While many of his points are sound, Mark Littlewood jumps the shark with this:
...for example, try to imagine government food vouchers being redeemable at McDonald’s.
??? The government issues food vouchers all the time. They are coins and notes, or their electronics equivalent, redeemable in McD's and just about anywhere else.
Two Birds, One Stone!
1 hour ago
8 comments:
I tried one of the more upmarket 'signature collection' burgers at maccy d's for the first time the other week. It was really good. Comes with a small portion of fries and a coffee for under six quid and the whole meal is only about 1,000 calories. Gave me a lot less wind than a KFC does too.
SL, I use the £1.99 vouchers from The Metro.
The government does not ''issue food vouchers...notes all the time''
If it did do that, the interest rate would fluctuate wildy during the day.
D, you are labouring under the delusion that "money" is a real thing and that the amount of "reserves" is fixed.
No delusion at all.
The amount of reserves is in fact fixed. It is fixed by BoE interest rate policy.
Once that is decided it is maintained by selling and buying bonds. Government spending and taxing does not change the quantity of reserves, it moves reserves between the reserve accounts of banks.
D, what are these magical "reserves" you speak of? Your explanation is about as wrong as it is possible to get.
Reserves is the term for deposit accounts held by commercial banks at the Bank of England. They are not magical, my explanation is correct. The explanation can also be found on the UK Debt Managemant Office website.
I think he should have added an 'only' in that statement. In that sense givernment food vouchers are a special type of money that can only be used to buy food (and booze. Hopefully. You gotta take the edge off somehow. And of course the fodd voucher purcase of booze wpuld only cost the government the net before tax price win win.)
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