"George Osborne should not be allowed to use smoke and mirrors to attempt to hide what's really going on with government borrowing and debt, so it's right that the presentation of these statistics is now reviewed. The chancellor's failure on economic growth is why deficit reduction has stalled and he is now set to borrow £245bn more than planned. No amount of accounting trickery can hide this failure from the public."
A grim document
7 hours ago
6 comments:
Much ado about nothing. Having interest on bonds held by the BoE paid direct to the Treasury rather than (as at present) waiting till the end of the year to make the payment, is a minor change.
Of far more fundamental importance here is the fact that the deficit and debt are total and complete non-problems, as advocates of Modern Monetary Theory keep pointing out. Unfortunately Cameron, Osborne, and the Labour leadership are far too thick to see that. Same goes for the dimwit politicians who run the USA.
R M - I would have thought that Cameron, Osborne and the Labour leadership would all jump with alacrity on evidence that the deficit and the debt are non-problems and follow it assidously, and that even if they haven't, perhaps because as you say they are all "far too thick" there must surely be enough "not thick persons" around who can explain to them, and indeed us other "far too thick persons" such as myself, in ways we might possibly understand, the how's, why's and wherefore's, so that these non problems can be shown to be just that, and dispensed with; and we can all then go back to worrying about other, possibly it would seem, more weighty and intractable 'real problems'. I should perhaps add that I am still trying to fully get my head around how this "we shall sell bonds in order to raise funds, and buy them ourselves, and then also pay ourselves the interest due to us as the holders of our bonds and spend it, too" thingy actually, well not "works" because it obviously does, else it wouldn't be happening, but "how" ...
BE, you can't expect RM to just explain MMT in the space of a blog comment.
Here's his 2,000 word summary.
Just Google it for yourself and read up - the theory is actually a very sensible way of looking at fiscal policy, the problem is, MMT doesn't really give us an answer as to what the best tax and spend policies are. That is where I differ from RM.
MMT has nothing to do with madness about issuing bonds and then buying them back, it's much simpler than that.
MW: As I understand, MMTers view taxes as a purely regulatory instrument to counter inflation, so from their point of view, LVT is far too inflexible don't you think?
Kj, LVT is only one side of the equation though. Remember that there's CI as well. A Georgist government could implement a flexible MMT regime by splitting the CI into two parts: guaranteed and bonus. The guaranteed CI being set on an annual basis along with the LVT rate and the bonus CI being set on a monthly basis as needed to counter inflation/deflation.
That should provide the flexibility required.
Kj, yes, the idea that the only reason for having taxes is to counter inflation is a large part of it.
But they don't seem to have a strong opinion on what is the least bad tax. And they seem to be against Citizen's Income.
D, I don't think that you need to make it that complicated.
Of course, recessions would be much milder in an LVT-CI world, but if there is a recession, you can still have deficit spending* and in the good years you can still run a surplus to pay off the national debt.
* Which could be actual spending on new roads or something, it could be LVT reductions or it could be CI increases.
In a really bad recession, total rental values would fall slightly, so it seems fair to reduce LVT in those years and if CI is kept constant, then you automatically have a small deficit.
But actually I like paying people to do things - like building new roads, or learning a second language, or whatever - best.
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