Crows Outside

@DrGDingus @LukeMikic21 @ProfSteveKeen They do use the power they have, to benefit themselves and the ruling class.

@LukeMikic21 @ProfSteveKeen MMT isn’t giving the state more power - it already has that power and chooses not use it. As you suggest the people in charge do not serve our interests, ask yourself why they do not use this power? Is that a choice made in your interests?

Imagine calling yourself a "top economist," all while supporting money printing and MMT?🤡 🇦🇺Cmon mate, it's bad enough no one takes our country seriously, this non sense doesn't help.😂 @ProfSteveKeen

Between April 1952 and October 1985, Leeds United played 1,696 matches and every single starting XI contained at least one player who made an appearance under Don Revie. #lufc

@DOWybourne13 @paul_d_stevens @LiamHalligan Sure. If you ever want to know how govt daily fiscal ops work and what role Gilts play, just ask 👍

@CrowsOutside @paul_d_stevens @LiamHalligan I have described the status quo adequately. You have failed to describe your own proposal. I think we're not getting anywhere so I will disengage. Thank you for the exchange. I wish you the best.

So the UK's 10-year gilt yield - the cost of government borrowing - is now up at 2008 levels. An 18-year high The difference is that, back then, UK national debt was 48pc of GDP, and now it's the best part of 100pc. So the debt service costs are much MUCH heavier. Of the £14.3bn the UK government borrowed in February alone, no less than £13bn of that was spent on interest on existing debts - a situation which is not only unsustainable, but very close to provoking a disastrous financial collapse. Yet still, our national discourse is all about more spending, more borrowing, more "state intervention". When is the Labour party – and much of the listless, unthinking rump of the UK's political and media class – going to start acknowledging reality? WHEN ....?

@DOWybourne13 @paul_d_stevens @LiamHalligan All, that's all, govt spending is via direct money creation i.e. new £s issued into existence every time. That's how the system works.

@DOWybourne13 @paul_d_stevens @LiamHalligan Ok, so you are unable to articulate how you believe the system works; fair enough but why should anyone take your unbacked opinions on the subject seriously? The W&M isn't a source of funding, it's the default residence for any deficit.

@DOWybourne13 @paul_d_stevens @LiamHalligan Sorry, but you are wrong again. The banking mechanics are fundamental to understanding how things work. Who told you govt doesn't go into overdraft? Again, explain how you believe the system works, reference any legislation you believe supports your position. Be specific.

You seem increasingly hostile. Shall we be civil? If you've ever paid tax (other than PAYE) you paid to a commercial bank. The government also has an account at the central bank, but does not go into overdraft, other than small and temporary Ways and Means balance. But the banking mechanics are peripheral. I have agreed that the government COULD do monetary financing if it chose. What you haven't addressed is that this is potentially disastrous. It's been done many times. It's only ever worked as a temporary crisis move, to be followed by fiscal austerity once the crisis is over. Where it's been introduced as the normal course of business it's disastrous every time. Think Zimbabwe and Weimar.

@DOWybourne13 @paul_d_stevens @LiamHalligan Interesting ... Nonsense, but interesting. So talk us through what you believe these accounts are, their balances, names, how they are used.

I think I was clear in my last tweet. At present there is no monetary financing. The government has cash accounts with commercial banks and uses them to settle obligations. If those accounts are empty it cannot immediately settle its obligations. GovernmentCOULD change this and begin monetary financing, but this is extremely dicey - it's a crisis move, and will lead to hyperinflation unless accompanied by serious fiscal consolidation (tax rises and/or spending cuts)

@DOWybourne13 @paul_d_stevens @LiamHalligan Explain how, in the current system, the govt could run out of £s.

In the current system, yes it can. In practice it COULD then change the system, work with the central bank to begin monetary financing. But unless this is accompanied by serious measures to restore the governments fiscal position, the currency loses credibility and heavy inflation follows.

@DOWybourne13 @paul_d_stevens @LiamHalligan Endogenous - originating internally. Eh? The govt, the sole issuer of £s Sterling, can run out of £s Sterling? That's ridiculous and shows you are woefully misinformed. But, anyway, explain govt can run out of the thing it issues into existing ...

@CrowsOutside @paul_d_stevens @LiamHalligan Endogenous to what? It's set partly by the market, and partly by the central bank making careful reference to the market. In the current system the government CAN run out of cash and would then be unable to meet its obligations.

@DOWybourne13 @paul_d_stevens @LiamHalligan They aren't a funding operation in any way but let's indulge your false idea, for a while. So talk us through how you believe govt spending/buying things works and how Gilts fit into it. Reference any legislation you believe supports your position. Be specific. Over to you...

This isn't really true. Gilts ARE a funding operation. Could they make a "policy choice" to finance spending through direct monetary financing? Yes they could. It's been done before, by such illustrious governments the first revolutionary French republic, Weimar Germany, and more recently Zimbabwe and Venezuela. In all these cases, hyperinflation ensued. It's also been done less disastrously a couple of times in war time, or by Japan when caught in deep deflation. But I don't really see what Britain gains by doing it now.

@DOWybourne13 @paul_d_stevens @LiamHalligan So, we agree, the money supply is endogenous. Great! The last statement is correct. Do you understand and can you explain what "cash management" and "debt management" are? Do you understand what happens if "cash management" doesn't meet the target?

@CrowsOutside @paul_d_stevens @LiamHalligan The first statement is sort of true but the appetite from credit worthy borrowers is a fuction of interest rates. The money supply level is thus set indirectly by the CB setting the interest rate. The last statement is false. New debt is sold by open market auction.

@Clementtomorrow @DavidMcNab17 @DavidPintoD Funny, isn't it, how all this just happened about a generation after WWII 🤔

@DavidMcNab17 @DavidPintoD Then of course, Healey got the IMF loan, and imposed USA neoliberal austerity.

@DavidPintoD here describes the ideas of John Maynard Keynes as “nonsense”. Keynes, widely recognised as the greatest economist of the 20th C. The man whose ideas Thatcher tore up before she destroyed our economy. Pinto: another Public School economist defending the status quo.

@btharris93 UK doesn't have any fiscal problems, it has a political ideology problem. Ftfy.

It’s depressing how easily many of the UK’s fiscal problems could be solved (by scrapping the triple lock and liberalising planning) but we simply choose not to because the pensioners would get mad.

@DOWybourne13 @paul_d_stevens @LiamHalligan Gilts are issued ex-post of spending, it's a policy choice; Gilts aren't a funding operation, they are a refinancing operation (in terms of "cash management", a reserve drain).

@DOWybourne13 @paul_d_stevens @LiamHalligan CB sets the base rate, retail banks continue lending until the last creditworthy customer willing to pay the current price of money applies for a loan. The money supply is endogenous. Gilt rates are set by govt via DMO, not the market.

@DOWybourne13 @paul_d_stevens @LiamHalligan Oh dear 🤦 Of course all govt spending has to be authorised in advance by parliament, that's how the system works. How do you think it works?

@CrowsOutside @paul_d_stevens @LiamHalligan .. It's not authorised by Parliament. Not directly anyway. The money supply arises from the price of money which is set by the BoE's MPC.

@DOWybourne13 @paul_d_stevens @LiamHalligan Sure, it's not arbitrary, it has to be authorised by parliament. How do you believe the money supply is "set"? How do you believe Gilts (a guaranteed savings account) can force fiscal discipline?

@CrowsOutside @paul_d_stevens @LiamHalligan It's created directly (ish) but not arbitrarily. The money supply is set such as to keep inflation low and stable. THIS, as much or more than the Gilt market, forces fiscal discipline.

@dssx66 @SUTONGIROTCIP @TheFrogDies @WarTalk1 @LiamHalligan Debt, in the same way your savings are debt. Money is debt. Let's see who understands; talk us through how govt spending works, the legal framework around it, where Gilts come into it. Reference any legislation you believe supports your argument. Over to you...

@CrowsOutside @SUTONGIROTCIP @TheFrogDies @WarTalk1 @LiamHalligan Supremely ironic given it’s you that has demonstrably no understanding at all. Your points are also ludicrous. Gilts are bonds which are literally debt. The UK government issues about £300bn a year. Who buys that?

@dssx66 @SUTONGIROTCIP @TheFrogDies @WarTalk1 @LiamHalligan You don't understand at all. Institutions don't lend to govt, govt offers them a secure savings account (Gilts) which they are happy to use. The idea that govt has to borrow from the private sector that which it, and only it, is the sole issuer of is ludicrous.

@CrowsOutside @SUTONGIROTCIP @TheFrogDies @WarTalk1 @LiamHalligan Yes I understand perfectly I’m not sure you do. Why would any institution lend their money to the British government in return for zero return on their money for a ten year period say? Literally no government or institution can do this anywhere. It’s a necessity not a choice.

@MarkRadcliffe44 @dssx66 @SUTONGIROTCIP @TheFrogDies @WarTalk1 @LiamHalligan So you would sell your 4% Gilt for non interest bearing £s and try to make the 4% back by "shorting the currency"? Is that correct?

@CrowsOutside @dssx66 @SUTONGIROTCIP @TheFrogDies @WarTalk1 @LiamHalligan Because they would get better returns shorting the currency and when that happens you won’t be so happy.. all world assets priced in $ good luck