Britain's National Debt - equivalent to £65K per household

This is a good point as well.

“How is it possible for the government to offer tax free saving and then say that there is not enough money for the NHS?”

Excellent articles, Maizie, thank you.
I like the discussion following the Proggressive Pulse one.

Why stop at QE and not have PQE, where the money is given to those in most need, so it circulates properly in the economy?
In fact, is that not what benefits are, although with a cap on benefits there is not enough money circulating.
Or how about introducing minimum income for the same reason.

ever considered the EU as fully signed up to the neoliberal economic orthodoxy

I think that is why people are, very legitimately, critical of the way Greece was treated by the EU i.e. by the imposition of auasteriy policies.'Austerity' is a key tenet of neoliberal economics which is being increasingly discredited by economists. The question is how do you recover from recession? QE is one way of stimulating the economy into growth.

This is what I am finding interesting...

That's an interesting link too railman Never considered the EU as fully signed up to the neoliberal economic orthodoxy, it's certainly thought-provoking.

To be honest MaizieD, I don't profess to understand the minutiae of what is being written in both your links - each of which at some level seems to make the assumption that 'free market economics' is essential to life. Just making arguments in favour or against, and doesn't offer clarity in explanation in a practical sense.

Most of the text sounds like management speak waffle, maybe makes a good debate on a student campus, but offers little by way of improvement in either society well being or economic sustainability.

If 'monetarist' or 'neoliberal' policies have been applied in the UK, then it can surely be seen today as a complete failure.

The only effect of QE has been to save the banks, who simply added the value to their 'bottom line' and failed to support manufacturing, construction or other basic industries.

The term 'neoliberalism' seems to me to encourage the idea that privatisation and market forces alone can sustain our stagnant economy, and deliver growth.

This might be worth a read on 'neoliberalism' and economics:

anotherangryvoice.blogspot.co.uk/2012/09/what-is-neoliberalism-explained.html

maizie some good informative and very interesting stuff.

Thank you

I don't play games, Primrose.

But I don't like untruths and inconsistencies to go unchallenged.

It means I feel I'm being set up. I'm fed up with the attacks Maizie.

I'm just not up for sharing an opinion - I'm fed up with all the name calling.

Well, that's a shame. Does that mean that you're not posting on this forum any longer? (I take that to be the logical conclusion of your statement)

I think they're both at opposite ends of the spectrum and an interesting read. I agree with bits and disagree with bits, but to be honest Maizie, I'm just not up for sharing an opinion - I'm fed up with all the name calling. I did appreciate your tie up with Venezuela though, I thought that great and I hope you realised my was jokey.

Primroses

First link is suggesting a way to circumvent Article 123 of the Lisbon Treaty, which you put forward as a barrier to increasing government spending with money 'created' by the Bank of England . It also runs contrary to neo-liberal economic theory in that it is advocating money creation and government spending to get out of recession (money 'creation' being the instrument which the UK government has used on a few occasions since 2008 and which is known as QE)

The second link refutes the ideas proposed in the first.

I tied them in to Venezuela on the other thread as money 'creation' by central government with resultant inflation has been a cause of their problems and a similar situation is threatened, by the tories, for the UK should Corbyn ever come to power as, at one time, he was taken with the 'Peoples' QE' idea.

I was just hoping you might have some comments on the two linked articles; in a non confrontational manner..

Are you sure you're reading both links, railman? As the second is a vigorous hysterical refutation of the first, which advocates government 'creation' of money through the central bank (which is basically what QE is) I don't see where you are finding them both pointing a finger at QE as 'the bad guy'.

The first does suggest that QE does not have to involve bond sales (which are the source of interest repayments which lead to increased nominal debt) but it is not characterising it as a 'bad guy'

Once past this point I can't work out if you support neo-liberal economic theory or not. Can you clarify for me?

MaizieD - Just read through the two links you posted, which rather unsurprisingly point the finger in general terms at 'QE' as the 'bad guy', and prefer to suggest that 'market forces' will ultimately determine successful economic growth.

Perhaps. But, only if your quest for economic growth is simply the accrual or aggregation of promissory notes or paper money as the sole measure of success.

The USA is hailed as the world's most successful economy underpinned by strict adherence to 'market forces' and effective monetarist policies.

However, it seems the USA has outsourced much of its IT production in particular to China, South Korea and Japan, and has little or no manufacturing capability within its own borders. Other manufacturing sectors may have fared a little better - Boeing in aerospace, and to a lesser extent, General Motors in the rail industry - so is there economic growth just a constant round of keeping the paper tiger afloat I wonder.

There is no reason why in the UK we should continue to follow that model, which is not a sustainable premise. There is a need for balance between both the means of production and exchange and trading mechanisms for it to be a long term success.

If we ever achieve it, I think I for one will have been pushing up daisies for a long time too!

Happy to discuss, but not sure what you're saying. Are you hypothesising that the inflationary impact of QE would be comparable to financing public institutions by printing money?

I'm really not that bothered about whether or not other posters find it interesting. Primroses. They don't have to read it.

I don't really regard my forum posting as being some form of entertainment for the other posters...

I'm not sure a discussion about the probability of the inflationary potential of QE is interesting for many of the posters, but both the links are interesting Maizie Thanks for the bump too - been a bit busy and I would have missed your post.

^

Bumping just in case Primrose misses this thread after I'd done a response specially for her.

or even 'trenchant'

It is suggested that Article 123 of the Lisbon Treaty can be circumvented

www.economonitor.com/blog/2013/07/overt-money-financing-of-fiscal-deficits-including-navigation-through-article-123-of-the-lisbon-treaty/

There is, shall we say, trechant criticism of the above article here;

www.lewrockwell.com/2013/08/michael-s-rozeff/america-will-be-zimbabwe-2/

Though as the US is a tax averse country I would imagine that the usual counter argument that inflation can be controlled by fiscal policy would not be acceptable to the author.

I would note that in the decade since the first round of QE in the UK has seen a modest rise in inflation (average 2.4% pa in 10yrs as opposed to 1.4% in preceding 10yrs) but it is questionable that it has been caused by QE as rates were rising before QE (2.3% in 2006 & 2007). Spikes in 2011 and recently can be explained by rising energy prices (2011) and devaluation of the pound (2016 on)

I honestly don't know the rights and wrongs of either side of the argument and it would take a great deal of time to study the topic sufficiently to have a secure grasp but it seems to me that current neo liberal orthodoxy has significant failings, particularly in the social aspect (increased poverty, debt and inequality) and that it is time it was looked at afresh. With an open mind.

It's over simplistic really.

Central banks could create money to finance debt in principal, however, article 123 of the Lisbon Treaty prohibits central banks from financing public institutions. So, for example, you can't print money to finance the NHS. That would get us into trouble with the EU as well as with some economists.

www.ecb.europa.eu/mopo/eaec/fiscal/html/index.en.html

Some people might find this interesting:

How is money created?

Fiat money is created from nothing on the basis of a promise – a promise to deliver goods or service in the future. Another word for promise is debt – I prefer promise. Only if we believe in these promises does money have value. The teacher promises to teach. The roofer promises to mend the roof. Money creation facilitates things getting done, but create too much too fast – by promising more than we can deliver – and it looses its value. Therein lies the problem.

Money is created either when the government spends, or when a bank makes a loan. We can think of government spending and bank loans as the beginning of two interconnected money circuits, see Figures below. The government and bank circuits form the duopoly of money creation.

More...

www.progressivepulse.org/economics/the-duopoly-of-money-creation/

The author:

Prof Charles Adams

Charles is Physics Professor at the University of Durham. He teaches Optics and Econophysics. He is currently writing a book a (hopefully popular) science book on economics. His research expertise is experimental quantum optics which is less relevant but does shape his world view on questions of measurement and uncertainty in particular. His strengths are in data analysis and visualisation. Recent research for example has been published on Tax and Human Development the Evidence showing a high correlation between the inequality-adjusted Human Development Index (IHDI) and Tax as percentage of GDP from the Heritage Foundation.

(This may, or may not give people grounds for pooh poohing his article)

Maybe you're confusing Commonwealth with empire, Tingley - there are still a great many Commonwealth countries.
And the 'Great' in GB never did have the sense of 'wonderful' - it has the same meaning as in 'Greater London', I.e. in the sense of area.

Peaches: Dunkirk was a very different situation to the one we now face. Then we were on the verge of an invasion. Also there aren't that many Commonwealth countries left because most of them have become independent. Don't kid yourself - Great Britain aint 'Great' and hasn't been for a long time.....

I have not read every thread so apologies if I am repeating what has been said already.
It is hard to compare with other countries because there are different ways of measuring it, also looking on the Internet the figures seem to vary a lot, but it does appear that our debt is one of the worst in the world. It might make us question why we spend money on cegrtain things - for example on our regional news there was something about a program for teaching English to EU immigrants - why don't they learn before they come here? (It is a different case with refugees of course) and generally there is a lot of waste and unnecessary expenditure which no one has the guts to tackle. Apart from that, most countries have huge debts - the whole economic system is like a house of cards - everyone is afraid to rock the boat as we would all suffer if one goes down. However it can't go on for ever, I think a total collapse sooner or later is inevitable. Everyone knows this but is afraid of the consequences, so they are hanging on for dear life.

I find these threads very enlightening, thanks for all the links and informed discussion, MaizieD and others who seem much more on the ball on these matters than I am.

It seems to me that Primrose's remark that the 'household economy' model is unhelpful. Public sector spending isn't pouring money into a black hole, it's paying for public sector jobs is on the money, excuse the pun.

Though I may not be au fait with all the arguments for or against this or that, I do expect HMG to have a handle on it at all times. That's what they're paid for, imo.