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Derek Henry-ren hitzak
(a) Derek Henry, 2017
Derek Henry says:
19 October, 2017
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.
Derek Henry says:
19 October, 2017
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 Richard Murphy1 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.
I asked Rev If I could do a weekend quiz on here. He never got back to me.
(b) Derek Henry, 2018
This thread highlights perfectly why when we get the correct structures in place it so important to have MMT’rs at the helm of both the central bank and the Scottish treasury.
I’ve been a member of the MMT UK group for years now and talk regulary with both Bill Mitchell and Warren Mosler and others. These people know exactly what is needed and how the monetary system operates.
1) The central bank is constitutionally barred from dealing in the foreign exchange markets, and margin trading is banned.
2) Banks can only lend (i.e. create money) for the capital improvement of the country. Since traders then know that there will be no ‘patsy’ in the market and no leverage available to them, they have no effective mechanism to attack anything. They would run out of liquidity. To sell the new currency you have to have them.
3) No need of foreign currency in the central bank. The foreign currency, if any, is held by the government to allow it to make necessary purchases in an emergency. Most importantly it is never used to settle foreign financial liabilities. Any entity that cannot service foreign financial liabilities goes bankrupt and the foreign debts are wiped out by the bankruptcy process. Creditors then get paid in the new currency achieved by selling the assets. The reason for that is straightforward – when you bankrupt a foreign loan you destroy their money.
4) Banks would always be under threat of being placed in administration and their shareholders wiped out if they break the rules regarding the currency. That’s how you keep them in line. They’ll be no socialising the losses in an independent Scotland
5) You tell banks what they are allowed to do, and NOT what they are not allowed to do. When you tell banks what they are not allowed to do, they will always find something you forgot.
6) Bank lending is to be limited to public purpose, which means you cannot use financial assets as collateral. You can’t borrow against financial assets from the member banks. If somebody in the private sector wants to make a loan, that’s okay. But not the banks with insured deposits.
7) And lending is done by credit analysis and not market prices of the assets underneath. You must lend by credit analysis to serve public purpose.
8) You don’t need foreign money. Foreign firms need the custom of the Scottish people because they have nowhere else to sell their stuff. To do that they need to either take the output of Scotland, or hold the new currency. If they don’t then they won’t make the stuff, which creates space for Scotland to make it for itself.
9) There is no need to issue public debt. MMT’rs know Overt money financing is the way to go.
http://bilbo.economicoutlook.net/blog/?p=34071 – Overt Money financing.
10) Introduce a job guarentee.
11) You introduce capital controls on FPI and encourage FDI. Foreign Direct Investment (FDI) where a foreign investor provides funds to a productive enterprise in another nation, from Foreign Portfolio Investment (FPI), which represents foreign investments in a nation’s financial assets which bear no interest in an underlying productive activity in the real sector of the economy.
And you could easily just use the Ways and means account Instead of issuing public debt.
The main contention made to support Gilts is that they manage the risk profile of private pension firms. And it is true that they do. In fact Indexed-Linked Gilts were introduced in 1981 by the Thatcher government specifically to do just that. The rationale behind them is a triumph of monetarism.
Of course what that tells you straightaway is that the private pension industry is incapable of managing the risk profile of pensions on its own within the private sector. It requires permanent government assistance to do so. The question then is what is the purpose of the private pension industry if it can’t deliver the outcome that is required?
A simple pension savings plan at National Savings, along the lines of the Guaranteed Income Bonds and Indexed Linked Savings Certificates, would solve the problem permanently, would be limited to individuals, and would allow them to manage their risk profile as they approach retirement (they would sell out of risky assets and transfer the money to National Savings).
Since it would be only available to individuals and there is no need to pay middlemen, it is clearly far more efficient than the current Gilt issuing system.
The Ways and Means Account is just an infinite overdraft with the Central Bank, and it grows over time to balance the net-savings of the private sector just as the Gilt stock does now.
The Scottish Treasury simply doesn’t issue any Gilts any more. Any funding of private pensions in payment should be done by offering annuities at National Savings, which would also have the neat side effect of ‘confiscating’ net savings and making the deficit go down.
It’s irrelevant what interest Bank Of Scotland charges on the ‘Ways and Means’ account since any profit the BoS makes from it goes back to the treasury anyway. So it can 50% if that gives the necessary level of satisfaction to mainstream economists and the gold standard, fixed exchange rate fiscal conservatives.
What you have is a standard intra-group loan account between a principal entity (Scottish Treasury) and its wholly-owned subsidiary. Normally those sort of loans are interest free for the fairly obvious reason that interest charging is utterly pointless, and they are perpetual for the same reason. Rolling over is totally pointless.
Any term money can then be issued to the commercial banks directly by the Bank of Scotland – up to three month Sterling bills.
If you are a member of a pension scheme then the savings of the current generation, plus the interest on Gilts and any income from the other assets owed pay the pensions of the current generation of pensioners. They are all, in effect, private taxation schemes that circulate money around the system.
You’ll note that when there was a threat of people failing to save in pensions, the government introduced compulsory retirement saving – which is of course a privatised hypothecated tax.
So in essence rather than the assets of a pension scheme being used to purchase Gilts, the assets would be used to purchase an annuity from the government dedicated to an individual. The result is that rather than the private pension receiving Gilt income from the state, to then pass onto the pensioner, the state would cut out the middleman (and their cut) and pay the pensioner directly as an addition to the state pension.
There’s a whole private pension industry out there literally doing absolutely nothing of any real value. They can’t provide a guaranteed income in retirement without state backing in the form of Gilts. So what is exactly the point of having them?
Get rid of the middlemen that take a hunge chunk of our pensions in the form of fees just for putting our money into state backed gilts. Get them do something useful in society instead.
We can treat foreigners ” savings” in the exact same way. Use the Ways and Means Account.
Warren Mosler explains clearly what you do with the commercial banks. The job of a bank is to promote the capital development of the economy. That is its public purpose; the job it is licensed to do. All other activities that conflicts with that purpose must be prevented. For banking to be effective it must be boring — bowler hat boring using the Mosler Mechanics for banking.
Banks can only lend directly to borrowers for capital development purposes (i.e. business credit lines and household loans), and the banks keep those loans on their books until cleared.
Banks must operate on a single balance sheet. No hiving things off into ‘off balance sheet’ subsidiaries to try and hide them.
Banks cannot accept collateral. Collateral is a fixed charge over an asset as an insurance policy and aligns the incentives of banks with those possessing assets, not ideas. It stops banks being capital developers and turns them into pawn shops. That is the wrong alignment of incentives. We want loan officers with skin in the game. Their success should depend upon the success of the borrower. Banks should line up in insolvency with the other unsecured creditors (and importantly behind the remaining preferential creditors — employees).
Depositors are protected 100% at all amounts. A depositor in a commercial bank is holding nothing more than an outsourced central bank account. They are not investors in the bank and should never be treated as such.
Regulation is provided by the bank resolution agency, which is a public body funded entirely by government. There is no charge or levy to the banks for the operation.
The job of the bank resolution agency is to ensure the banks are properly capitalised given their loan book and declare them solvent. If they are not, they take the bank over and resolve it with any excess losses absorbed by government. This aligns the incentives of the regulator. If they get the solvency calculation wrong and the capital buffers exhaust, the regulator stands the cost.
The Central Bank provides unlimited, unsecured lending to regulated banks at zero interest rates. Collateral serves no purpose since the bank has been declared solvent (and therefore there is no reason for it to be illiquid), and collateralised Central Bank lending just shifts the losses to depositors who are protected 100% anyway.
Once you get rid of interbank collateral and funding requirements, you get rid of one of the final excuses for keeping Government Bonds. National Savings annuities for pensions (allowing retiring individuals to receive a secure lifetime income) would get rid of the final one. Transferable instruments that confer government welfare on the owners do not serve the public purpose. Government welfare receipt is a social decision, not a market driven one.
As the asset side is heavily regulated, you want the liability side to be as cheap as possible. Unlimited central bank access ensures liquidity for depositors and allows lending-only banks to arise. It gets rid of the Interbank overnight market and replaces it with central bank overnight accounts. It puts the Central Bank ‘in the bank’ as a major investor — with open access to the commercial bank’s loan book via the work of the solvency regulator.
All levies, liquidity ratios, reserve requirements and the like are eliminated. The cost of maintaining the collateral system is eliminated. The result is loans at a low price with the quantity restricted solely by credit quality. As an economy heats up, credit quality declines and loans become restricted — systemically preventing the Ponzi stages of finance that lead to a Minsky Moment.
Proscribed banks, forced to rely on credit analysis for profit, help prevent a boom by issuing less credit as project quality declines.
You get a natural and steady withdrawal of funding that is far more surgically targeted and responsive to local conditions, than the carpet bombing approach of interest rate adjustment.
This leaves the payment system, which should be as costless as cash and clear just as instantly to eliminate transaction frictions. Whether that should be publicly provided, or remain outsourced to the banks is an open question. Depositors are a cost to the bank and would effectively be a tax, but leaving them with the banks would give them an incentive to get the cost of clearing provision down. It may boil down to a political question that depends upon your view of the effectiveness of public and private provision. I’d lean towards an Open clearing system created by the state and available to all on an open licence. We want one good clearing system like we have one good Linux.
We know exactly what to do to make things work for the people of Scotland.
Bank of Scotland = The new Scottish Central bank.
Did you see Bill’s piece on the Growth Comission ?
Oh Scotland, don’t you dare! – Part 1
Oh Scotland, don’t you dare! – Part 2
I live in Glasgow and I’m working with the Common Weal to get Bill in Scotland early October. I’ve been speaking to Warren about it.
Did you get my piece about interest rates John ?
Doesn’t seem to have posted – Very important.
Interest rates hikes DO NOT fight inflation or strengthen a currency. They do the complete opposite.
That’s why we need people in charge who know what they are doing. This whole assumption that interest rates would spike to strengthen a new Scottish currency is false.
(c) Derek Henry, 2019ko apirilean
The puppet Parliament becomes more pathetic
Posted April 14, 2019
I’ve voted for the SNP all my adult life for the exact same reasons most on here have voted for Brexit. I voted leave in the EU referendum.
Both the success or failure of Brexit or Scotland’s independence would all depend on the economic policies put in place after leaving.
I brought people together and set up MMT Scotland and organised 2 events in May with MMT economists Warren Mosler and Bill Mitchell. Two experts who actually do know how the monetary system, central banks, commercial banks and currencies operate in reality.
However, I will never vote for the SNP again. From day one they have tried to overturn the referendum result and I will never vote for Labour or the Conservatives in the future because of their lies, deceit and treachery. So it looks like the Brexit Party is the only party I can vote for. Does anyone know if there will be a Brexit Party in Scotland ?
Scotland has been a currency slave of London for far too long in the exact same way countries using the Euro are currency slaves to Brussels. The SNP are deluded and beyond stupid wanting to replace one currency slave owner with another.
I’ve fought for Scottish Independence all my adult life and I’m 50 next year and even though staying in the union keeps us as currency slaves to the fiscal Conservatives. Who have no idea whatsoever how the UK monetary system works. I’ll be fighting against the SNP for the rest of my life to stop them taking Scotland into the heart of the EU’s neoliberal globalist sess pit.
The Scottish Growth Comission produced by the SNP was a blue print not for true Scottish independence but for joining the Euro. An independence in name only a soft Indy that would leave Scotland controlled by the bankers and the IMF.
The SNP strategy is to steal remain Labour and Lib Dem voters in Scotland a ” Indy at all costs ” plan. That will get them across the line if there is another Indy vote. Walking Scotland into the EU prison that parade countries around like pets in a zoo.
The Brexit Party has to be set up in Scotland to give the independence voters like myself people who voted to leave in the EU referendum a voice. I will NEVER vote Conservative until they tell the truth that we live in a spend and then tax economy not a tax and then spend one. They have morphed into a lobbying arm for the City Of london, Wall Street and Frankfurt and no longer listen to or respect the Tory grass roots.
Surely the Brexit party wouldn’t be against Scottish Independence because Scottish independence voters are trying to leave London for all the same reasons the UK are trying to leave Brussels. If they are against Scottish independence then I have no one to vote for.
Derek Henry speaking for @MMTScotland. The interview starts at about 36:18
(d) Derek Henry, 2019ko apirilean (segida)
Derek Henry (iruzkinak)
(in Currency Matters, https://bellacaledonia.org.uk/2019/04/26/currency-matters/)
27th April 2019
There are 2 large Elephants in the room that nobody in Scotland wants to talk about and these should also be at the forefront of the debate and tackled head on and MMT economists along with MMT Scotland should be leading this debate as they are the experts. They are teaching mainstream economists every day how the monetary system actually works
1) What to do with the commercial banks and how to set up the central bank.
Independence isn’t enough or our own currency what we do with the commercial banks and how we set up our central bank are just as important. Don’t let anyone tell you they know what to do with both apart from Warren Mosler. Warren is the only person I know of who can set these up the way they need to be.
2) The EU
An independent Scotland has to keep an arms length away from the EU. The current SNP position of trying to steal remain voters and wanting to be at the heart of Europe and join the single market and customs union is economic suicide. It’s a faux independence and Scottish voters have to start to recognise that the Stability and growth Pact, the 6 pack, 2 pack and excessive debt proceedure and EU neoliberal treaties are the foundation stones of the Growth Comission failures. The seeds used that produced everything wrong with the Growth Comission.
It’s no use being open and honest about the failures of the growth comission then completely ignore the adject failures of the Eurozone and the European union. You are not only lying to yourselves but what’s even worse is you are lying to the people of Scotland.
The 22 “advisory groups” that the ECB maintains. They have “517 representatives from 144 different entities: either corporations, companies or associations, mainly trade associations.” All groups but one are completely dominated by financial corporations, and the number of seats taken by the private financial sector is an astonishing 98 per cent (508 out of 517).
What was and still is at work is an Orwellian strategy of rhetorical deception to represent finance and other rentier sectors as being part of the economy, not external to it. This is precisely the strategy that parasites in nature use to deceive their hosts that they are not free riders but part of the host’s own body, deserving careful protection.
1) To reduce economies to debt dependency, to transfer public utilities into creditor hands, and then to create a rent-extracting tollbooth economy.
2) The financial objective is to block governments from writing down debts when bankers and bondholders over-lend.
3)Taken together, these policies create a one-sided freedom for rentiers to create a travesty of the classical “Adam Smith” view of free markets. It is a freedom to reduce the indebted majority to a state of deepening dependency, and to gain wealth by stripping public assets built up over the centuries.
27th April 2019
The idea that the euro has “failed” is dangerously naive.
The euro is doing exactly what the bankers who adopted it – predicted and planned for it to do.
Removing a government’s control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession. It puts monetary policy out of the reach of politicians. Without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.
Currency union is class war by other means and given rise to the SNP and populism everywhere you look.
Bank-friendly writers and lobbyists fostered a myth that the economy needed its investment banks to remain solvent to keep the economy functioning. But many former officials, including Bair, Neil Barofsky, and Reagan Administration budget director David Stockman, rejected the claims that public guarantees for reckless bank loans was needed to protect insured depositors. Retail savings and current accounts were never threatened by the bad gambles that banks made. But this myth had to be promoted in order for Paulson, Geithner Bernanke and other bank protectors to persuade Congress to overrule Bair and make governments pay.
Their aim was to save the banks from being nationalised, and to protect bankers from being prosecuted for fraud or reining in the exorbitant salaries and bonuses they had given themselves. No attempt was made to change the system that had led to the crash.
The return to classical bank policy would deem loans fraudulent and annul debts when creditors do not lend with any reasonable calculation of how the debt can be paid in the normal course of economic life. Loans made without such a calculation should be considered predatory. The natural check on such behavior is to permit mortgage debtors to walk away from their homes, free of the debts attached to them, letting title revert to the banks that over-lent in the first place.
The banks seek to shift responsibility onto the financial victims (“the madness of crowds”). Governments are blamed for running deficits, despite the fact that they result mainly from tax favoritism to the rentiers. Having used FICA paycheck withholding as a ploy to cut progressive tax rates on themselves since the 1980s, the rentiers blame the indebted population for living longer and creating a “retirement problem” by collecting the Social Security and pensions.
The financial mode of conquest against labour and industry is as devastating today as in the Roman Republic’s Social War that marked its transition to Empire in the 1st century BC. It was the dynamics of debt above all that turned the empire into a wasteland, reducing the population to debt bondage and outright slavery. Livy, Plutarch and other Roman historians placed the blame for their epoch’s collapse on creditors.
Tacitus reports the words of the Celtic chieftain Calgacus, c. 83 AD, rousing his troops by describing the empire they were to fight against: Robbers of the world, having by their universal plunder exhausted the land. If the enemy is rich, they are rapacious; if he is poor, they lust for dominion; neither the east nor the west has been able to satisfy them. To robbery, slaughter, plunder, they give the lying name of empire. They make a wasteland and call it peace.
27th April 2019
FREE MOVEMENT OF CAPITAL !
The other elephant in the room that NOBODY wants to talk about. One of the EU four prisons.
Europe’s war against debtor countries was turning into class war, which always ends up being waged on the political battlefield as we’ve all seen with the rise of populism. One IMF analyst noted that the money raised for putting up islands and public buildings, ports and the water system for sale “will barely put a dint in Greece’s now-unpayable public debt.”
Creditors simply hoped to take as much as they could, in the absence of public protests to stop the selloffs. That is why bankers resort to anti-democratic methods in opposing any political power independent of creditor interests. The aim is to centralise financial policy in the hands of “technocrats” drawn from the banking sector – not only Lucas Papademos in Greece, but also Mario Monti in Italy.
The fear is that democratically elected officials will act “irresponsibly,” that is, in the interests of the economy at large rather than catering to the demands of banks and bondholders.
The acquisition of power soon leads to its abuse, to economic and social hubris. By seeking to protect its gains, perpetuate itself and make its wealth hereditary, the emergence of a power elite locks in its position in ways that exclude and injure those below. The wealthy indebt them, shift the tax burden onto the less powerful, and turn governments into an oligarchy.
This has led pro-creditor economists to exclude the history of economic thought from the curriculum. Mainstream economics has become censorially pro-creditor, pro-austerity and anti-government except for insisting on the need for government bailouts of the largest banks and savers. Yet it has captured Congressional policy, universities and the mass media to broadcast a false map of how economies work. So most people see reality as it is written and distorted – by the One Percent. It is a travesty of reality.
Ponzi austerity schemes, just like Ponzi growth schemes, necessitate a constant influx of new capital to support the illusion that bankruptcy has been averted.
The IMF which is nothing more than a lobbying arm for Wall Street, The City Of London and Frankfurt have told Greece they have to run government budget surpluses for the next 50 years. Which in Greek government accounting terms means the non government sector which include Greek households, businesses have to run deficits for the next 50 years. Forcing more Greek households and businesses to take on more debt keeping the bankers happy.
I give them less than a decade before the whole thing implodes again unless they chase the IMF out of Greece. Then the ECB will just threaten to turn off the tap of Euro’s again forcing the Greeks to surrender.
27th April 2019
Wall Street and the City of London and Frankfurt scream for balanced budgets or budget surpluses. So the banks can allocate resources and the banks can be the main issuer of the currency. We don’t want the government to fund public infrastructure. We want it to be privatised in a way that will generate profits for the new owners, along with interest for the bondholders and the banks that fund it; and also, management fees. Most of all, the privatised enterprises should generate capital gains for the stockholders as they jack up prices for hitherto public services.
This idea that governments should not create money from thin air implies that they shouldn’t act like governments. Instead, the de facto government should be Wall Street and the City of london. Instead of governments allocating resources to help the economy grow, the commercial banks should be the allocator of resources – and should starve the government to save the wealthy. Starve the government to a point where it can be drowned in the bathtub and which is what austerity and neoliberalism is really all about.
Allowing the commercial banks to control the money supply they then proceed to privatise the economy, they can turn the whole public sector into a monopoly. They can treat what used to be the government sector as a financial monopoly. Instead of providing free or subsidised schooling, they can make people pay for it to get a college education. They can turn the roads into toll roads. They can charge people for water, and they can charge for what used to be given for free under the old style of Roosevelt capitalism and social democracy.
Which now means a large and increasing % of our wages are paid directly to landlords and the economic rent seekers.
The people of Scotland have to drop this obsession that somehow the EU are left wing and will save them. The people of Scotland have to take a step back and understand you can easily have your own currency thinking you are independent and sovereign but still be fooled into a debtors prison which is no independence at all.
The EU have to be kept at arms length if Scotland ever gains independence or all that would happen is Scotland would be swapping one currency slave owner master for another. Huge swathes of the 60% that voted to remain in the EU are simply oblivious to these facts. They have been fooled to believe the EU are on their side. Choose to ignore what is happening in France, Greece and Italy and HUGE rise of populism across Europe who are people just like them tying to break free from the bankers that now control Europe.
Taken from Common Space
“Kirsty Hughes, Director of the pro-EU Scottish Centre on European Relations (SCER), has argued that Sterlingisation would make EU membership difficult, due to “divergence” with the EU rulebook.
Writing on SCER’s website on Friday, Hughes said: “Scotland would also be unlikely to get any opt-out from the euro, so it would have to commit to eventually joining the euro (although once in the EU, this process could be put off indefinitely). But the currency debate comes to the fore here. If Scotland had kept the pound sterling, but the UK was outside the EU, then Scotland would not be able to demonstrate that it could commit to join the euro at some indefinite future point. Nor – if it took up to a decade to adopt its own currency – could it show that as a member state it would use its independent monetary policy to target price stability and make its exchange rate a ‘matter of common concern’ with other member states (as required by the EU’s Lisbon treaty). So this would be a significant political challenge.”
Kirsty Hughes should be stopped at all costs. The SNP and Kirsty Hughes will sleepwalk Scotland into a neoliberal globalist nightmare if Scotland was to gain independence. As more and more voters in countries within the EU are taking a step back from the EU’s neoliberal globalist vision. Kirsty Hughes wants to march head long into the centre of it.
Complete and utter madness !!!!
28th April 2019
Remain and reform is a fantasy they been trying for over 45 years and all they have got through is ban smoking in pubs. Nobody can point to one progressive reform in over 45 years all the reforms have been in the other direction.
The way the EU is set up you would need EVERY leader to be like Jeremy Corbyn or Nicola Sturgeon and Jean Luc Mechelon and then the impossible task of all of them winning right across Europe at the same time.
All the leaders of the left across Europe are not from the left they are liberals like Blair with some from the left actually being right of centre.
Amidst growing popular dissatisfaction, social unrest, and mass unemployment (in various European countries), political elites on both sides of the Atlantic responded with business-as-usual policies and discourses. As a result, the social contract binding citizens to traditional ruling is more strained today than at any other time since World War II – and in some countries has arguably already snapped, as testified by a series of electoral uprisings that, despite their differences, all share a common target: globalisation, neoliberalism, and the political establishments that have promoted them.
The simple fact is that right-wing forces have been much more effective than left-wing or progressive forces at tapping into the legitimate grievances of the masses disenfranchised, marginalised, impoverished, and dispossessed by the forty-year-long neoliberal class war waged from above. In particular, they are the only forces that have been able to provide a (more or less) coherent response to the widespread – and growing – yearning for greater territorial or national sovereignty, increasingly seen as the only way to regain some degree of collective control over politics and society, in the absence of effective supranational mechanisms of representation. Given neoliberalism’s war against sovereignty, it should come as no surprise that “sovereignty has become the master-frame of contemporary politics”,
As Paolo Gerbaudo notes. After all, the hollowing out of national sovereignty and curtailment of popular-democratic mechanisms – what has been termed depoliticisation – has been an essential element of the neoliberal project, aimed at insulating macroeconomic policies from popular contestation and removing any obstacles put in the way of economic exchanges and financial flows. In this sense, neoliberalism and globalisation have not entailed a retreat of the state vis-à-vis the market, as most left analyses contend, but rather a reconfiguration of the state, aimed at placing the commanding heights of economic policy “in the hands of capital, and primarily financial interests”,
As Stephen Gill writes. Given the nefarious effects of depoliticisation, it is only natural that the revolt against neoliberalism should first and foremost take the form of demands for a repoliticisation of national decision-making processes.
I don’t fear Nigel Farage, Marie Le Pen, Jacob Rees Mogg, Alternative Fur Deutschland, the Northern League, Donald Trump, the English Defence League, Golden Dawn. The reason I don’t fear them is that as soon as they try their policies the economic results will be clear and they’ll be voted out for a generation.
The progressive left have been asleep for nearly 50 years and these types have stole a march on them as these are the only parties that people right across Europe who want to escape from the bankers can vote for. Use these useful idiots to take us out allow them to implode and then introduce a true progressive vision that the people are actually looking for.
I’ve wanted Scottish independence since I was 18 and now I’m nearly 50. I’ve wanted out of the EU since the Mastricht and Lisbon Treaties. I live in Glasgow and now have nobdy to vote for. The logical step is to vote for the Brexit party and once out of the EU then vote for a party in Scotland that offers true independence.
So I fully understand why millions upon millions of people are now turning to the likes of Nigel Farage, Marie Le Pen, Jacob Rees Mogg, Alternative Fur Deutschland, the Northern League, Donald Trump. They are turning to them to find a voice and a vote that counts.
28th April 2019
Small “C” Conservatives don’t go on marches or protest. They organise coffee mornings and neibourhood watch schemes and shop in Sainsbury’s and John Lewis and play bowls and golf. Drink coffee in Starbucks where they get their name on a cup and pop out to the theatre every now and then.
There are millions upon millions of them right across the UK. They are sharpening their pencils as we speak. A pencil sharperner is how the silent majority protest.
It won’t happen overnight it will take a few years but I don’t think anybody in Scotland is ready for what is about to happen because the liberal metropolitan elite, Wall Street, The City Of London and Frankfurt have overturned the result of a democratic referendum result.
Then you have the dyed in the wool unionists that don’t care about anything else who want out of Europe also.
Then you have the fishing communities that turned Blue the last time.
There’s a shit storm coming in what form it turns up and how long it will take to turn up I have no idea. The mainstream parties are in for the shock of their lives and why the US ended up with Trump. The SNP are deluded if they think they can run from it.
28th April 2019
The SNP have replaced….
Scottish voters who have wanted Scottish independence all their lives and want out of the EU because of the Mastricht and Lisbon Treaties.
Scottish voters who have never wanted independence but want to be run by Brussels.
Small “C” conservatives, Dyed in the wool unionists and fishing communities haven’t moved an inch. Only question is will they vote for the Tories or the Brexit party but one thing is for sure they’ll vote against the Indy Nicola is offering.
It’s a recipe for disaster.
29th April 2019
Bungo Pony you should listen to the Nigel Farage show on LBC
Voters who have voted SNP all their lives are now picking up the phone calling in to Farage and saying they’ll never vote for the SNP again.
Because Nicola has chosen the wrong strategy.
SNP voters are running to Farage wether you believe it or not it is already happening and this is just the start.
Bella Caledonia Editor
29th April 2019
“SNP voters are running to Farage”. Really? Evidence please (hearing someone on a talkshow doesnt count as evidence).
(e) Derek Henry, 2019ko maiatzean
Tuesday, May 7, 2019
Test 4 is where all the Scottish think tanks and the Scottish government end up in a graveyard. That’s both unionist and Indy think tanks.
I would say for the last 3 years I’ve been trying to explain the foreign reserves issue with floating exchange rates they just don’t get it. They all come at it from the wrong point of view and and still stick to fixed exchange analysis based around apparent Kaldorian views religiously. I really don’t understand why post-Keynesian’s can’t get their head around the dynamics of floating rate exchange systems.
James Meadway and Simon Wren Lewis suffer from the same problem no matter how many times it is explained to them.
This nails it for me – So as a left progressive I would advocate staying out of the EU cabal.
Brexit is extraordinary we now live in a world where the right has started to act like the left and left are acting like liberals. This has happened because of a complete mis understanding of how monetary systems operate.
If both the left and the right actually knew how monetary systems operate in reality. The left would be running for the exit door and the right would be trying everything they can to stay in. Instead, the left are doing political and economic gymnastics to stay in and the right are trying everything possible to leave. The liberal left and right the (middle ground) that is now in the middle of the right wing spectrum have fell in love with liberalism of the Neo persuasion. The change UK party should just go where they belong and join the liberal democrats with Chuka Umunna as the new Lib Dem Leader.
The EU is fiscal conservatism on steriods that’s handed real resource allocation to the bankers. If you are from the right what’s not to like ? in one word immigration everything else is from the fiscal conservative handbook.
There’s never been a time in British History when so many politcal parties are on the wrong side of the arguement. Fighting against what they actually stand for. Driven by voters who have no idea how the monetary system actually works.
No more so than in Scotland. With so many left wing voters spread right across the country who are proud to be called left wing and progressive. Yet, want to be at the heart of Europe which is liberalism/ fiscal conservatism on Steriods. Yet, at the last Scottish election the Lib Dems only won 7.8% of the vote and 6.8% of the vote in the UK general election.
No Scottish election in recent memory has ever voted for liberalism/ fiscal conservatism on Steriods. Yet, 60% of the population want to be at the heart of Europe. It’s a delusion as a large % of Scottish voters think the EU is a socialist paradise that will save them. Not bind them in neoliberal globalist/fiscal conservative chains. Then send the IMF in and put a technocrat in place to rule them and leave nothing in public hands apart from Bass Rock lighthouse if they are lucky.
(f) Derek Henry, 2019ko maiatzean (segida)
Monday, May 20, 2019
2. Scotland would have to go through a convergence process to ensure its fiscal and other economic parameters were consistent with the EU Stability and Growth Pact rules.
Which is of course what the Growth Comission was all about it was a blue print for joining the Euro. So the SNP have looked at all of this and lied to their supporters. There can be no other reason why the growth comission was written in the first place. The growth comission was the start of that process.
Nigel Farage rode into Edinburgh last week and I bet he couldn’t believe his luck it was an open goal to him and the Brexit Party.
“Nigel Farage says Scottish independence within EU is ‘most dishonest discourse I’ve ever seen’ ” – The article is in the Glasgow Herald newspaper. Everything Farage says is true.
This is what happens when the Indy movement either lied or stayed Quiet about the real dangers of EU membership. Nigel Farage has stolen the truth and political space right from underneath their noses. The Indy movement was far more concerned in stealing Labour and Lib Dem voters who support the EU to get independence. The ludicrous Indy at all costs strategy.
I warned all of the top Indy think tanks this was going to happen and I also told them this was just going to be the start. How trying to reverse the will of a democratic referendum will play out in the long run is anyone’s guess and I don’t think they are prepared for Small C conservative reaction to it. They have also ignored left wing voters like myself who have wanted out of the EU since Mastricht and the Lisbon treaties. People like me now have nobody to vote for in Scotland.
I suppose now I am a “populist” a working class label I will wear with honour.
Scottish Independence should have always been about getting out of the EU first and the SNP and Indy movement could have used the Tories to do that. They should have honoured the Brexit result it would have been easy.
Then debate with the rest of the UK and tell them if you don’t tell the truth about how the monetary system actually works at the UK level. Then start using it the way they should then Scotland will leave the rest of the UK to set up their own monetary system.
France is a very interesting case as now in France both the left and the right want to leave the Euro. In the long run France could well save the so called progressive left from themselves right across Europe.
Monday, May 20, 2019
The first Scottish referendum was lost on the currency issue and the fear of change.
The second Scottish referendum (if there ever is one) will be lost on the EU issue.
The Indy movement will have nobody to blame apart from themselves (again).
Monday, May 27, 2019
The HUGE problem in Scotland is the currency experts do know the real dangers of EU membership and talk about it openly behind closed doors.
But instead of educating the voters they have decided to say nothing and do nothing. By doing so they have allowed the poltical space to be filled with nonsense. What’s so much worse than that is quality control goes right out of the window.
(g) Derek Henry, 2019ko ekainean
Posted June 16, 2019
It is Mosler bonds2.
Warren Mosler the father of MMT came up with the idea over 5 years ago.
MMT is the only true description how monetary systems operate which is neither ideological or political but based on accounting fact.
I’ve been on the BBC radio talking about it.
The Italians are being advised by a group of MMT economists they’ve been advising Italy for several years now. Only a matter of time before they try and get out of the Euro.
I set up MMT Scotland this year and I’ve been warning you all on here for over a year now whoever is left with the lies that.
Taxes fund government spending
Government finances operates like a household budget
Don’y understand that government deficits are non government sector surpluses
Are going to be wiped out at the ballot box for lying to voters for nearly 50 years now.
Posted June 16, 2019
They have been 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.
Italy still needs to have the grass mowed and the weeds pulled in its public gardens. So it has been playing with the idea 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.
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, their taxes would be completely paid after providing 250 hours of weeding and pruning. After that, obviously, they would 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 β―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 β15 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 β15 suddenly costs β150! 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.
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 4: 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 5: 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.
Posted June 16, 2019
When lies are introduced to the current monetary system it dilutes our arguement.
I’m all for brexit and it is 95% economically sound. The 5% that lets it down lets it down because it is a lie.
The glaring lie is because we are leaving the EU and not sending X amount to the EU we now have more money to spend. That is complete nonsense.
The UK government could spend £60 trillion on Monday morning if it wanted and New Zealand could spend 500 trillion on Monday morning if it wanted. They don’t because there is not enough skills and real resources in the economy to absorb that spending.
People think the Norweigan oil fund gives Norway more money to spend it doesn’t.
It all boils down to how many skills and real resources a country has and can be put to use without causing inflation. If you don’t have enough skills and resources to absorb the spending then you get inflation.
Bank lending, tax cuts, government spending all face the same constraint.
So just because we no longer need to send money to the EU after we leave does not mean we can then spend that money at home. There is nothing stopping us from spending that money in the UK on Monday morning apart from 2 things.
The skills we have and the real resources we have. If you don’t have enough of these things then too much money will end up chasing too few goods and services = Inflation.
The key is to plan what we want to do which is why the success or failure of Brexit will depend on the policies put in place after we leave.
Those policies wether it is more commercial bank lending, government spending or tax cuts or a mixture of all 3 have to make sure that the private sector and public sector have time to adjust to make sure they can absorb the extra aggregate demand all 3 will cause.
Money Monopolist, 2019ko urtarrilean
Australia regularly goes through these sorts of exchange rate swings but manages to be classified as among the richest per capita nations in the world. It is simply untrue that a flexible exchange rate system severely compromises the material living standards of workers.
Second, it is false to think that a flexible exchange rate regime is more prone to speculative attacks on a nation’s currency. If anything, the reverse is true.
When currency traders form the view that a government will have to eventually devalue a fixed peg parity to stem the consequences that accompany a chronic current account deficit they can easily hasten that decision by short-selling. It becomes a self-fulfilling inevitability.
And, in this context, the nation state has the capacity to impose capital controls if there are destabilising financial flows present. Iceland has demonstrated the effectiveness of using capital controls to stop the financial sector undermining currency stability through speculative capital outflows. Similarly, unproductive capital inflows can be subjected to direct legislative controls.
Moreover, the history of fixed exchange rates tell us that costs of defending the exchange parities (the recession-bias) tend to dwarf all other costs including fluctuations in price levels that might be sourced in exchange rate variability.
This is not to deny that a nation may have to take some hard decisions in relation to its external sector when it experiences a depletion of foreign exchange reserves or its currency depreciates against foreign currencies that it requires to purchase essential imports.
This is especially so if it the nation is reliant on imported fuel and food products. In these situations, a burgeoning external deficit will threaten the dwindling international currency reserves.
In some cases, given the particular composition of exports and imports, currency depreciation is unlikely to resolve the external deficit without additional measures.
As noted above, the depreciation may impart an inflationary bias to the economy. Moreover, depreciation leads to expectations of further depreciation and fuels the run out of the currency. There may be no interest rate that is high enough to counter expectations of losses due to depreciation and possible default.
The reality is that a nation facing a lack of ability to purchase imports, for whatever reason, has to either increase its exports or reduce its imports.
For less developed countries faced with currency crises, there is probably no short-run alternative but to urgently restore reserves of foreign currency either through renegotiation of foreign debt obligations, international donor assistance or default.
For an advanced nation, similar constraints might apply and a sudden shift in international sentiment against the nation or other financial assets denominated in that currency are no longer deemed as desirable, then adjustments in the flow of real goods and services sourced from foreigners are required.
The limits for a nation are clear – if it cannot command access to real resources owned by foreigners the it must rely on the resource wealth it has for sale in its own currency.
But none of that reduces the financial capacity of the currency-issuing government to purchase whatever is for sale in that currency.
Further, it introduces a valid role for an international agency to replace the International Monetary Fund. A new agency could ensure that weak nations were always able to purchase essential energy and food imports.
Regarding the ” sterling ” debt after independence if there actually is any.
Warren Mosler covered this in detail. How the way you launch the currency, use deficit spending, ZIRP and the Job guarentee all in conjunction with each other
then it is a non issue.
MMT economists have spent the last 25 years working on this ackage so that it works. Sterling debt under current institutional arrangements is a drag on its economy and will continue to be a drag with it’s own currency, though it would both be a lesser drag and diminish over time. Scotland would be able to keep the population fully employed and sustain a 0 policy rate all of which would promote low inflation, a stable currency, and real gdp growth that would cause the fx debt to gdp to diminish over time all with a higher standard of living.
Warren didn’t even mention the size of the sterling debt once. Wasn’t even interested how much sterling debt there would be. If you take the time to read above.
This trying to make out Scotland to be a special case because of whatever Sterling debt they hold is a strawman arguement. Many countries have foreign debt it is how you manage it that counts. He even talks how Turkey are going the wrong way about it ( which we all know)
Scotland’s sterling debt under current institutional arrangements is a drag on our economy now and will continue to be a drag with it’s own currency, though it would both be a lesser drag and diminish over time.
As Warren showed Scotland would be able to keep the population fully employed and sustain a 0 policy rate all of which would promote low inflation, a stable currency, and real gdp growth that would cause the fx debt to gdp to diminish over time all with a higher standard of living.
This Scotland can’t be independent because it will have some “sterling debt ” is non sensical and is ideological driven. More like a political statement than a factual one. – Scotland will not be a special case it will manage the debt like everyone else.
You know that so it is time to stop beating this idological drum.
Scotland’s got foreign debt now in the way of “Sterling” and we don’t issue ” sterling ” and has the sky fallen in ? Of course not.
Turkey is not using their fiscal policy to sustain domestic output at full employment levels. Their high interest rate policy rate is basic income for those who already have Lira so it has created distributional issues. Are Turkish govt payments indexed to “inflation”? How’s banking regulation and supervision in Turkey.? What’s the situation with Turkish state owned enterprise? Lending to SOE’s? Do Turkey Index wages? They are not following the MMT paradigm.
Turkey’s high interest rate policy is causing lenders to sell their interest payments for FX and that drives down the lira. The inflation looks at lot more like cost push than demand pull inflation.Their high policy rates means equally high forward prices for non perishable goods that continually increase with forward delivery dates. Turkey’s high policy rate is supporting their inflation rate and depreciating the currency continuously over time. They need to drop it to 0.
Turkey isn’t maintaining high aggregate demand or using under ulitilised resources. It’s increasing the money supply largely from bank lending. Debt to GDP is low so it is not an excessive fiscal expansion story. They have a high number of FX reserves which means the government has directly or indirectly been selling Lira to buy FX which is driving the currency down also probably to drive wages down to support exporters with political clout.
In general the private sector borrowing has been climbing rapidly probably supported by state controlled banks. So Turkey’s FX depreciation is not coming from attempts to sustain full employment but from issues in the banking system and their high interest rate policy.
So you can’t compare Turkey with its own sovereign currency with foreign debt and an Independent Scotland with Sterling debt it is comparing apples and pears due to their political choices.
Scotland’s sterling debt under current institutional arrangements is a drag on its economy and will continue to be a drag with it’s own currency, though it would both be a lesser drag and diminish over time.
Using MMT understanding of the monetary system and functional finance, ZIRP and introducing a job guarantee. Scotland would be able to keep the population fully employed and sustain a 0 policy rate all of which would promote low inflation, a stable currency, and real GDP growth that would cause the FX debt to GDP to diminish over time all with a higher standard of living.
Money Monopolist (aka Derek Henry?)
1 Ikus, besteak beste, ondokoak: Warren Mosler eta Richard Murphy; Warren Mosler-ek Richard Murphy-ri DTMz; Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida; Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida (2); Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida (3) eta Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida (4).