Is Sir Keir In The Last Chance Saloon?

Tell me that house prices haven't become highly inflated

I can't.

But why? It's not just here in the UK, it's in some other countries too.

Ah, I see. All of this is comparing different things, but I see what you mean.

Doodledog

Ah, I see. All of this is comparing different things, but I see what you mean.

That was to Molly.

... and where are the Liberals? [foxie]

Doing quite well asking questions in Parliament, especially as they are not the official opposition, as far as I can see.

I don't think RR needs to "seek advice" (consult) the MPs, but she does, as does KS, need to inform.

Not making cuts to Universal Credit and Personal Independent Payments means they will (under current thinking) have to be made elsewhere or taxes raised. I think the MPs do need to be made aware of this as they seem to be disregarding reality.

The world economy is in the doldrums, with weak economic growth, stubborn inflation and rising interest rates in the major developed economies clouding the near-term economic outlook (Global Ecconomic Prospects - World Bank)

(And no, MaizieD, I do not need another lecture on where to find the Magic Money Tree)

I think he's arrogant, boring, thick, and a total waste of space. He climbed a ladder and got to the top and is now exposed as completely useless.

letmein who do you have in mind? I can think of a few men who fit your description.

Not making cuts to Universal Credit and Personal Independent Payments means they will (under current thinking) have to be made elsewhere or taxes raised. I think the MPs do need to be made aware of this as they seem to be disregarding reality.

I don't think that MPs are aware of reality, but they seem to be stumbling towards an inkling of it, even though it contradicts the apparently ruling theory that taxation funds state spending (subscribed to by most commentators and many economists, though the latter might just be pandering to folk views of how the economy works).

I asked Chatgtp (AI) what would happen if the state no longer issued money into the economy but depended on tax revenue to fund its spending.

Its response:

Start

If the state stopped creating money and relied solely on taxation to fund public services—under the assumption that all money originates from the state (as per Modern Monetary Theory or MMT)—then the economy would face severe constraints. Here's a breakdown of what would happen:

If all money is created by the state, and the state stops issuing new money, then:

The existing money stock becomes fixed.

Households and businesses can only obtain money that already exists in the system.

Since the state taxes money back to fund itself (instead of issuing more), no net financial assets are added to the private sector.

Over time, this would lead to a shrinking money supply, because:

Taxes would drain money from the economy.

Less money in circulation = falling demand.

Businesses sell less, invest less, and lay off workers.

Falling incomes lead to lower tax receipts, forcing more austerity.

This triggers a negative feedback loop:

Less spending → lower income → lower tax revenue → cut public services → even less spending.

. Public Services Would Shrink
Without the ability to issue currency, the state would be forced to:

Balance the budget like a household.

Cut spending when tax revenue falls, worsening downturns.

Be unable to act counter-cyclically during recessions (i.e., no stimulus).

4. Private Sector Becomes Indebted
To maintain economic activity in the absence of new state money:

The private sector (households and businesses) would need to borrow from banks.

Private debt would rise, creating instability.

This replaces sovereign money (public net financial assets) with private credit (debt).

5. Unsustainable and Destabilizing Over Time
Eventually, the economy would become:

Constrained by liquidity shortages.

Highly unequal, as wealth concentrates in those who already have money.

Vulnerable to financial crises due to excessive private debt and lack of public buffers.

Summary

If all money originates from the state, then new state spending is essential to sustain economic growth and liquidity. Relying only on taxation (which removes money from the economy) without new issuance would:

Reduce money supply over time

Cause deflation and recession

Shrink public services

Increase private debt

Destabilize the economy

End

I challenged its use of the word 'assumption' in relation to MMT

It admitted : MMT is not just a theory; it is a descriptive framework that is empirically correct about how modern fiat monetary systems function—especially for currency-issuing sovereign governments.

"If the state stopped creating money" ? (MaizieD)

Giving a long answer to a question nobody is asking is unlikely to persuade anyone toward the Magic Monetory Theory, Maizie. Just another red herring.

I would guess the new far-left party Zarah Sultana is setting up would be possible disciples of it though.

Giving a long answer to a question nobody is asking is unlikely to persuade anyone toward the Magic Monetory Theory, Maizie. Just another red herring.

Not at all. I was responding to your point about taxes needing to be raised to cover extra spending. My hypothesis is that if it were actually true and that the state only depended for taxation for its spending it would run short of money, as AI explained.

Post after post on Gnet tells me that that is what people believe, but the logic of it is faulty.

If you don't believe that the state can create its own money, and that spending it into the economy is how it keeps the money supply enough to service the population perhaps you'd like to explain how money works?

I only put in the bit about MMT because AI initially said it is an 'assumption'. Which I felt you would triumphantly pick up on.

Mollygo

Oreo

It may have helped her if Starmer had answered the question by Badenoch on whether Reeves would still be in the job come election time? He waffled but didn’t say.

Why wouldn’t he say? It’s a simple yes or no question, and he could always do a u-turn on whatever he said.

Because it was a moronic question I imagine. When have you ever known any PM, or for that matter decent manager anywhere publicly sell one of their close team down the river like that?

Because it was a moronic question I imagine. When have you ever known any PM, or for that matter decent manager anywhere publicly sell one of their close team down the river like that.

But it wasn’t a moronic question, because he did eventually answer it when he had time to see the negative impact of his refusal to answer.

Do you actually think his response meant anything at all Mollygo? Must admit I didn’t have you down as naive.

You didn’t notice the effect in the market Casdon? I didn’t have you down as naive . . . But I do now.

Markets are jittery at the prospect of any change to what they have second guessed might happen Mollygo - just look at the USA.
If it’s naive to say that no PM would ever say in a public forum that he was planning to sack a senior minister in advance, but would then do so soon, or later, afterwards then call me naive. I repeat, it was a moronic question.

States can and do control their own money supply, what they cannot do it loose the confidence of their creditors by increasing it too much. Because then interest rates rise and the currency falls in value, nations that have a lot of imports cannot afford to pay more due to currency falls.

The UK been borrowing/creating close to 100% of GDP, most think it is high enough and needs to falls, Starmers recent U Turns and defeats make it quite uncertain targets will be achieved

Casdon 👍

Starmer could have just said no he wasn’t planning to sack RR. That’s what he said, amidst the hugs and smiles the next day.
That’s not selling them down the river, nearly so much not answering.

AI may be very good at supplying information MaizieD, but only if you ask the right (and truthful) question.

Where did I say "the state only depended for taxation for its spending"? Another piece of misdirection.

Casdon

Markets are jittery at the prospect of any change to what they have second guessed might happen Mollygo - just look at the USA.
If it’s naive to say that no PM would ever say in a public forum that he was planning to sack a senior minister in advance, but would then do so soon, or later, afterwards then call me naive. I repeat, it was a moronic question.

Moronic or not, we know it was a jibe, typical of PMQ’s, an acerbic answer from Starmer on the lines of ‘yes the Chancellor will be here for the next election and the one after that!’ May have put a smile on RR face.
Starmer had to publicly affirm that she would stay in place the very next day so he would have done well to do it in the first place.

Mollygo

Starmer could have just said no he wasn’t planning to sack RR. That’s what he said, amidst the hugs and smiles the next day.
That’s not selling them down the river, nearly so much not answering.

👍🏻

Oreo

Casdon

Markets are jittery at the prospect of any change to what they have second guessed might happen Mollygo - just look at the USA.
If it’s naive to say that no PM would ever say in a public forum that he was planning to sack a senior minister in advance, but would then do so soon, or later, afterwards then call me naive. I repeat, it was a moronic question.

Moronic or not, we know it was a jibe, typical of PMQ’s, an acerbic answer from Starmer on the lines of ‘yes the Chancellor will be here for the next election and the one after that!’ May have put a smile on RR face.
Starmer had to publicly affirm that she would stay in place the very next day so he would have done well to do it in the first place.

I agree with that Oreo. The point I was making was that the question would never elicit a truthful answer from any PM- how many times does a PM say I have absolute faith in X and he will remain, only for them to be gone a week, a month, or a year later. Think Matt Hancock.

I agree it can be the kiss of death 😬

“The point I was making was that the question would never elicit a truthful answer from any PM- how many times does a PM say I have absolute faith in X and he will remain, only for them to be gone a week, a month, or a year later.” Casdon

So true! In football, managers know that after a vote of confidence from the Directors following a run of poor results they’re getting the OBE…out before Easter!