Friday, 9 June 2017

Daily Mail inadvertently hits the nail on the head.

I hope everybody is enjoying the strength and stability of the UK government as much as I am LOLZ.

Moving on to more important topics, the Daily Mail ran a cartoon to accompany a Homey rant article about the "Garden tax". I'm sure the irony of this will not be lost on people who actually know about this stuff:

The point is that this is a major attraction of Land Value Tax; people will only want to own/occupy what they actually need; land ownership will no longer be a magical money tree.


Steven_L said...

I'd feel more in the mood for celebrating had I listened to that poster over at C@W who has been banging on about this being a set up for the hung parliament and had a wedge of money on it!

Bayard said...

SL, yes there were some cracking odds going. I should have seen what I could get after I'd been to vote at my local (small rural) polling station and found out the turnout was 75% with three hours to go.

DBC Reed said...

There are times when saying increasing real estate values are the magic money tree is handy but it is not strictly true as the BoE 2014 QI bulletin on " Money creation in the modern economy" spelled out: "..the majority of money in the modern economy is created by the commercial banks making loans".
There has to be a new well-informed economic consensus
that banks currently create money out of thin air by granting loans with no back-up then charging interest on them: something that you in the past have argued against.
For the meanwhile we should stress that LVT is a non-party safeguard mechanism for stopping increases to the money supply being diverted away from production and consumption and into useless property price inflation.
As the right wing neolibertarian consensus in the UK seems to have crumbled in a fortnight following Labour's 50's revival manifesto we should not be, in any way,using language similar to that of the repressive right wing.

Mark Wadsworth said...

DBC, superficially you are right about banks creating money out of thin air, we have done that to death.

The real Magic Money Tree is land rents, the gift that keeps on giving. A lot of the rental value is turned into mortgage repayments, but they are the same thing, and banks take the total value of future mortgage payments and pretend that this sum of money exists as at today's date.

If LVT-man stops banks turning rental values into mortgages, then it is not as if money will then be diverted into productive uses, it just won't be created in the first place.

The point is that instead of money being sucked out of the productive economy as tax, it will be sucked out of rental values (the magic money tree).

Bayard said...

"banks currently create money out of thin air by granting loans with no back-up then charging interest on them"

Agreed, but they couldn't do this if there weren't i) people wanting to borrow money ii) land to act as security for the loan and iii) a social acceptance that it is OK to have more debts that you can easily pay back.
You must be old enough to remember when getting into debt was frowned upon; if we all thought that way still, the banks' ability to create money would be severely hampered.

mombers said...

Those who create the most value lose in the current game...

DBC Reed said...

Yes but once we close off inflating land prices as a destination for fictitious loans , the banks will still use the real magic money tree to crank out money to other, alternative customers.
They did in the past.Bayard calls upon my age to recall past experience: my recollection is that, in the UK, mortgages were most often provided by building societies, that provided a place for local savings to be passed on to young people to buy houses without the dishonest "leveraging" of the banks.
BTW How did the Guv bail out the banks 2008-9? Whom did they borrow the money from?

Bayard said...

"the banks will still use the real magic money tree to crank out money to other, alternative customers"
They are going to find it hard to replace land as a security for such loans and also face competition. ATM a huge amount of money is locked up in overpriced land. If land was more reasonably priced, then a lot of that money would be available for people to lend to businesses direct, either by buying bond, or shares in share issues. I remember my father taking out a private mortgage from the vendors when he bought his farm in the 60s.