ended up teaching at the Levy institute that teaches MMT in the US.

@ yesindyref2

MMT is what is, not what might be.

link to bilbo.economicoutlook.net

It’s not a theory it describes how the monetary system is set up. Nothing more, nothing less then from that it debunks the lies and framing and propaganda the fiscal conservatives have used for the last 40 years to hide the truth.

Most people knew how it worked it’s just after we came off the gold standard nobody updated the economic textbooks.

And the fiscal conservatives have used that to their advantage ever since.

@ yesindyref2

90% of the population believe the government finances operates like a household budget. As long as that continues the Tories will keep winning elections.

Once we get set up in earnest, we are going to change that.

REV should have been chipping away at that years ago. There’s way too much time attacking Labour and the Tories about things that don’t really matter on here.

Debunk the economic basics that the fiscal conservatives have used for 40 years and they’ll be finished off for along time to come. Everything Labour and the Tories do flows from those lies.

If REV has been debunking that when he started. When it came to the currency question during the referendum debate everybody would have been on board with the correct solution.

Anyways, bedtime. If I can sleep I have achilles tendanitis.

Catch ye.

@Derek Henry
Yes, me too (bedtime that is), nite nite.

Rev’s blog though is mostly about media, though he has had some articles from other contributors. It’s a tricky one, the likes of Bella or commonspace might be interested, but then they have their own political nuances.

What would help to get Rev interested is some nudging from those on his twitter feed you see every so often, maybe if you check that out and contact one or two of them. And another thing to do is to do a wordpress blog – they’re easy, and if you get stuck, post your problem on off-topic. Then you can do an article and just do a link to it, and hope someone tweets it on Rev’s twitter thing!

Have our Gish Gallopers evolved into:

Jackie Baillie Gallopers ? 🙂

@ Derek Henry at 3:58am ………… “We approached Alex to help with the currency question… We never heard anything back…”

Didn’t Alex have Joseph Stiglitz (and others) advising him? Isn’t he a world expert? Don’t you rate him at all?

And getting back to basics for people like me, (background in nursing, teaching, sociology and psychology) with little knowledge of economics, could you let me (us) know what you think of the GERS figures / Fraser of Allander economists?

@Petra
My feeling without understanding it that much, is that MMT could make GERS as it stands totally irrelevant. Which would, from a different angle, be the same as Richard Murphy’s view.

Apparently Stiglitz did consider it, but stuck to the “straight and narrow” instead. Which to be honest was probably the correct decision for Indy Ref 1, there was too much else for people to take in. Same as our own currency, right enough …

@ yesindyref2 at 6:50am …. “GERS”

Thanks for that. And as you say in your next post, “If it is as it is (what we’ve got now) why bother finding out about it, as there’s clearly nothing needs to be done, no changes in policy needed and no help. Which for people interested in change rather than theory, is an off-putter.”

And that’s it in a nutshell for me yesindyref2, if I’m reading you properly.

As already mentioned I don’t have much of a clue about economics other than what I HAD to study in relation to Sociology. It was the only part of the course that bored me witless and I’m left with nothing more in my head now than the names of economic models such as Keynesianism, Monetarism and Marxism.

And to be honest I think that the vast majority of the people living in Scotland know as little (or as much, lol) as me. If we can set up a Central Bank, have our own currency and MORE than anything demolish the GERS myth that should do it. Add to that say comparing Scotland to successful countries with similar sized populations, preferably with less resources than we have, should do the trick.

People aren’t interested in theories. They want facts. They just want the sums to add up, imo. To know that we can afford to pay pensions, run our NHS and so on and it looks as though Nicola (her economists) has been working on that. Maybe I’m being too simplistic, but that’s how I see it.

link to itisintruthnotforglory.wordpress.com

Devil in the detail?
link to instituteforgovernment.org.uk

link to indyref2.scot

Girl denied passport should have one “by the end of the week”
link to archive.is

link to uk.businessinsider.com

EU’s Tusk expects no breakthrough on Brexit at summit
link to archive.is

Judy Asks: Does May Need Merkel for a Brexit Deal?
link to carnegieeurope.eu

link to bloomberg.com

Carles Puigdemont has until 10:00am today to renounce his plans for Independence. If not Rajoy will seemingly implement Article 155 and transfer powers from Barcelona to Madrid.

And what then? Is Rajoy going to have Puigdemont arrested? Will people take to the streets? It’s not looking good. Is there no one out there willing to help them and put a stop to this? Absolutely hellish to say the least.

Ronnie’s missing link:-

link to thenational.scot

May is touting a deal for EU residents, nothing on paper as far as I know, definitely nothing signed. Would the EU take at her word?
I rather doubt it.

Also no hint of sorting the reciprocal a health agreements for expats living abroad. Many who moved abroad, sold up here to create a better life, mostly in retirement.

House prices across areas that are popular with Brits, particularly in France have fallen dramatically which means they may be forced to sell at a substantial loss, with no guarantee they will be able to find a home in a reasonable area for them on their reluctant return.

Many will be badly financially burned due to this Tory mess, and they do not seem too concerned about the damage to these people.
Shame on them. Tories that are only concerned about their own pockets, nothing new there.

@ Macart

Well well, I can hardly wait for Prof Tompkins’s comment on this. If I recall he spent quite a lot of time on twitter sneering. Seems to be a unionist trait sneering.

@ Les

Twitter thread on the letter to EU citizens

link to twitter.com

Guardian story archived

link to archive.is

Great links Nana in particular Indyref2/Democracy, InstituteforGovernment and Bloombergs. Then we see that as veterans as suffering terribly, starving in fact, Tory parasites are charging us for lolling in their baths or using their own companies to set up their websites.

The good news of course is that Angus MacNeil has managed to get a passport for that wee girl, fantastic for her and her grandparents, and Theresa May is going to get a boot up the backside.

Well that’s me got the news for the day (the only place to get it other than the National/SH), read over my breakfast, now time to head out.

@ skintybroko at 8:35am …

I’m in a rush SB, but if you check out the Commons Library you’ll find the info there.

@ Macart

Sadly the answer to that is No. I live in hope that maybe some day soon………..

A few more links. I’m spoiling you lol

Scots haggis exports to Canada to resume after 46 years
link to archive.is

link to scotgoespop.blogspot.co.uk

link to eureferendum.com

link to thenation.com

North Sea oil and gas costs to double if Brexit talks fail: link to nakedcapitalism.com

So not only have they thrown away 50 years of eggs the golden goose laid, they now want to shoot the goose.

As always Nana, thanks for the links.
They go down well with a coffee before starting work.

Sorry Liz Rannoch, missed your post.