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January 29, 2021


Nigel Clarke

Economics is not discussed because it is not understood be either the electorate or the politicians.The politicians have no interest in economics because it is irrelevant to their chances of re-election and also this leaves them free to espouse nonsense like trickle down, and laffer curves.


Perhaps it is because within the memory span of the modern voter, no policies tried have actually changed the economic trajectory?


I imagine this is true of elderly Tory voters, but what about the young with marginal jobs and no hopes of buying a house? They may be powerless but they surely care about their future economic and other opportunities.

Bill Posters

Where's Blissex?

Southern Tory voters don't care about economics as long as house prices keep going up.

David Friedman

"What’s more, many important issues can be addressed without policies to raise general economic growth – such as food poverty, the housing crisis or climate change."

The major policy supported as a way of reducing climate change is replacing fossil fuel with wind or solar. That increases the cost of energy, which one would expect to have a negative effect on general economic growth.


At some level, the public understands that we can print money faster than prices rise and distribute it equally to avoid the Cantillon effect. Real purchasing power increases faster than inflation; taxes aren't necessary. Economists have a whole impressive edifice denying this intuition, but everybody knows they're wrong. Some are starting to say it out loud ...


Seems to me politicians have been pushing economics buttons for decades but without much effect. Small wonder they are looking for new/different buttons to press. The traditional buttons seem not to be connected to anything. We are back to a pre-technology pre innovation society at least for now. In effect ownership of rental assets and coercion assets is what counts.

Right now the fashionable buttons are electric cars, all things green, influencers, social media. We seem to be making a living by tweeting, sending trivial messages and pictures around the world and buying 'stuff' made in China. All good ways of burning off human endeavour.

In return we flog 'services' such as insurance, high finance, legal services, software and technology and 'tech' and intellectual property. All fine and large, but unconvincing. Intellectual property sounds a lot like 'land', something to be rented out, fine until someone does the job differently. Further, being intellectual it only exists in heads and heads are a common enough product, IP can go anywhere, overnight.

We may worry also that electric cars are a dead end. The battery revolution may be a long time coming. Are we really going to find all the metals to make all those fancy motors and generators. Is Mr Biden really going to wean the rednecks off their 5 litre SUV's. On the other hand heating homes is another energy intensive business. To make all homes energy efficient we would have to knock most down and start again - whilst keeping an eye on costs, quality and whatever the next gotcha is. Sure to be done on the cheap.

What is really happening underneath all this. People still need food and housing and medicines etc. People are still messy creatures that screw the place up. We might yet have to think of think of holding down their numbers. Howls of protest, if us then why not them etc etc. To do so overtly or covertly? Perhaps a never ending Covid20, 21, 22 etc might help. At least viral infections like Covid knock off everyone in more or less equal portions. Our salvation may be staring us in the face.


What is so interesting, in contrast, is that President Macron just delivered a profoundly important speech at Davos on inequality with unfettered capitalism and a need to change the concept of capitalism.

Also, President Xi spoke importantly on economics at Davos:


January 25, 2021

Special Address by Chinese President Xi Jinping at the World Economic Forum Virtual Event of the Davos Agenda

BEIJING -- Let the Torch of Multilateralism Light up Humanity’s Way Forward


Remember that the British media ruined the Labour leadership of Jeremy Corbyn. Corbyn of course always focused on economic policy and that was threatening to the likes of Murdoch media folks or even the BBC and Guardian elite. With the likes of Starmer there will be no actual concern with economic policy.


January 29, 2021



Cases   ( 3,772,813)
Deaths   ( 104,371)

Deaths per million   ( 1,533)


Cases   ( 2,207,393)
Deaths   ( 57,052)

Deaths per million   ( 680)

Jan Wiklund

You are right, Chris. But there is more in it.

Classical politicians wanted growth, or rather development. They wanted their countries to be competitive, not least for military reasons. And they thought like pre-industrial landlords or subsistence peasants: how do I get as much as possible out of the land. That was also the approach of classical economy, as with Serra, Colbert, Hamilton, List, Carey, Schumpeter and all the post-slump development economists. Even Keynes thought like that, although Samuelson neutered him when he was dead.

Nowadays politicians think like employees: how do I get the money to last. And this restricted way of looking at things is also the neo-classical economist approach. You can see the differences between the approaches at http://othercanon.org/organization/.

Moreover, the latter express themselves in such a hermetical way that politicians can’t get any help from them even if they had any.

Jan Wiklund


Classical economics (of the kind mentioned above) thought in terms of productive capacity. Different business lines could be of different value depending on the time or space, or on the presence of other business lines, as the rather latecoming development economist Erik Dahmén's "development blocks", see https://link.springer.com/chapter/10.1007%2F978-94-009-1075-1_5.

Contemporary economics is flattened out, one-dimensional. It has no other units than monetary ones. It judges a rent as equally valuable as a productive capacity, if not better. Thus, it has made us all into pensioners. So what could the poor politician do?


Just a reminder that none of this hardship is necessary... this is deliberate government action withdrawing support from its citizenry for no good reason... there are no fiscal constraints on a sovereign currency issuing nation such as the UK... and they know it...

So once again I present for your perusal the Whole of Government Accounts (WGA) for the UK...


Which provides a consolidated view of government... This represents pretty much exactly the MMT view of the government sector...

Some of the quotes from the accounts are too good to be left hidden away in a PDF...
So I’m going to highlight them for your delectation... 😉

Paragraph 2.2 (p7) sets the scene:

HM Treasury identifies the entities to be included in WGA in accordance with the legislation that required WGA to be prepared1. It is required to include entities that “exercise functions of a public nature” or that are “substantially funded from public money”. The Treasury’s decisions are consistent with the classification of entities to the public sector by the ONS. This is because the ONS takes account of these factors when making their classification decision as well as the degree of control that government has over each entity.

This is corroborated by the auditor in paragraph 7.16 (p50)

To be included in the WGA, a body must do the work of the UK government, be accountable to, or be otherwise controlled by government.

Therefore, unsurprisingly, the accounts include the central bank (para 7.75 p76)...

the Treasury has taken steps to make the WGA more transparent and complete. The 2010-11 WGA: … consolidated the financial activities of additional bodies, such as the Bank of England

The bilateral relationship between HM Treasury and the Bank of England is similarly explained clearly. Para 3.80 (pp28) shows that the indemnities between them are irrelevant at the consolidated level.

A number of guarantees and indemnities exist between HM Treasury and the Bank of England. These are not disclosed in Whole of Government Accounts, as both bodies are included in the consolidated financial statements.

The same point is made in Para 3.85 (p 29)

Arrangements between bodies within the WGA boundary, such as guarantees and indemnities between HM Treasury and the Bank of England, are not included, as they eliminate on consolidation in these accounts.

MMT says that QE is an asset swap and effectively eliminates any Gilts purchased... The accounts agree in para 7.50 (p62)...

As at 31 March 2011, there were some £1,059 billion of gilts outstanding but the WGA shows a smaller figure of £746 billion (Figure 10). The WGA is not intended to include as liabilities gilts held as assets by entities in the WGA, such as the Bank of England Asset Purchase Facility Fund as part of Quantitative Easing (paragraphs 7.53 to 7.54).

Para 7.54 (p65)expands on this and delivers the killer conclusion...

Consolidating Quantitative Easing does not significantly reduce the overall liabilities of government but it does reduce the number reported as government borrowing. Once intra-government transactions are eliminated, the scheme represents an exchange of gilts (liabilities of the National Loans Fund) for central bank reserves (liabilities of the Bank of England).

In addition the Consolidated Statement of Financial Position (p94) contains the term "Financed by Taxpayers' Equity"... Which is exactly correct... The net savings of the non-government sector is indeed Taxpayers' Equity...

When you apply the International Financial Reporting Standards to a set of government accounts ... the MMT viewpoint arises quite naturally from the numbers...


"MMT says that QE is an asset swap and effectively eliminates any Gilts purchased..."

Central banks buy a lot of private assets. Doesn't that mean that the privately-created assets are effectively eliminated too, leaving only money in private hands? In other words the private sector creates a debt instrument and monetizes it by selling to the central bank?

If so, doesn't that contradict MMT dogma that the private sector cannot create Net New Financial Assets? The private sector creates a sterling-denominated asset out of thin air, sells it to the Bank of England, and now has sterling instead of the magically-created asset? Isn't that essentially creating a private sector net new financial asset?



Since loans create deposits I believe that the “privately created asset” also features a simultaneous and equivalent “privately created liability.”

Net private sector assets equal government debt as demonstrated by Wynn Godley’s sectoral balances analysis.

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