Funding the Future

Many on the political right wing obsess about interest paid on government debt as if it disappears into some black hole. It doesn’t. It’s just interest paid on savings deposited with the government and there’s been nothing excessive about its overall cost of late.

Macroeconomics suggests how governments work. But at present it’s almost all based on microeconomics, which is about how individuals, households and companies work. But that’s absurd when micro entities and governments are completely different as to purpose, goals and the tools available to change outcomes. No wonder we’re in a mess.

We’ve had limited liability companies in their current form for about 170 years now, but no one back then imagined we’d have more than five million of them. So, are we really doing the right thing giving limited liability to anyone who asks for it now, or should we be more circumspect?

Politicians, commentators and journalists all like to claim that the UK government could run out of money, but that is total nonsense. The UK government can always create the money it needs to pay its debts. It is the one and only organisation in the UK that can never, as a result, run out of money. #uk #government #money #economic #politics #bank #government #tax #investment #share

Rachel Reeves keeps saying that we should manage the economy as if it were a household. That is completely wrong. But if it was true, the decisions she is making would end up destroying the finances of that household she’s making such a mess of things.

I keep hearing people say that we need to get the money back from tax havens. That, though, is not necessary. There is no money in tax havens. All they do is record the ownership of money and other funds that are always actually deposited elsewhere, like the City of London. Instead, what we want back from them is the tax not paid on income recorded there as a consequence of this.

The national debt is widely misunderstood. The reality is that this is not a burden. It underpins UK banking. It’s fundamental to UK savers. And a part of it is the UK represents the government’s way of creating the money supply on which we all depend. Repaying it would be absolutely disastrous. 

The accounts of the largest companies in the UK and around the world are works of fiction because no company in existence has undertaken the transactions that they record. Is that what we really need when we come to assess what the private sector is up to?

It would be great to think that Rachel Reeves might go down in history as both the first woman to be Chancellor and as a great Chancellor. The first is hers by right. But she is going all the wrong way about claiming the second title.

There is a lot of interest in wealth taxes right now. I understand why,  but if we want to tackle the problems wealth creates there are two better ways to do that before we ever think of having wealth taxes.