Pointless Pain Is What We’re Enduring. And All for the Sake of Accepting That Money is Not a Constraint on Our Potential, and Never Will Be

Yves here. While Richard Murphy’s examples are from the UK, the general point he makes still applies: that “money” constraints on sovereign currency issuer are illusory; what makes it necessary and desirable to cut spending or raise taxes is inflation.

Now readers might ask who the “we” is in the headline. Investors like tight money. The plebes are the losers.

By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK

There is no budget that does not unravel. Rishi Sunak’s has. It’s apparent there is much wrong with it, but the most significant was the issue surrounding nurses pay, which is totemic of the austerity built into the budget, none of which is necessary.

The last year has shown that the argument ‘we cannot afford it’ does not hold true. If there are resources available to use that need to be put to use then the reality is that there is nothing that this country cannot afford.

Money is not scarce. Money is a wholly artificial mechanism created to ensure that the necessary exchanges that put people to work in our economy can take place. That can be done. The money to make this possible can always be created.

And the necessary exchanges are those that fairly reward people. Anyone who thinks that NHS staff only deserve a 1% pay rise are callously indifferent to the effort they have made and and the suffering that they have endured.

To argue that we can pay no more is to ignore the staggering £37bn of waste in NHS track and trace. It is to also ignore the fact that 92% of this year’s deficit has been funded by the Bank of England, as will next year’s too, of which I am certain.

To pretend in that case that money is not available is a straightforward lie. All the money we need to make our economy work is available. There is just a choice to pretend otherwise that prevents people getting fair pay, and imposes austerity.

I accept that creating money this way is inflationary. But it only inflates one thing, and that is the wealth of those already wealthy. It was another political decision, also made in this budget to do nothing about that. There were no steps taken to address inequality.

The corporation tax increases were deferred. Capital gains tax was not increased, and remains a massive creator of injustice. There was no attempt to make those in high earnings pay as much national insurance as those in lower pay.

Council tax remains incredibly unjust, and biased to the rich and against those on low income. Those with investment income continue to pay much less in tax than those who work for a living do, because they do not pay national insurance. An extra tax to correct this was needed.

But none of these political choices were made. Instead it was decided to penalise those working in the NHS. And to penalise those in care, education and other vital services on which we depend as well.

And none of this was necessary. Taxes could, and should, have been increased in the way I have noted to address the issues Bank of England funding of the government creates. But the decision to leave the rich with their riches cannot be used to justify punishing the NHS.

This is all politics. It is politics to bias funding to Tory MP’s seats with extra funding. It is politics to penalise working people on low pay, as most who work for the government are. It is politics to leave the well off with their unearned gains.

And the sad thing is, it works. So strong is this narrative; so embedded is our belief that there are deserving rich people, and undeserving poor people who have to work for the common good, for heaven’s sake, and so sure are we that Eton cares, that apparently we forgive them.

How do I know? Because the Tories have a 13 point poll lead. The gain for them of permitting mixing at Christmas that has unnecessarily killed tens of thousands, and our pathetic gratitude at being potentially allowed out again six months later means we will vote for them.

The masochism within this is unfathomable. ‘Beat us some more’ we appear to be saying. ‘Grind down those who work until there is nothing left but grind for insufficient reward’ is the plea, whilst the wealthy get wealthier.

When will we wake up and appreciate this is all just abuse? That we are all being collectively bullied by an elite who think we can get away without, just as easily as they think they can pay off senior civil servants?

The reality is that we too now need a settlement to compensate us for that abuse. We too need to be paid for the effort made, the contempt suffered, and the indignity endured as a result of the indifference thrown our way. And soon.

I hope soon. Because I can’t see how things can continue like this. Our society is already fragile enough. I worry about how much more it can take. And when I see people – in our government – choose to abuse it further, I worry.

I worry that people cannot survive this. Real, warm blooded, caring, loving people can be broken by this. And that’s what makes me angry. Because this is unnecessary. The money to deliver a decent society exists.

All that we need to make the lives of the vast majority of people in this country is a real understanding of economics, of money, of how it interacts with tax, and how we can use that for the common good.

But no political party seems to get that as yet. And until they do, this unnecessary suffering will continue. And that makes me very angry. Pointless pain is what we’re enduring. And all for the sake of accepting that money is not a constraint on our potential, and never will be.

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  1. PlutoniumKun

    The Tories, as always, know what they are doing. Overwhelmingly, low to mid pay public sector staff in the UK vote Labour or LibDem/Green/SNP/PC. So an act of calculated cruelty to them gets them a bad days headlines, but ultimately doesn’t impact on them electorally so long as they pump money into things their voters, and potential voters do care about. Its possible Sunak miscalculated by pushing too hard, but I doubt it. People absorb that ‘well, hard decisions have to be made’ and congratulate the Tories for doing it. Sunak is astonishingly popular, even with people who should know better, mostly because of his pretty good quick response to the original outbreak and his ability to push the blame for his bad judgement later on onto Johnson).

    But Labour have been pathetic. The ‘look responsible and let the Tories tear themselves apart’ strategy may look sensible to some strategists, but its proving a disaster in reality, because now the ‘opposition’ to the government is the Tory party itself. The Tory party have, partially by accident, partially due to how the media in the UK works, has become both government and opposition, making Labour irrelevant.

    So in the UK they have a government run by a buffoon surrounded by lightweights, that has made an appalling mess of Covid, screwed up Brexit, has destroyed the UK’s standing internationally, and has driven the country into an unnecessary steep recession. But is still incredibly popular.

    On a related point, I’ve noted here in Ireland that variations of the MMT idea is gaining more and more traction among mainstream commentators. Obviously, the discussion is different within the Euro as budgets really do have to be balanced within euro economies. But the idea that Covid costs are not real costs is gaining ground. We can just hope that they are listening in the ordoliberal capitals in Europe. The ECB seems to get it to some extent, but plenty of powerful people don’t (or they do get it, they just don’t want everyone else to get it, if you know what I mean).

    1. Biologist

      You’re right, and that popularity is really the depressing part. There will be no revolt, the Tories are popular, and every turn they use their power and money to get more power and money.

      This article from The New Republic was linked here a couple of weeks ago, it’s worth reading in case you missed it:
      The Sordid Story of the Most Successful Political Party in the World
      How the Tories became unbeatable

      Even if there would be stronger opposition (perhaps Labour going left again – hahaha), the UK is getting increasingly authoritarian. Not just in the places where you expect (human rights anyone?), but in new ways such as the new post-Brexit freeports. These are physically on-shore locations around ports or airports (Liverpool port, East Midlands airport) that for tax purpuses are off-shore. The propaganda as in the linked BBC article wants us to believe it’s just about lowering taxes to attract investment, but I suspect these zones will also be free of pesky things like labour and environmental regulations, and that is their real selling point. It’s hard not to imagine where this can further lead – private mini fiefdoms where normal laws don’t apply and employment conditions make Amazon warehouses look like a socialist paradise.

    2. shtove

      On the real opposition to the Tories – interesting to look into the self-identified roots of the Ultras in 1830, when a party faction opposed to Catholic emancipation and to electoral reform brought down Wellington’s government. While the official opposition was the Whig party, representing cities and industrial capital, the original Ultras were essentially landed capital and sought to maintain the hierarchy formed after the Glorious Revolution – a cycle that their ancestors had opposed, and they had come to accept.

      A curious element in their conservatism was resistance to government austerity – they must have recognized that increased exposure of agricultural labour to market conditions heightened the risk of insurrection, which they were already tasting in the Swing Riots, with the in-the-flesh omen of another deposed French king camped out in Dorset. Here’s the disruption they feared:

      But there is another sort of economy – a mischievous, meddling, and pestilent spirit, that shows itself only at particular periods, and then breaks out with an outrageous and ungovernable frenzy, destroying or overturning everything within its reach; an economy wasteful of its own substance from its anxiety to preserve it – for ever pulling down and building up again – generated out of present circumstances – living only for the present – caring only for the present – and expiring with the emergency of the hour; an economy, in fine, eminently fitted by its nature to be the ally and the minister of faction, but utterly incapable of rendering any beneficial service to the state. From such economy defend us!

      The Ultras miscalculated – the fall of Wellington gave rise to a Whig replacement that went much further than expected – although it did keep this card close to its chest:

      “the reform is an efficient, substantial, anti-democratic, pro-property measure, but it sweeps away rotten boroughs and of course disgusts their proprietors. The main hope therefore of carrying it, is by the voice of the country, thus operating by deciding all wavering votes … The radicals, for which heaven be praised, support us.”

      Today’s Ultras are going for the biggest target in austerity – at least as perceived – the 1% pay rise for NHS workers, and I expect they’ll mark up a public victory. The guys in charge will be content to be seen to be put in their place. The Radicals will remain distracted by the dignity of their own reflection.

      1. Susan the other

        A one percent pay raise is an insult. It’s like flipping the nurses a nickel and saying, Hey, don’t spend it all in one place. It’s insulting. But the best thing about how things change, especially budgets and economies, is that what goes around comes around. And that includes austerity. Austerity will work its way to the rich and they know it. Else why offshore banking? Without a functioning economy-society the elite have nothing. Including no possible future. When rich people howl about inflated currency and demand taxes on the poor and largesse for themselves they are the ones doing all the inflating. By demanding that “money” be defined by some delusional sense of their own meritocracy instead of a working economy. And then they skip off and reinvest that money in more nonsense like the most profitable contraband. That hysterical greed is truly a form of flatulence at the very least. We should call it inflatulence instead of inflation. The word “inflation” is totallly meaningless at this point.

  2. troublemecca

    And this from the place that subsidized 80% of wages during lockdown, with long established, sweeping welfare services… are the Brit plebes ungrateful? Or are the American ones masochistic?

  3. Steve K

    MMT is a bad joke, as eventually those countries using it most aggressively will see their currencies decline in relative value (& buying power). The Pound has been strong the past year or so mainly because UK hasn’t been the worst offender. It is a race to the bottom!


        Euro nations cannot implement MMT because they are not Monetarily Sovereign. That also is why cities, villages, businesses, you, and I cannot implement MMT. We are not Monetarily Sovereign.

        1. liz

          Individual members of the EU cannot implement MMT but the Central European Bank on behalf of all country members could implement it, and in fact has been implementing it to pay for the pandemic jusy like individula other countries.

      2. Massinissa

        In addition to the Euro as mentioned by Rodger, Ecuador can’t use MMT either, because for some reason they use the USD as their main currency.

      1. dummy

        Let me have a go.
        If prosperity and wealth can be created by printing more money, why there is still poverty in the world?
        After all, isn’t every country equipped with a central bank that can print as much money as they want?

        1. eg

          Depends upon what the additional money is used for — if it’s to employ the currently unemployed productively, then everyone is better off.

          1. dummy

            Real wealth is not denominated in dollars, only in what those dollars can buy. Devaluing the dollar doesn’t hurt the wealthy, most of their wealth is in the form of equity and real assets, not dollars.
            The average person’s wealth is measured mostly in his future labor, how much he is going to earn. He will earn less because the Fed devalues his labor through its manipulation of the dollar. He will see this in the rising cost of living without an increase in his pay. Sure perhaps the value of labor will at some point catch up to the devalued dollar, but in the interim he will earn less and will never catch up to what he would have earned otherwise. It doesn’t hurt the wealthy, it hurts the middle class, and will for years to come.

        2. LarryMotuz

          MMT is not about printing more money for just any ole reason.

          When I look at the United States post-Nixon’s abandonment of Bretton Woods, I see that much about ‘printing money’ depends upon 1. who does it; 2. how this money is spent. Unfortunately, the U.S. is characterized by what has been termed ‘Military Keynesianism’ and ‘Quantitative Easing’ {read bail-outs of a private banking sector and corporations unable to redeem their own bonds out of their earnings} rather than productive public sector investments.

    1. eg

      Your macroeconomic ignorance is duly noted, featuring as it does the usual “commodity money” and mercantilist shibboleths.

      MMT describes fiat monetary operations which have been in effect since the Nixon shock and the abandonment of Bretton Woods almost 50 years ago. Do catch up.

      1. Adam Eran

        Yep, the countries implementing MMT are the same ones implementing the law of gravity.

    2. Yves Smith Post author

      Your comment is a bad joke.

      Looks like you didn’t get the memo that the gold standard era is over.

      Any country that is a monetary sovereign is using MMT. Some of them are like Moliere’s Bourgeois Gentilhomme who had to be told he was speaking in prose.

    3. BlakeFelix

      MMT doesn’t say that the countries that are printing the most money won’t see their currency decline in value, it says the opposite of that. The right balance between inflation and deflation and taxes and spending is above my pay grade, but it seems to me that generally countries that are abusing MMT are abusing the economy in other ways as well. MMT in that context seems more like the theory of gravity, where it’s silly to blame Newton for you falling down and hurting yourself.

    4. Schofield

      “MMT is a bad joke, as eventually those countries using it most aggressively will see their currencies decline in relative value (& buying power).”

      Given China has been using MMT for a long time now and grown substantially because of it I can only despair at your arrogant ignorance.

  4. Louis Fyne

    honest question, wouldn’t MMT (in a hypothetical universe run by committed MMTers) in the UK likely will produce vastly different results than MMT in relatively autarkic economics like the USA or Russia?

    The UK relies on imports to one degree or another for virtually every physical good necessary for a first-world living standard (food—even basic foodstuffs like wheat, medicine, spare parts, petrol, apparel, even steel, etc).

    While the UK’s economy tilts to exporting services…education, finance, media, medicinal/technological intellectual property, tourism, etc.

    Would a weaker UK pound encourage more service exports? Or merely increase inflation, particularly for the bottom 50%?

    honest question.

    1. PlutoniumKun

      Because MMT analysts tend to be mostly US or Australian, the applicability of it to smaller, more open economies has not, I think, had the attention thats needed (although to be fair, Richard Murphy has done quite a lot of writing on this). While the UK is a large economy, its also very open (although increasingly less so, thanks to Brexit). So it clearly has much less room to manoeuvre in terms of monetary or fiscal policy than a more autarkical nation. Its not just with MMT and inflation – things like Keynesian multipliers tend to be lower in more open economies as the benefits of fiscal expansion get exported out. The Labour party under Corbyn did put together some very interesting and well thought through MMT-influenced policies, but of course that all got thrown out with Corbyn.

      As Yves has pointed out before, the UK has a particular problem in that it has little spare physical capacity in its economy to take advantage of a weaker currency. In the past, it has been unable to increase output when the pound has been weaker. So a weakening pound is likely to be more inflationary than in many other economies.

      I think that in a general sense, MMT makes sense in all economies in a Covid scenario of a massive drop in output thanks to a black swan event. As Murphy points out, you just need to shove the cash into the economy through monetary means and forget about having to repay it. Inflation just isn’t a problem in those circumstances, and it has the benefit of maintaining productive capacity within the economy. But in more ‘normal’ times, MMT needs to be applied with far more care in an economy like the UK than in a US or China or Russia or EU.

      1. Susan the other

        Kind of wondering here what would happen if all the poor and unemployed/welfare recipients and even the precarious middle class also decided to offshore their money. Why not? Say in every country; say it became a global movement. The neoliberal nightmare should inform us all. Just because a small country doesn’t have spare capacity or idle resources is not really a contraindication for MMT. It is more a factor of having an intrinsic imbalance due to decades if not centuries of grift and graft by those in a position to help themselves. And it creates confused politics. As you mentioned above – the Tories in the UK seem to have also usurped the opposition. Well, to my thinking, that is exactly what Trump did. And it is almost a crazy hope of “If you can’t beat them, join them.” And just exactly where does that leave a functional economy? My first image is a junkyard.

    2. James E Keenan

      Two points:

      First, apropos the applicability of Modern Money Theory to relatively open economies like that of the U.K., see the discussion of the prerequisites for monetary sovereignty as outlined by Robert Hockett and Aaron James in their 2020 book, Money for Nothing. In addition to the well-known requirements (nation must issue its own currency; currency not pegged to metal or any other currency; no borrowing in foreign currencies), Hockett and James add others, including “limited trade dependence in essential goods such as food or energy sources, in order to mitigate foreign exchange and inflation risk ….” (274)

      Second, apropos the applicability of MMT to smaller economies, I am pleased to note that Fanny Pigeaud and Ndongo Samba Sylla’s 2018 book, L’Arme Invisible de la Françafrique: Une Histoire du Franc CFA, has at last been published in English as Africa’s Last Colonial Currency: The CFA Franc Story. (Your search engine will take you either to the publisher or to an internet behemoth where you can order it.)

      Pigeaud and Sylla’s book is a history and analysis of the political economy of the CFA zone: the countries of central and west Africa which were French colonies and which continue to use a common currency imposed on them by the French imperialists in 1945.

      This book is, in my estimation, the best book we have so far in applying the insights of Modern Money Theory to non-monetarily sovereign economies. You have to love any book that starts out by translating Hyman Minsky’s most famous aphorism into French: Tout un chacun peut creér de la monnaie: le problème est de la faire accepter.

      1. HotFlash

        “limited trade dependence in essential goods such as food or energy sources, in order to mitigate foreign exchange and inflation risk ….”

        Again, we/they have choices based on resource constraints. But, as usual, they are political. Most of these choices seem impossible now, but remember Victory Gardens? Alas, such things are not looked upon favourably by Big Ag and the supermarket chains, but my depression-era grandparents grew most of their own food for their very large (by our standards) families. Maternal side, farmers — my mother, born 1923, said that she never even knew there was a depression until she read about it later in high school. Grandpa paid his property taxes by driving snowplow for the county in the winter. Father’s side — my father, born 1922, grew up in a village (5-bedroom two story house built by his father, a shoemaker, and friends/relatives/contractors) on a biggish, maybe 1-2 acre? lot, which was part of a grant to the family for Civil War service. Grandma still had apple, peach, cherry and walnut trees, raspberry and currant bushes when I knew her, and had grown beans, tomatoes, potatoes and all that stuff before the 7 kids got married. Obviously, the kids did a lot of the work, too. Sewing room — made most of the clothes for family, Dad says the kids’ diapers were made of sugar sacks.

        IOW, this is not rocket science. We did this sort of thing for millions of years, omitting the last 200 or so, and can very likely do it again. People explored the whole round world, and conquered a lot of it, without electricity or the internal combustion engine. We’re not all gonna die!

        Unless we as a species continue to act on maximizing shareholder value rather than surviving.

        1. The Rev Kev

          I think that you might be onto something here. I suspect that the lives of our grandchildren as they grow older will resemble the lives of our grandparents from your description. Of course that may mean a lot off decentralization from out of big cities but it can be done – especially if there is no other choice. And it’s not like in the US that there is not the land to do this with.


    It is an excellent article, with one small exception, the words, “I accept that creating money this way is inflationary.”

    Contrary to popular wisdom, inflation is not caused by money creation. All inflations are caused by shortages, most often shortages of food or energy.

    That includes hyperinflations. Consider, for one, the Zimbabwe hyperinflation. The government took farmland from farmers and gave it to non-farmers. The inevitable food shortages caused inflation. The government’s “money-printing” was merely the wrongheaded response to the inflation, not the cause.

    In fact, the hyperinflation could have been cured by more money creation, had that money been used to cure the food shortage, by purchasing food from abroad and distributing it, or by teaching the non-farmers how to farm.

    In the past year, the U.S. has spent an astounding $4 trillion, and soon it will spend another $2 trillion, Yet, there will be no inflation so long as there are no shortages of food, oil, or labor.

    Bottom line: Scarcity, not money creation, causes inflation.

    Economists: Revise your economics textbooks.

      1. Mansoor H. Khan


        Are their any examples currently or in the past in the world where this MMT type thinking as been implemented Successfully?


        1. Yves Smith Post author


          The US never worries about how it’s paying for our next bombing run in the Middle East.

          The US has run Federal deficits on a consistent basis. The time it didn’t, under the Clinton era, the private sector blew monster bubbles to make up for the lack of enough demand economy-wide. Both the Fed and the Bank of England have acknowledge that the government spends directly. Bond issuance is an after-the-fact convention.

          1. Mansoor H. Khan

            I should have clarified myself.

            I meant is anybody doing UBI in the world?


  6. DTK

    In the US, as in the UK, planned inequality and (managed) unequal access to the benefits of the money system are two of the most salient activities of our (US) three government branches.

  7. Patrick

    So are ye telling me the reason conservatives don’t (for example) want to raise the minimum wage is not because of some economic or monetary reason or law but instead just to keep people in their place, i.e. preserve the status quo? Amazing! And I guess them conservatives that “havenot” go along because of that “relative advantage” thing – they are so fixated on keeping those below in their place that they are blind to the upside of a more democratic and social monetary policy. Well I’ll be. Now I git it!

    1. Patrick

      Adding that yes, “fear of inflation” is an applicable “economic or monetary reason or law” that may explain the conservative position.

      1. Anonapet

        Then the MMT School are conservatives since they’d use taxation to curb inflation (by some undisclosed means that does not curb consumption).

        But why should price inflation be a problem so long as:
        1) It does not exceed income gains for ALL citizens;
        2) the means that produce it do not violate equal protection under the law;
        3) it is not extreme?

        The only reason I can think of, and it’s a contemptible one, is that large fiat hoarders* would see their hoards diminish in value in real terms.

        *not to disparage those saving for a home, initial capital formation, legitimate liquidity needs, etc.

        1. Adam Eran

          One point of inflation is to restrain creditors (rhymes with “predators”).

          Meanwhile, “printing” money does not initiate inflation. Most inflation–even hyperinflation–is “cost push,” i.e. related to shortages of goods. In Zimbabwe, the Rhodesian farmers left, and the people to whom Mugabe gave their land were not as productive. Result: a shortage of food requiring imports (balance of payments problem).

          In Weimar Germany, the French army invaded the Ruhr, shutting down Germany’s industrial heartland, making a shortage of goods. They already had a balance of payments problems with WWI reparations.

        2. Patrick

          “Then the MMT School are conservative”

          In my example, no. The MMT School does not invoke inflation FEAR to deny nurses a meaningful wage raise.

          Fear. Of change. Of “others”. Of a level playing field? These pesky conservatives.

          (For the record I did not excel in Father Brennan’s freshman year logic class. And that was fifty years ago!)

        3. Amfortas the hippie


          it was always thus.
          the real Burkean Conservatives behind it all, who…yes…want to keep everyone in their place.
          as i’ve lamented many times, it’s hard to get a read on who the real Bosses are, since they don’t go on TV and brag, generally(various rightwing billionaires in the last 15 years, notwithstanding)
          C.Wright Mills and Domhoff are the only taxonomists of that cohort that i’m aware of…Diannah Johnstone, perhaps.
          Maybe Pepe Escobar when they hide the rum.
          otherwise, every attempt i’ve seen in the last 30 years has had elements of tinfoil and illuminatii/NWO scattered throughout.
          I reckon this is by design, at some level.
          whatever…there exists a demographic cohort of humanity that is exceedingly wealthy, thinks it’s in charge…and mostly really is…and that is truly cosmopolitiain…citizens of the world.
          their most defining feature is that they pretend real hard not to exist…and most of us little people give them no mind, and pretend right along.
          This cohort is not monolithic, nor all powerful…they each are as prone to tunnel vision and stupidity as any of us…but they have better connected steering wheels, and cleaner windshields, and mirrors that work.
          One hopes that, like in FDR Times, they will feel threatened enough by the results of their long term policy preferences to allow a few larger crumbs to fall from the table, so as to mollify the ravening hordes….ere those hordes notice who the real Hostis Humani Generis are.
          But it looks like they’re more likely to double down on the diversionary division of the Bewildered Herd…hence, Cancel Seuss!…and Sinema’s little antoinette dance….and an hundred other mostly unimportant things that happened just yesterday to keep us’n’s riled up about the wrong things.


          for an enlightening memento mori of being right here before….Time is, indeed, cyclical, like the Ancients insisted.

            1. Amfortas the hippie

              no disrespect intended!
              just going off one of his pictures he uses in his byline…like a rogue cia guy in panama, with the beard and the devilish grin and sunglasses and hat.
              I think about Myer’s Dark every time i see it.

              1. Patrick

                And now you have me thinkin’ ‘bout Myer’s Dark. And that’s ok. Been a while.
                Keepin’ an eye out for pirates driving busses with tight steering, clean windshields, and mirrors that work.

  8. JohnB

    With the nurses striking in response to their grossly insulting 1% pay increase, it has left me wondering: Why on earth have nurses and other medical staff everywhere, not been striking already?

    People might put forward the obvious response, that they are too busy dealing with the pandemic – but if nurses etc. went on strike not only for their own direct needs, but to force the governments hand on e.g. implementing proper/effective coronavirus policy – then they can save lives that way, by preventing people becoming patients in the first place.

    An international strike by nurses and medical staff, on these grounds, seems like a very obvious idea – one that would be expected to have come about sooner, given how terribly nurses etc. are being treated everywhere during the pandemic.

  9. DJG, Reality Czar

    This post is an excellent diagnosis of the Anglo-American malady.

    Quoting PlutoniumKun: “So in the UK they have a government run by a buffoon surrounded by lightweights, that has made an appalling mess of Covid, screwed up Brexit, has destroyed the UK’s standing internationally, and has driven the country into an unnecessary steep recession. But is still incredibly popular.”

    In the U S of A, the Monoparty, Aqua Wing plus Mauve Wing, have driven the country into declining life expectancy, a constant petty low-level civil war, greater and greater income / wealth inequality, and visible decline–streets falling in, broken sidewalks, tatty post offices no longer maintained, and so on.

    Yet there is no indication that the Monoparty can be broken up. Meanwhile, minimum wage is maintained at an obscene level, the government quibbles over unemployment benefits (let alone the manipulated unemployment rate), and the stimulus is a guaranteed shambles. Large numbers of Americans have a sense that the whole shebang is “rigged,” yet being American, they want to fall into racial panic rather than breaking down the system of oppression.

    And Joe Manchin, oh-so-conveniently, is president of this mess.

    1. DJG, Reality Czar

      Re: U.S. international standing

      It doesn’t take much to understand that the Iranian government has some eighty years of reasons for not wanting to deal with the U.S. government. Justifiable reasons. Yet the U.S. is still deluded enough to think that it is the center of Empire. Talk about lightweights–the U.S. foreign policy establishment and the “intelligence communit” have produced one disaster after another, with impunity.

  10. Dick Swenson

    As a resident of Joe Manchin’s country, it is pleasing to see that the discussion of the idiocy of what is happening politically in the US and that the discussion of MMT are finally being presented in a rational way.

    The opening of this entire blog hit it on the head – money is not an issue for a sovereign monetary country. The EU could adopt the MMT point-of -view, whereas the individal countries making up the EU cannot. There is only one party in the US, the party of those who have enough money to buy the politicians.

    With the above admitted, NC can now retire; there is nothing more to discuss except how do we get rid of these problems with the governments in power?

      1. Amfortas the hippie

        I’m somewhat terrified to open that document on THAT particular website.
        luckily, i have that very manual in hardcopy in the Library.
        (obtained a large wooden box full of such material at a garage sale, long ago. I paid cash, of course)

  11. Gregory Etchason

    The US already applies MMT to upper income tax cuts and Defense. You never here the words
    “how are you going to pay for it” regarding those two budget items. MMT is political. It’s just a matter of deciding what parts of the economy get the treatment.

    1. John Anthony La Pietra

      And who gets to decide. Maybe that was part of the point of the NEED Act, originally proposed by Dennis Kucinich — and now adapted and adopted as the “Greening the Dollar” plank of the Green Party platform. See Greens for Monetary Reform”.

      1. skippy

        Ugh …. AMI

        “Our nation is in debt because our privatized Federal Reserve monetary system only creates and issues money as debt through loans. The government must constantly borrow more money due to the shortfall in tax revenue, thus steadily increasing the national debt.”

        The Government does not borrow what it creates.

        “All new money will be issued as a debt-free, permanently circulating asset by the federal government. A new Public Monetary Authority will be established under the Department of Treasury to scientifically determine the amount of money that can be safely created for the national economy to avoid inflation or deflation. The Monetary Authority will be empowered with full autonomy and independence to avoid political influence.”

        “A new Public Monetary Authority” – nothing public about it but in name.

        “The Monetary Authority will be empowered with full autonomy and independence to avoid political influence.” – see above E.g. anti democratic w/a side of technocratic [ideology] free market theology.

        “scientifically determine the amount of money that can be safely created” – no such thing as scientifically determining amounts of money in the system E.g. there is no science applicable to the task i.e. its a human thingy …

        There is a Green AET party now – ??????

      2. Mansoor H. Khan

        John Anthony La Pietra,

        Even if the Greens for Monetary Reform is implemented (I am all for it) it is only a start. We will also have to contend with the shadow baking system which will simply fractionalize over the 100% reserve money (green money). Fractionalization creates money and increases the money supply.

        And even after reining in the shadow banking system we will have to deal with any financial institution which uses mis-matched maturities to lend (borrows short and lends long). see https://www.amazon.com/Mystery-Banking-Murray-N-Rothbard/dp/1933550287 for more details.


  12. Carla

    On the Pointless Pain theme, I’m reading Pavlina Tcherneva’s excellent “The Case for a Job Guarantee.” Although I was able to order this little 128-page gem from a local independent bookseller, if you can’t, you can easily get it shipped free to you by http://www.betterworldbooks.com for only $12.95 plus an applicable sales tax.

    Most of the problems in my life have been caused by involuntary unemployment — mine or others’. Now that I am fortunate enough to be retired, most of the problems in my family, neighborhood, city, state and country are caused by… unemployment.

    Ms. Tcherneva’s book, published in 2020, is indeed timely.

  13. Sound of the Suburbs

    The wealth is there and then it’s gone.

    At the end of the 1920s, the US was a ponzi scheme of inflated asset prices.
    The use of neoclassical economics, and the belief in free markets, made them think that inflated asset prices represented real wealth.
    1929 – Wakey, wakey time

    The use of neoclassical economics, and the belief in free markets, made them think that inflated asset prices represented real wealth, but it didn’t.
    It didn’t then, and it doesn’t now.

    Real estate – the wealth is there and then it’s gone.
    1990s – UK, US (S&L), Canada (Toronto), Scandinavia, Japan, Philippines, Thailand
    2000s – Iceland, Dubai, US (2008), Vietnam
    2010s – Ireland, Spain, Greece, India
    Get ready to put Australia, Canada, Norway, Sweden and Hong Kong on the list.
    It’s not real wealth.

    What is real wealth?
    Weimar Germany and Zimbabwe were never short of money.
    Weimar Germany and Zimbabwe had created far too much money compared to the goods and services available within the economy causing hyper-inflation.
    States can just create money, and the last thing you want is too much of the damn stuff in your economy.
    They had made so much money it lost nearly all its value, and they needed wheelbarrows of the stuff to buy anything.
    Money has no intrinsic value; it comes from what it can buy.
    Central bankers actually look at the money supply, and expect it to rise in line with the new goods and services in the economy, as it grows. More goods and services in the economy require more money in the economy.

    Paul Ryan was a typically confused neoliberal and Alan Greenspan had to put him straight.
    Paul Ryan was worried about how the Government would pay for pensions.
    Alan Greenspan told Paul Ryan the Government can create all the money it wants, there is no need to save for pensions.
    What matters is whether the goods and services are there for them to buy with that money.
    That’s where the real wealth in the economy lies.

    They worked it out last time.
    The real wealth creation in the economy is measured by GDP.
    The transfer of existing assets, like stocks and real estate, doesn’t create real wealth and therefore does not add to GDP.
    Real wealth creation involves real work, producing new goods and services in the economy.

    It took them a long time to disentangle the hopelessly confused thinking of neoclassical economics in the 1930s.
    This is the second time around and it has already been done.

    1. Anonapet

      Real wealth creation involves real work, producing new goods and services in the economy. SoS

      So, in your ideal world, if bank “loans” are used to finance the automation that disemploys, say, 80% of workers, with the profits going to the automation owners and not to the disemployed, that’s just fine?

      Where does just distribution of wealth come in, in your ideal world? Or should the newly disemployed just hurry up and die as “useless eaters?”

      Look, the warfare between landlords and tradesmen financed by bankers is interesting but neither class seemed to care about not exploiting others, especially the poor with only* their labor to trade for a living.

      *and that’s a disgrace too involving the theft of the commons, etc.

      1. Sound of the Suburbs

        I am just trying to let you know how the current system should/actually does work.
        When you know that you can modify it successfully.

    2. DTK

      See “Weimar Republic Hyperinflation through a Modern Monetary Theory Lens
      Phil Armstrong and Warren Mosler 2020”
      As the paper explains, a big problem was the lack of currency in circulation.
      Thank You

  14. Greg S

    There is plenty of money out there. It’s just in the wrong hands. The money, when it was newly created, was put into the hands of a few who then put it into the wrong places to do society as a whole any good. A government who has a sovereign currency can create all the money it wants but unless it initially reaches the hands of the many who will put most of it to use going about their lives, only the rich and powerful benefit. We should be taxing the holy hell out of the few who are benefiting beyond belief from this situation. In the past the country as a whole prospered mightily with marginal tax rates as high as 92%. Until our government stops protecting and subsidizing the rich and powerful the current situation will not improve, only get worse.

  15. Lee

    All good. UBI.

    Electronic Voting by ‘The People’. Twice a week. (UBI = Democratic wage)
    Which elites of all colours will hate. It cuts their cloth.
    And lets the people find their own way to a work life, in a coercion free enviroment.
    Bosses have to be nice.
    It prevents false democratic claims that a policy is a good idea.
    Elites will only allow what suits them and enables their world view.

    Thatcher and Blair. A misquote.
    Do not referendise everything it spoils my fun.

    1. skippy

      Direct democracy is a market based public choice theory concept that has neoliberal roots.

      UBI is welfare and not income derived from ownership of ones own labor or production E.g. your right back out into the market place with no rights except some tokens of exchange.

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