The notion of taxation as a counterweight to spending through creation of money is very interesting. If things are as expansive as MMT might suggest, in terms of creative approaches with taxation, for example, it makes the current neo-feudalism of fear, instability and scarcity all the more sad.
I knew someone who worked for a Federal Reserve bank. He says for the government to create money all they have to do is make an entry in a computer. Taxes has nothing to do with it.
A great, and concise, explanation of MMT. I'm also an advocate after reading Reclaiming the State by Mitchell and fazi. It's a pity that none of our political parties are brave enough to explode the myth on tax and spend. That said, the Tories won't because the class war of austerity is in their DNA.
Great channel. This is the first time I managed to understand MMT. Not certain I am ‘sold’ on it but interesting to ponder as we see how economic activities play out in time. I find Richard extremely easy to follow which shows that a good explanation need not be complicated.
The more money you create... the more money is competing for domestic products... so the price goes up... (supply and demand)... The less your money buys domestically, the lower it's exchange rate becomes internationally... Things you import, like oil, which is priced in $, becomes more expensive in £'s... Since oil is needed for domestic production, inflation enters the domestic market, with predictable results... So... MMT is a' loan' to oil the wheels of the economy, to create wealth... When you pay the loan back, the remaining surplus is profit... and the system works... If you don't pay the 'loan' back... and you keep getting more 'loans'... eventually, your £'s are worthless to exchange for imports in $... ... and your import driven economy collapses... ... but your country isn't bankrupt... No, it just can't afford to import the oil, to make the plastic film, to make the banknotes! (or import food etc)... Even Douglas Adams understood that... re: use leaves as currency, and everybody is a millionaire... until the trees die!... 🎄😅
When I was a young person still in high school, the locker room of our gymnasium had the following message on a sign at the entrance: "Good, better, best; may we never rest until our 'good' is 'better' and our 'better' 'best'. As a college student working on master degree, I chose to write on the history of monetary systems and monetary reforms as my final paper. History and my contemporary observations convinced me the existing system of monetary creation and management was a fundamental cause of market and governmental instabilities. Only one brief period during the last four centuries did a model of monetary honesty exist. This occurred with the establishment in 1609 of the Bank of Amsterdam as a deposit bank, taking in gold and silver coinage and issuing receipts to depositors for their money. To the extent the bank earned fees for its services, the bank could also make loans. The Bank of Amsterdam's directors succumbed to the practice of issuance bank notes in amounts far exceeding the bank's actual coinage assets. From this point on every bank did likewise. This was and is not "fractional reserve" banking; it was and is criminal fraud. Any hope for a monetary system that results in a gradual reduction in the price of goods as an outcome of production efficiencies ended. Other externalities had to come into play before broad improvements in the quality of life for most people would occur. Absent honest monetary creation, we in the United States have since 1913 authorized the Federal Reserve Banks to print (or create in digital form) Federal Reserve Notes in whatever quantity they decide. These bank notes are the primary form of legal tender used to make purchases, pay for services and pay taxes. The U.S. Treasury gains access by exchanging government securities for the bank notes. In this process, our government incurs debt that must be serviced and, if not retired, refunded again and again. The Federal Reserve could solve the debt problem by purchasing maturing securities from private holders and cancelling the debt. This solution meets the 'good' test. The path to 'better', I believe, is to gradually retire all Federal Reserve Notes and replace them with debt-free currency issued by the U.S. Treasury and spent into the economy either directly or by means of grants to state governments. As the Bank of England is a public-owned bank, perhaps the authority already exists to eliminate debt money in the United Kingdom?
Yeah... while you are playing these silly abstract games, a lot of people are being tortured to death because of a lack of essential services. The books are not people, and debts can and are quietly written off by the banking system. We also have these monetary black holes called corporations who use the system to accumulate wealth for the sake of itself which in turn is used to prop up industries that should disapear from the face of the earth YESTERDAY. The super rich have twisted the monetary system into a stupid game where they suck all the currancy out of the economy using their political power: they are like blood sucking ticks. Who needs them when we have natural disasters to deal with. What is the point of 'honest' monetary creation, when organised crime and the 1% have the financial power to buy out entire governments? People dont create in technolgy to make money, they do so because they love solving problems. We dont need big capital to change the world, because the capital 'cost' of scaling up a production process is ZERO. It does not cost anything for the government to create money to build a factory.
Hi Richard, great videos ! Can you please explain why government uses a third party (the BoE central bank) to create money which then charges interest on that money, instead of (logically, if the State is the CREATOR of money as you say) issuing the money itself and thus not needing to be charged interest on it (as would make more sense to most people). If I am not mistaken, historically, this practice was known as usury and was banned in Christian and Islamic cultures. Thanks in advance!
Key messages: there are constraints (finite limits of employable people and natural resources) on a currency issuing government, but not the monetary constraints that politicians, the media and mainstream economists would have us believe. So, how is the government to pay is a nonsense question. So much, so good, but: ‘Governments operating their own currencies create all money (or banks under government licence). That’s a very important or, and you miss the distinction. The central bank increases financial assets of private entities with no set timescale for a matching liability to be repaid, whereas banks create a financial asset and liability with set term. ‘the government has spent £500 billion it hasn’t got right now.’ You mean, it didn’t have a record of it on the central bank computer until the moment it created it. And it didn’t fund it through QE. It didn't fund it full stop. How can you still not understand QE? MMT doesn’t say, even in principle, that there is no need to tax. Tax is always needed and a Government Job Guarantee Scheme is also fundamental as an automatic stabiliser. It does, correctly, identify that so-called government ‘borrowing’ isn’t required and that, as you allude, the term ‘borrowing’ is a misnomer. Taxation is needed because otherwise ‘Inflation will run out of control’ - this is the, can’t trust the elected politicians’ myth - that for some reason they would keep awarding ever higher wages to public sector workers and contractors. You are correct that the UK is not in the position of Greece or any other Euro member. The EU and ECB have in fact acted as Osborne and the BofE did, in imposing austerity on Spain and Italy and others as a price for ensuring their financial systems didn’t go into meltdown. Greece was not different from Spain and Italy except being subjected to even worse austerity. The regimes of austerity in the UK, Spain, Italy, Greece have not been to their citizens benefit and were entirely unnecessary. The difference for the UK is in the democratic pressure that politicians and in turn the central bank are subject to, which is why the worst of Osborne’s austerity didn’t last very long. But the EU is set up to ensure that citizens of Euro countries can’t exert such democratic pressure.
You are totally wrong when you talk about "Governments operating their own currencies create all money (or banks under government licence).'. That is pure fantasy that contradicts the reality that private banks create most of the money in the economy and they do not get that money from government and are not agents of government. Private banks are creators of new money and create over 90% of all money and do it based on their risk and return profile not at the direction of government. There is also no restriction on their lending or a mandated minimum. They are no more agents of government than any licensed car driver is an agent of government. Your claim that they are some kind of agent is garbage. All of the official money (such as Dollars in the U.S.) in the economy is fiat credit based money created with an equivalent amount of debt. There is no validity in believing that some currency issuing government can create more wealth by creating more money simply because it has not worked yet anywhere. You also say "So, how is the government to pay is a nonsense question. ". Government does Not pay for anything. It collects taxes from others to pay directing the wealth they produce to what government decides is worthy. You seem totally unaware of the fact that government is group of people of no particular skills who are operating is an environment of making decisions that private people are liable to prosecution over if they do the same. So how do you decide that they could know what to spend new money on or what the restrictions of their spending should be.?
Is it the case that the money collected as HMG’s tax receipts is just “disappeared” rather than redistributed through spending departments because HMG is creating new money every year ?
The government is the safest place to save? So those bond holders currently sitting on £millions in unrealised losses and whose financial assets are being eroded away by inflation, do they feel safe?
Really enjoying and learning from these videos, thank you. I’m wondering about the implications of MMT, if the UK were to one day rejoin the EU, and therefore, presumably join the Euro. As UK would no longer have monetary sovereignty, would that put us at risk of Greek style default/bankruptcy that you refer to?
An excellent video - thank you! I want the homeless to be housed, and cared for. That will increase demand for property, which is already in short supply. Until that is increased, how does taxation reduce the demand? A tax on rental income may help but I don't get how MMT resolves that very real problem. I favour UBI + Sales Tax myself, because even the wealthy people have to buy stuff. They can't escape so easily - but they will try, of course. Will that combination ever be viable?
I never realised Mr Murphy voted for Brexit as he just said we can only have MMT if we can print our own money unlike Greece, who cant . Surprised me that .
I don't know how Mr Murphy voted on Brexit but I would like to see a video explaining how UK Government spending will work if and when we become part of the EU, have no opt out from the Euro and so our Government can no longer print money but has to rely on the ECB.
@richardbanner9050 You think the EU will still be there in a few years ? It's only a matter of time before it collapses . It's like a man having 20+ wives and expecting them all to get along with each other and being sensible and spend the same amount of money .
Like any theory it has its limit, what is the safe limit for the government debt and deficits ? we saw recently that the increase of interest rates was asphyxiating the governments because the level of debt is so high, so in case of serious inflation the central banks cannot increase interest rates too much as it will shut down the government. If you look at Argentina, they keep printing money to cover their government spending but they have hyper inflation and the country is getting poorer.
I don't necessarily think this is wrong and I'm willing to accept it, but I'm definitely skeptical. The problem is that debt is a promise to pay, and money is simply a representation of real value created in the economy. In other words, money is just a number in a database that we humans give it to represent the value of some actual good or service in the economy. Thus, an economy built on debt is a lie, and a cover up of a lack of improving amount of value in the economy. This is a problem economists needs to totally and unemotionally figure out, because we don't have time anymore. Governments are spending trillions in additional debt every year.
What about inflation? Housing costs, education, assets, real estates? Why would they inflate in value unless people realise that FIAT currencies are worthless? What about crypto, etc.?
It’s all Government policy choices. By the UK Government with its Central Bank but not the devolved administrations. Austerity is what the Tories and other Neoliberal political parties do anyway but under different names and policies.
It's a fact that all money comes from the central bank. However, money is just a representation of value. Government creates very little value. Private sector people and businesses do. This is how it works in most countries today because it has been proven that government is extremely bad at creating real value. It's like sports. The private economy is the players and coaches, while government is the refs and owners. The real value comes from the players and coaches making the sport valuable. The refs and owners just manage the rules and top level money flows.
Because the use of and definition of the word theory is pretty crap. Whenever we talk in such context its "actually" a matter of fact, but in the context of scientific theory. A conclusion that comes together with evidence and testing that is ongoing. And as such the theory (a collection of evidence) grows as more evidence becomes available.
Because the full story is not being told. Every time they 'create money' the value of the money decreases. These idiots who save by buying bonds are taking money out of the system necessitating more money printing. And more devaluation of the currency.
@@PeaceLandBeer - and we would have become a basket case for decades. Printing £1 million notes, and rebasing our worthless currency. There are many countries that have suffered this way, it destroys productivity and the countries wealth. (Reference Argentina, Zimbabwe, Turkey, & many more)
@phildavey7466 how would the currency be worthless? Not at all. Based on what measure? America has ptinted and splurged trillions on war. Why aren't they printing million dollar notes? Investing in infrastructure, health and science all pays back what you spend on it through productivity. A £1 well invested returns that pound plus in the future.
@mickhills6288 America has global military power, bases in almost 100 countries. If one government decides that the dollar is worthless, America overthrows them. Britain was a military power, we had the power to force others to accept whatever we said. Those days are gone. We now need the city and American private equity to agree to all our fiscal policies and actions or they will do a run against sterling like they did in 1992 with the ERM.
Hi Richard, you say Governments can “spend at will”. I think this is pushing it. They can spend while productivity increases and up until full employment is reached. Beyond this and we get inflation. You do clarify this later in the video. I do have a question: If, through carbon and other taxes, we reduce net consumption in dealing with climate change, presumably we will need to reduce the money the Government invest in the green transformation in order to avoid inflation? I note there will be significant green growth, but the jury is out on which will be larger, reduced consumption of higher carbon products and services or increased consumption of green low carbon products and services.
MMT provides a reason why governments avoid wealth taxes - converting wealth into taxes to be spent into the economy increases money supply - the exact opposite of what MMT says taxes are for.
This guy appears to look at things from the perspective of an accountant rather than an economist. A currency represents a measure of economic 'value' of a resource, product or service. It needs to cross international boundary. Those changes and differences in value is the core of inflation and exchange of goods. Everything he advocates on MMT appears to reside in a bubble. I have no idea who he is but suspect that he is either a Socialist or a Communist certainly not a Capitalist.
@Jesus RUclips just notified me of this reply now... That's all true. But can we just print money endlessly is the real question? If credit goes beyond productivity and people start to believe that the money being created is just a piece of paper or a number in a database, and doesn't represent real value then how will the economic system work? We have to get back to what is the meaning and purpose of money itself. It's just a representation of the real value of goods and services, and specifically proof of value creation.
![Felix "Unfair" | [Stray Kids : SKZ-PLAYER]](http://i.ytimg.com/vi/Oswujxm2Ag0/mqdefault.jpg)
The notion of taxation as a counterweight to spending through creation of money is very interesting. If things are as expansive as MMT might suggest, in terms of creative approaches with taxation, for example, it makes the current neo-feudalism of fear, instability and scarcity all the more sad.
Finally a short and concise explanation of MMT. Cheers!
I knew someone who worked for a Federal Reserve bank. He says for the government to create money all they have to do is make an entry in a computer. Taxes has nothing to do with it.
@@michaelhurley3171 Correct
@@RichardJMurphy thanks for responding, love your videos. Have a great day
Thanks so much, Richard - appreciate you taking the time to educate!
A great, and concise, explanation of MMT. I'm also an advocate after reading Reclaiming the State by Mitchell and fazi. It's a pity that none of our political parties are brave enough to explode the myth on tax and spend. That said, the Tories won't because the class war of austerity is in their DNA.
Great channel. This is the first time I managed to understand MMT. Not certain I am ‘sold’ on it but interesting to ponder as we see how economic activities play out in time. I find Richard extremely easy to follow which shows that a good explanation need not be complicated.
The more money you create... the more money is competing for domestic products... so the price goes up... (supply and demand)...
The less your money buys domestically, the lower it's exchange rate becomes internationally...
Things you import, like oil, which is priced in $, becomes more expensive in £'s...
Since oil is needed for domestic production, inflation enters the domestic market, with predictable results...
So... MMT is a' loan' to oil the wheels of the economy, to create wealth... When you pay the loan back, the remaining surplus is profit... and the system works...
If you don't pay the 'loan' back... and you keep getting more 'loans'... eventually, your £'s are worthless to exchange for imports in $...
... and your import driven economy collapses...
... but your country isn't bankrupt... No, it just can't afford to import the oil, to make the plastic film, to make the banknotes! (or import food etc)...
Even Douglas Adams understood that... re: use leaves as currency, and everybody is a millionaire... until the trees die!... 🎄😅
Richard The MMT creation of money is fine so long as other countries believe in Sterling.
The ECB is in Frankfurt not Berlin
When I was a young person still in high school, the locker room of our gymnasium had the following message on a sign at the entrance: "Good, better, best; may we never rest until our 'good' is 'better' and our 'better' 'best'. As a college student working on master degree, I chose to write on the history of monetary systems and monetary reforms as my final paper. History and my contemporary observations convinced me the existing system of monetary creation and management was a fundamental cause of market and governmental instabilities. Only one brief period during the last four centuries did a model of monetary honesty exist. This occurred with the establishment in 1609 of the Bank of Amsterdam as a deposit bank, taking in gold and silver coinage and issuing receipts to depositors for their money. To the extent the bank earned fees for its services, the bank could also make loans. The Bank of Amsterdam's directors succumbed to the practice of issuance bank notes in amounts far exceeding the bank's actual coinage assets. From this point on every bank did likewise. This was and is not "fractional reserve" banking; it was and is criminal fraud. Any hope for a monetary system that results in a gradual reduction in the price of goods as an outcome of production efficiencies ended. Other externalities had to come into play before broad improvements in the quality of life for most people would occur.
Absent honest monetary creation, we in the United States have since 1913 authorized the Federal Reserve Banks to print (or create in digital form) Federal Reserve Notes in whatever quantity they decide. These bank notes are the primary form of legal tender used to make purchases, pay for services and pay taxes. The U.S. Treasury gains access by exchanging government securities for the bank notes. In this process, our government incurs debt that must be serviced and, if not retired, refunded again and again. The Federal Reserve could solve the debt problem by purchasing maturing securities from private holders and cancelling the debt. This solution meets the 'good' test. The path to 'better', I believe, is to gradually retire all Federal Reserve Notes and replace them with debt-free currency issued by the U.S. Treasury and spent into the economy either directly or by means of grants to state governments. As the Bank of England is a public-owned bank, perhaps the authority already exists to eliminate debt money in the United Kingdom?
Yeah... while you are playing these silly abstract games, a lot of people are being tortured to death because of a lack of essential services. The books are not people, and debts can and are quietly written off by the banking system. We also have these monetary black holes called corporations who use the system to accumulate wealth for the sake of itself which in turn is used to prop up industries that should disapear from the face of the earth YESTERDAY.
The super rich have twisted the monetary system into a stupid game where they suck all the currancy out of the economy using their political power: they are like blood sucking ticks. Who needs them when we have natural disasters to deal with.
What is the point of 'honest' monetary creation, when organised crime and the 1% have the financial power to buy out entire governments?
People dont create in technolgy to make money, they do so because they love solving problems. We dont need big capital to change the world, because the capital 'cost' of scaling up a production process is ZERO. It does not cost anything for the government to create money to build a factory.
Hi Richard, great videos !
Can you please explain why government uses a third party (the BoE central bank) to create money which then charges interest on that money, instead of (logically, if the State is the CREATOR of money as you say) issuing the money itself and thus not needing to be charged interest on it (as would make more sense to most people). If I am not mistaken, historically, this practice was known as usury and was banned in Christian and Islamic cultures.
Thanks in advance!
So why did a tory party under Osborne create austerity, is it just to keep wages down and profits up or is there another reason...anyone plz
Superb! Highly informative whilst short, sharp and to the point. Thank you
Key messages: there are constraints (finite limits of employable people and natural resources) on a currency issuing government, but not the monetary constraints that politicians, the media and mainstream economists would have us believe. So, how is the government to pay is a nonsense question. So much, so good, but:
‘Governments operating their own currencies create all money (or banks under government licence). That’s a very important or, and you miss the distinction. The central bank increases financial assets of private entities with no set timescale for a matching liability to be repaid, whereas banks create a financial asset and liability with set term.
‘the government has spent £500 billion it hasn’t got right now.’ You mean, it didn’t have a record of it on the central bank computer until the moment it created it. And it didn’t fund it through QE. It didn't fund it full stop. How can you still not understand QE?
MMT doesn’t say, even in principle, that there is no need to tax. Tax is always needed and a Government Job Guarantee Scheme is also fundamental as an automatic stabiliser. It does, correctly, identify that so-called government ‘borrowing’ isn’t required and that, as you allude, the term ‘borrowing’ is a misnomer.
Taxation is needed because otherwise ‘Inflation will run out of control’ - this is the, can’t trust the elected politicians’ myth - that for some reason they would keep awarding ever higher wages to public sector workers and contractors.
You are correct that the UK is not in the position of Greece or any other Euro member. The EU and ECB have in fact acted as Osborne and the BofE did, in imposing austerity on Spain and Italy and others as a price for ensuring their financial systems didn’t go into meltdown. Greece was not different from Spain and Italy except being subjected to even worse austerity. The regimes of austerity in the UK, Spain, Italy, Greece have not been to their citizens benefit and were entirely unnecessary. The difference for the UK is in the democratic pressure that politicians and in turn the central bank are subject to, which is why the worst of Osborne’s austerity didn’t last very long. But the EU is set up to ensure that citizens of Euro countries can’t exert such democratic pressure.
Nailed it.
You are totally wrong when you talk about "Governments operating their own currencies create all money (or banks under government licence).'. That is pure fantasy that contradicts the reality that private banks create most of the money in the economy and they do not get that money from government and are not agents of government. Private banks are creators of new money and create over 90% of all money and do it based on their risk and return profile not at the direction of government. There is also no restriction on their lending or a mandated minimum. They are no more agents of government than any licensed car driver is an agent of government. Your claim that they are some kind of agent is garbage.
All of the official money (such as Dollars in the U.S.) in the economy is fiat credit based money created with an equivalent amount of debt.
There is no validity in believing that some currency issuing government can create more wealth by creating more money simply because it has not worked yet anywhere.
You also say "So, how is the government to pay is a nonsense question. ". Government does Not pay for anything. It collects taxes from others to pay directing the wealth they produce to what government decides is worthy.
You seem totally unaware of the fact that government is group of people of no particular skills who are operating is an environment of making decisions that private people are liable to prosecution over if they do the same. So how do you decide that they could know what to spend new money on or what the restrictions of their spending should be.?
Is it the case that the money collected as HMG’s tax receipts is just “disappeared” rather than redistributed through spending departments because HMG is creating new money every year ?
The government is the safest place to save? So those bond holders currently sitting on £millions in unrealised losses and whose financial assets are being eroded away by inflation, do they feel safe?
Really inspiring. Keep up the good work.
Really enjoying and learning from these videos, thank you. I’m wondering about the implications of MMT, if the UK were to one day rejoin the EU, and therefore, presumably join the Euro. As UK would no longer have monetary sovereignty, would that put us at risk of Greek style default/bankruptcy that you refer to?
Great content, thanks Richard
You can go bust, the money has a value dictated by market forces. This ignores literally the complete other half of the system. The markets.
I got adverts with this video - first adverts since watching your videos.
Thats an awesome video! Can you regard some literature, which contains realistic scientific economics. Thank you!
An excellent video - thank you!
I want the homeless to be housed, and cared for. That will increase demand for property, which is already in short supply. Until that is increased, how does taxation reduce the demand? A tax on rental income may help but I don't get how MMT resolves that very real problem.
I favour UBI + Sales Tax myself, because even the wealthy people have to buy stuff. They can't escape so easily - but they will try, of course.
Will that combination ever be viable?
I never realised Mr Murphy voted for Brexit as he just said we can only have MMT if we can print our own money unlike Greece, who cant . Surprised me that .
I don't know how Mr Murphy voted on Brexit but I would like to see a video explaining how UK Government spending will work if and when we become part of the EU, have no opt out from the Euro and so our Government can no longer print money but has to rely on the ECB.
@richardbanner9050
You think the EU will still be there in a few years ? It's only a matter of time before it collapses . It's like a man having 20+ wives and expecting them all to get along with each other and being sensible and spend the same amount of money .
What happens in the Euro zone, where countries share a currency?
Like any theory it has its limit, what is the safe limit for the government debt and deficits ? we saw recently that the increase of interest rates was asphyxiating the governments because the level of debt is so high, so in case of serious inflation the central banks cannot increase interest rates too much as it will shut down the government. If you look at Argentina, they keep printing money to cover their government spending but they have hyper inflation and the country is getting poorer.
Private banks create money when they extend loans, not the government.
I don't necessarily think this is wrong and I'm willing to accept it, but I'm definitely skeptical. The problem is that debt is a promise to pay, and money is simply a representation of real value created in the economy. In other words, money is just a number in a database that we humans give it to represent the value of some actual good or service in the economy.
Thus, an economy built on debt is a lie, and a cover up of a lack of improving amount of value in the economy.
This is a problem economists needs to totally and unemotionally figure out, because we don't have time anymore. Governments are spending trillions in additional debt every year.
How do you lend to s government?
What about inflation? Housing costs, education, assets, real estates? Why would they inflate in value unless people realise that FIAT currencies are worthless? What about crypto, etc.?
Try listening to the video. The theory is that taxation and issuing bonds controls inflation.
It’s all Government policy choices.
By the UK Government with its Central Bank but not the devolved administrations.
Austerity is what the Tories and other Neoliberal political parties do anyway but under different names and policies.
Hi love the videos. Could you do one on inflation?
We have a video on inflation coming soon
It's a fact that all money comes from the central bank. However, money is just a representation of value. Government creates very little value. Private sector people and businesses do. This is how it works in most countries today because it has been proven that government is extremely bad at creating real value.
It's like sports. The private economy is the players and coaches, while government is the refs and owners. The real value comes from the players and coaches making the sport valuable. The refs and owners just manage the rules and top level money flows.
Thank you Richard.
Most of the money is created in the banking system not the central bank.
Why is this theory only a theory? What prevents it being "actuality"?
Because the use of and definition of the word theory is pretty crap. Whenever we talk in such context its "actually" a matter of fact, but in the context of scientific theory.
A conclusion that comes together with evidence and testing that is ongoing. And as such the theory (a collection of evidence) grows as more evidence becomes available.
You can't have properly controlled experiments in economics so you can never get absolute proof therefore everything is a theory.
Bob Murphy sent me here
Until government cannot tax people anymore
Could you create a MMT playlist please? This video is really helpful for understanding how economics work. Thank you!
Why did the UK need an IMF loan in 1976. Surely it could have just ramped up money printing?
Because the full story is not being told. Every time they 'create money' the value of the money decreases.
These idiots who save by buying bonds are taking money out of the system necessitating more money printing.
And more devaluation of the currency.
Yes, it could have.
@@PeaceLandBeer - and we would have become a basket case for decades. Printing £1 million notes, and rebasing our worthless currency.
There are many countries that have suffered this way, it destroys productivity and the countries wealth.
(Reference Argentina, Zimbabwe, Turkey, & many more)
@phildavey7466 how would the currency be worthless? Not at all. Based on what measure? America has ptinted and splurged trillions on war. Why aren't they printing million dollar notes? Investing in infrastructure, health and science all pays back what you spend on it through productivity. A £1 well invested returns that pound plus in the future.
@mickhills6288 America has global military power, bases in almost 100 countries. If one government decides that the dollar is worthless, America overthrows them.
Britain was a military power, we had the power to force others to accept whatever we said. Those days are gone.
We now need the city and American private equity to agree to all our fiscal policies and actions or they will do a run against sterling like they did in 1992 with the ERM.
Hi Richard, you say Governments can “spend at will”. I think this is pushing it. They can spend while productivity increases and up until full employment is reached. Beyond this and we get inflation. You do clarify this later in the video. I do have a question:
If, through carbon and other taxes, we reduce net consumption in dealing with climate change, presumably we will need to reduce the money the Government invest in the green transformation in order to avoid inflation? I note there will be significant green growth, but the jury is out on which will be larger, reduced consumption of higher carbon products and services or increased consumption of green low carbon products and services.
+1
M
Thank you 👍
Stay safe
did not hear too much about your pound and the $.
MMT provides a reason why governments avoid wealth taxes - converting wealth into taxes to be spent into the economy increases money supply - the exact opposite of what MMT says taxes are for.
oof
This guy appears to look at things from the perspective of an accountant rather than an economist.
A currency represents a measure of economic 'value' of a resource, product or service. It needs to cross international boundary. Those changes and differences in value is the core of inflation and exchange of goods.
Everything he advocates on MMT appears to reside in a bubble. I have no idea who he is but suspect that he is either a Socialist or a Communist certainly not a Capitalist.
What about Venezuela, Weimar Republic, Zimbabwe or Argentina? They all had their own currency and all did this, and all collapsed.
@Jesus RUclips just notified me of this reply now...
That's all true. But can we just print money endlessly is the real question? If credit goes beyond productivity and people start to believe that the money being created is just a piece of paper or a number in a database, and doesn't represent real value then how will the economic system work? We have to get back to what is the meaning and purpose of money itself. It's just a representation of the real value of goods and services, and specifically proof of value creation.