There are *Infinite* Government Funds For Anything we Need. So what’s stopping us?

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Austerity is a political choice, and with political will we can have a fair and just society for the many.

This is why the right wing parties, and the UK media owned by ultra-rich, reviles Jeremy Corbyn and Labour’s superb manifesto. They know it is the truth, that there are infinite funds, and that tax is not required for funds, but as a tool for redistribution and to control inflation. Money can never just ‘run out’.

We can invest and build anything we want, as long we have resources and people to do the work. We have plenty of both, so what are we waiting for? Let’s build a society which prioritises people before privilege.

Most voters accept that the Tories are the party of privilege, and when presented with a manifesto, often refer to it as a ‘wish’ list promised just to achieve power, and feel it is  unaffordable and therefore the Labour Party has unrealistic aspirations. What is true, is that there does need to be a government with the political choice to oppose austerity, and to invest in people’s lives. What is untrue, however, is that we are limited by affordability.

Few people would disagree that we need homes, health, education, a good standard of living, and to protect our planet in a Green New Deal. The Labour Party has the political will to deliver this, but needs to have an overall majority in parliament to oppose those who act in self interest and to challenge those whose politics are designed to benefit for a few ultra wealthy individuals and not the vast majority of ordinary people.

ACCEPTING THE TRUTH:

The first thing in achieving a fair and just society is to realise two shocking facts:

    Firstly, we have been sold the greatest and most effective political lie ever told. It was been repeated relentlessly for as long as most of us can remember and in reality for even longer.
    1. And secondly, the fact that the

UK Government’s supply of  money is **LIMITLESS!**

** NB ** INFINITE  as long as there is a sovereign currency, as we do in the UK. Countries like poor Greece, in the €uroZone do not.

Yes, we have an unlimited supply of funds to achieve our aim, but unbridled spending does depend on adequate resources and inflation control.

1) Resources: Trained personnel, natural resources and energy

There needs to be adequate planning of training and natural resources in order to invest. This is not limited by funds, but still limits what can be achieved. Boris Johnson’s ill fated claim that he would build 40 hospitals may have been affordable, but it would be pointless without sufficiently skilled medical personnel to staff them. In simplistic terms, there is no point in building a diamond mine without any diamonds. Or to promise every citizen a diamond when limited by availability of diamonds.

2) Inflation is caused by too much cash in the system, and allowing those with the cash to bid higher and higher for resources, hence prices rise.  The solution to avoidance of inflation this is either:

a) Austerity- put less cash into the system or

b) To tax more cash out of the system hence it’s called a “tax return”.

Austerity is a political choice. It makes a horrible mess of society. It destroys lives, decimates public services, and the estimated unnecessary deaths from the Tory/Lib austerity programme is 130,000 lives, and most likely is many more.

Austerity is not and never was necessary. It was never designed to ‘fix the economy in the national interest’. After WW2, so many homes were destroyed, yet even when there was a shortage of resources, the Labour government set about building the 750,000 homes needed.

The Tories’ concern is not about the economy, but a cynical diversion of cash in the system to the billionaires in their tax-free-islands who already have more wealth than they can ever use.

Tax

The alternative way of limiting inflation is to reduce the cash in the system by taxation, by retrieving some of it, but not by taxing the poor. So many of the rich and wealthy are avoiding paying any or little tax.

Taxes have three functions:

✅ control inflation

✅ redistribute wealth (progressive/ regressive)

✅ Influence public behaviour (i.e. reduce smoking, fines for speeding etc.)

❌ Taxes ARE NOT required to fund public expenditure. We can print infinite cash.

 

Dispelling the Myth

So we need to break free of this crazy “household budget” analogy; it’s a falsehood. Margaret Thatcher justified her economics by putting government expenditure on the same footing as household budgets. This idea is accessible because it’s something we all need to do if we are to survive. But the idea that governments depend on some kind of biscuit tin full of cash, hidden at the back of some gigantic larder is ludicrous. In the past there was a limiting factor when currency was tied to Gold Reserves. Since the link was broken, ( MMT), cash is infinite and created by fingers on keyboards instantly. So the idea that the government is spending the taxpayers’ money and needs them to pay for it is absurd, and framing language in this way is a deceptive politically device.

It is difficult to accept that truth because of that great effective lie which has kept the obscene wealth owned off-shore by the ultra rich untouchable for generations.

That cynical Tory lie is unravelling as they come unstuck by their own sudden alarming availability of funds for dubious reasons, while denying the affordability for projects which most people would find admirable.

The Tory lie is coming unstuck when they:

  • Bribe DUP £1bn
  • Can’t explain where cash is coming from for spending promises (because it will undermine the lie)
  • Can pay £600m to repatriate Thomas Cook customers but …
  • Won’t pay £450m to save Thomas Cook and save people’s jobs (saving £600m)

We should not think of money being “spent” or “wasted”.  All are  transactions, so money (much like energy in physics) cannot be destroyed, just transferred. It then becomes a simple matter of analysing the transfer:

* from rich to poor people

* or from poor to rich people?

Households have to earn cash and if they spend more than they earn they go bankrupt but governments (with sovereign currency) can never go bankrupt; that is an impossibility.

The unhelpfully named ‘National Debt’ is not a debt owed by Government or by the nation but it is cash lent by Central Bank, to society, to facilitate exchange of resources.

INSTANT MONEY

Ever since August 15th 1971, states have created money out of thin air by typing on keyboards at the Central Banks. Those keystrokes make the balance of accounts in private banks go up when a person or company receives a payment, and they make those balances go down when a person or company pays taxes to the state. Therefore, the state can’t run out of its own money and the idea of it saving its own currency becomes nonsensical. Companies and families do need to save because they are users, not issuers, of money, but the state doesn’t save in its own currency because it can always issue as much as it wants and it can never run out of it. In this way, money stops being a commodity and becomes a mere accounting entry (Wray 2012). Furthermore, the capacity of the state to spend stops being dependent on the collection of taxes or on the issuing of debt (Mosler 2010). However, taxes keep on being necessary, but not to finance the current spending of the state, but to accomplish a double function: they give value to money and they control aggregate demand (consumption capacity). Through the first function, they assure that state money will be accepted as a payment means , and through the second, they control inflation.

IMMIGRATION

In terms of resources, there is a link between economics and current politics  which concerns immigration. It is not an issue about whether immigration is good or bad. There has always been a movement of people since time began; in fact it is necessary in evolutionary terms.

But the issue is how people are being utilised. If wages are undercut and held back, if there is not an investment in training and in education in local populations, then the labour resources are unsustainable, and so is the standard of living.

The government has kept wages low. There is inadequate work for people to enable them to afford homes and food for their families. Short term employment – often of an hour  a week – falsifies employment levels, and people on short-term or zero-hours contracts have little or no employment rights and protection. In reality there is unemployment and underemployment which is intentional, artificial and political,  and so wages become more and more depressed.

In contrast, while there is insufficient well-paid work, skilled staff are in short supply because of a failure of the government to invest in education and training. For example, there has been a cut to bursaries for nursing staff to train, and to provide adequate childcare for workers.

There will be a shortage of staff beneficial to society such as trained nurses and doctors because of under-investment in training and education, and therefore without  further immigration those skills are unavailable.

It is no way anti-immigrant to argue that human resources and skills are underdeveloped and underused in the local population, people who are unable to afford tuition fees for training, and who cannot live and support themselves or a family without maintenance grants. However, it is understandable when people are living in poverty and are paid less than it costs for housing and food become resentful and that  they feel the cause is immigration, when in fact the cause is economics and utilisation of people. It is arguable that there should be greater  investment for training more local people who are otherwise unemployed or underemployed rather than draining skills and labour from other countries.

Objections are not anti-immigrant but anti-exploitation and it is questionable (if all things were equal) whether there would be mass immigration of people from their homelands and whether freedom of movement is a true liberty, or that it is simply driven by economic and sociological conflict factors.

Movement as a choice, rather than movement resulting from having no alternative, is a different issue and separating families as we have seen as result of recent anti immigration policies is appalling and must be rejected.

EUROZONE

** In the UK, we have the ability to turn our economy around to benefit the people, and not the billionaires, because we still have our own currency. Because of the Euro, the Greek government could absolutely go bankrupt, as per the household budget analogy as they had no sovereign currency, i.e.) they couldn’t print the cash to meet obligations to the EU.

It was a false comparison to scaremonger the UK electorate with Greece, and it is false scaremongering in the news that the expectation of the EU is for UK to join the Euro. Those states who signed up to the Eurozone are trapped within it.

Fiat socialism is a name for an open and prosperous society ruled by the principles of the modern monetary theory and functional finance. It is a society without unemployment or poverty, in which everybody has a decent job (either in the private sector, or in the public sector) which allows him or her to fulfil all basic needs and coordinate working and private life because of reasonable time schedules. A society in which public services, education and health access are of the highest quality, and in which the level of prices remains stable.

Further Reading

From Think Left:

Published Books:

  • NHS plc The Privatisation of Our Health Care: Allyson M Pollock
  • The Courageous State: Richard Murphy
  • Treasure Islands Tax Havens and the Men who stole the World:  Nicholas Shaxson
  • Tax Havens How Globalization Really Works:  Palan, Murphy and Chavgneux
  • School Wars The Battle for Britain’s Education : Melissa Benn
  • The Plot Against the NHS:  Colin Leys and Stewart Player
  • Bad Pharma: Ben Goldacre

References

 

@Dave Gillian Twitter https://threadreaderapp.com/thread/1178436669789356033.html 

https://braveneweurope.com/carlos-garcia-fiat-socialism

Mad Friday reveals last year 900,000 ambulance calls answered without paramedics

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GMB investigation on ‘Mad Friday’ reveals 900,000 ambulance emergency calls were answered without paramedics last year.

Information from GMB has exposed the critical shortage of ambulance staff as a result of government policy has resulted in almost one million ambiance calls responded to without trained  paramedics. As a result of austerity, lack of investment in public services, stress to public sector employees, pay-caps, and moves to privatise the NHS, evidence shows service levels are unsafe and wholly inadequate.

Police forced to take patients to hospital due to shortages in more than 1,000 incidents of 999 ambulance calls

On the day dubbed ‘Mad Friday’, an investigation by GMB, the union for ambulance staff, reveals at least 900,000 emergency calls for ambulances were not attended by a paramedic in England last year.

And in more than 1,000 confirmed cases trusts were forced to ask the police to take injured patients to hospital due to ambulance shortages. The real figure is likely to be as high as 5,000.

‘Mad Friday’ – the last Friday before Christmas – is one of the busiest days of the year for amulance staff as many people celebrate finishing work for the festive period.

GMB submitted a freedom of information (FoI) request to all 10 ambulance trusts in England asking: ‘How many 999 calls to your trust were attended only by emergency care assistants, or other non-fully qualified paramedics rather than with a fully-qualified paramedic in the financial year 2016/17?’

The nine responding trusts disclosed that there were a total of 882,465 incidents last year.

However, the true figure is likely to be significantly higher as East of England Ambulance Services refused to respond, claiming it would take them too long to find the information.

South East Coast Ambulance Service had the highest number of non-paramedic responses with 190,813 incidents.

North East ambulance service’s response revealed 155,902 incidents, of which 650 were in response to the most life-threatening ‘Red One’ calls.

The trust also revealed 887 incidents where the police took patients to hospital due to a shortage of ambulance staff.

Tim Roache, GMB General Secretary, said:

“It will send shockwaves through the country that hundreds of thousands of patients, some of them involved in life-threatening incidents, are not being attended by a trained paramedic.

“Proper support for our overstretched ambulance services is literally a matter of life and death.

“GMB members are performing miracles every day but the system is failing because funding just hasn’t kept pace with demand.

“Paramedics and other ambulance staff regularly work 12-hour shifts or longer. They have no more to give.

“This must be a wake-up call for Jeremy Hunt.

“It is vital that our ambulance services are given the additional resources they desperately need.”

Kevin Brandstatter, GMB National Officer for Ambulance Staff, said:

“How many people will die this Christmas because the Chancellor refuses to properly fund our ambulance services?

“Is anyone in this Government prepared to apologise to the patients given inadequate care by over stretched and under-trained staff?

“Is anyone in this Government prepared to apologise to the families of those who die because of staff shortages? I bet not.”

[1] Results of GMB Freedom of Information Request to NHS Ambulance Trusts in England:

[2] The National Audit Office found in January 2017 that in the 2010 – 2015 Parliament funding for ambulance services rose by 16 per cent but demand rose by 30 per cent:“Increased funding for urgent and emergency activity has not matched rising demand, and future settlements are likely to be tougher. Between 2011-12 and 2015-16, income for ambulance trusts’ urgent and emergency care activity increased by 16% from £1.53 billion to £1.78 billion. Over this period, activity (ambulance calls and NHS 111 transfers) rose by 30%. Commissioners have warned that, given current financial challenges in the wider health service, future funding settlements are likely to be tighter (paragraph 1.12).”National Audit Office, NHS Ambulance Services, 26 January 2017, page 7: https://www.nao.org.uk/report/nhs-ambulance-services/

 

Brighton Fringe – #MMT with the one and only Prof. Bill Mitchell #Lab17

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Many of us now realise that the scares about deficits and debt are nothing more than useful devices to justify cuts and sell-offs of our public services.  Austerity is a political choice.  There was/is nothing necessary about the last 7y of Tory asset-stripping.  If you’re in Brighton for LP conference (or any other reason) come and hear Professor Bill Mitchell explain how the economy really operates.  You don’t need to be a LP member and it doesn’t cost you anything to be informed by a world class economist.

Monday 25th September, 2pm until 5pm at the Brighthelm Centre (just a few steps down from Brighton station).

Overworked Ambulance Staff forced to take 80,000 sick days due to stress.

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GMB INVESTIGATION REVEALS OVERWORKED FRONTLINE AMBULANCE STAFF FORCED TO TAKE 80,000 SICK DAYS DUE TO STRESS
Twelve per cent of all paramedics and ambulance health care assistants in England were sick due to stress or anxiety last year.
GMB, the union for ambulance staff, has revealed 12 per cent of all ambulance staff were forced to take a total of more than 80,000 sick days due to stress last year. A total of 2,468 paramedics and health care assistants – or one in eight workers – had to take time off due to stress. The total number of days lost across England was 81,668 on the financial year 2016/17.
The shocking figures come from a series of Freedom of Information requests sent by GMB to all ten Ambulance Trusts in England. In two of the trusts – East Midlands Ambulance and North East Ambulance – a shocking 23 per cent and 22 per cent of frontline staff took sick days due to stress. [See note 1 for regional breakdown].
GMB is campaigning for the paramedic retirement age to be equalised with other physically demanding front-line emergency service roles, such as police officers and firefighters who are able to retire at 60.

Kevin Brandstatter, GMB National Officer, said:
“These disturbing figures once again prove what we already know – that our frontline ambulance workers are in the midst a stress and anxiety epidemic.

“They are consistently overworked, underpaid and expected to do incredibly difficult jobs – such as dealing with the aftermath of the Grenfell disaster or Manchester bombings – without adequate staff or resources. “It’s no wonder almost 12 per cent of the whole workforce is sick with stress.

“Theresa May needs to stop buying her head in the sand and start listening to front-line ambulance workers.

“Workforce numbers haven’t kept pace with sharply rising demand.

“Forcing ambulance staff to work up to the age of 68 is another major cause of stress. There’s no justification for treating paramedics differently to comparable physically demanding front-line roles.

“The absences caused by staff shortages and overwork are already contributing to potential delays in the attending incidents.

“The absence of staff due to stress will only compound this situation.

“If any patients lose their lives as a result, the blame falls fairly and squarely on an uncaring Tory Government for not dealing with stress and anxiety of our frontline emergency staff.

“It’s time paramedics and other ambulance staff workers got the support they deserve.”

[1] Paramedic and other ambulance staff absences due to stress, anxiety and related conditions in 2016/17
Screen Shot 2017-09-20 at 09.37.13

iGMB asked Ambulance Trusts to provide “details of how many of your paramedics and emergency care assistants have taken time of work due to stress in the financial year 2016 – 2017.”
Employment totals for the financial year 2016/17 are taken from the March 2017 ‘Organisation Tables’ of NHS England’s NHS Workforce Statistics – March 2017 publication: http://www.content.digital.nhs.uk/catalogue/PUB24214

 

 

What do unions think of Labour’s manifesto?

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http://www.union-news.co.uk/breaking-unions-welcome-labours-manifesto/

Unions have welcomed Labour’s election manifesto, praising it as “impressive”, a “chance for real change” and “a real opportunity to build a better Britain”.

ASLEF general secretary Mick Whelan said: “This is an exciting and progressive platform on which Labour can fight the next election. It offers people a real opportunity to help build a better Britain.

“Jeremy understands how ordinary hardworking men and women are suffering in the Conservative Age of Austerity. David Cameron, George Osborne, Theresa May and Philip Hammond have pulled off the trick of redistributing wealth from the poor to the rich – the reverse of Robin Hood! – to bail out the fat cats and bankers who caused the economic crisis of 2008.

“In contrast Jeremy wants to rebuild Britain to create a fairer, more modern society, with a more productive economy, that delivers for all the people, not just the few, and is fit for the 21st century.

“We especially welcome the promise to bring Britain’s railways back into public ownership – a policy on which ASLEF has campaigned passionately ever since John Major’s ill-starred privatisation of British Rail in 1994 – and freeze passenger fares across the network.

“This is an exciting, and sensible, socialist platform on which any of the great Labour Party leaders of the past – Keir Hardie, Clement Attlee, and Harold Wilson – would have been happy to stand. That’s why I urge people to vote Labour on 8 June and help return a Labour government to build a better Britain.”

PCS general secretary Mark Serwotka said: “Labour’s pledges to end the public sector pay cap, improve collective bargaining, repeal anti-trade union legislation and strengthen employment rights stand in stark contrast to the Conservatives’ bogus claims on workers’ rights.

“Labour’s manifesto sets out a clear commitment to many long-standing PCS industrial issues and demands, including an end to the privatisation of public services, renationalisation of public utilities and raising the pay of civil and public service workers.

“Tax reforms we have long campaigned for – including the ‘Robin Hood tax’ – offer the opportunity to ensure that those with the greatest wealth contribute more. Coupled with much-needed investment in HMRC to go after those who evade and avoid tax, these reforms will provide essential and much-needed investment in our public services.

“Plans to reform social security, including scrapping the hated Bedroom Tax, ending benefit sanctions and reinstating housing benefit for those under 21, are most welcome and signal a shift away from the policy of demonising claimants doggedly pursued by the Tories.

“Jeremy Corbyn and John McDonnell have always shown great support for PCS campaigns and our members, and their pledges are in stark contrast to what the Tories have to offer. We have been clear that our message to our members is that another Tory government would be the worst possible outcome.”

TSSA general secretary Manuel Cortes said: “This is an exciting, ambitious vision for a big-hearted, inclusive Britain that will build better lives for the many not the few. What’s not to like? Of course, as the head of transport union which has long campaigned to see rail brought back into public ownership I am delighted on behalf of TSSA members to welcome Labour’s commitment to taking back control of rail from corporate franchise holders who for too long have been able to get away with extracting profit out of our rail system without having to plough back into it in investment.

“Great news that the construction of HS2 is to be extended into Scotland as is that HS3 and Crossrail 2 will also be built. Good quality rail links are at the heart of a modern economy and today we have been not just been given the plan but the commitment to bringing every area of Britain onto 21st century track.

“This manifesto will transform Britain’s rail industry and help underpin the expansion of a high speed, high-tech economy. Our members too will be delighted at the commitment to a £10 living wage which will lift so many of their fellow workers and family members off the bread line. The commitment to house building, an industrial strategy, NHS and public services shows Labour is putting people back at the heart of British economy, committing to giving the many a wage rise. This manifesto show working people are definitely better off with Labour. Bring on June 8.”

FBU general secretary Matt Wrack said: “There are clear dividing lines for who to vote for in this election. Labour will invest in firefighters in order to keep people safe, whereas the Tories will continue to cut and decimate our service, putting public safety at risk.

“Having 3,000 more firefighters on the frontline is a promising start, and we welcome their commitment to review staffing levels across the service as a whole.

“Fire deaths have risen for the first time in 20 years since the Tories came to power, and response times to emergencies are getting slower. The service is in crisis and the Tories don’t have a plan to save it. Labour are the safe pair of hands who will deliver a properly resourced fire service to protect public safety.”

Unite general secretary Len McCluskey said: “What Labour is doing today is what Labour does best – offering real change for the many in this country. Labour will invest in our people and build a Britain that we can all be proud of.

“For those who want to see our children given a chance, to see that work really pays, that our elderly and vulnerable are no longer degraded by government policy, then the answer is to vote Labour.

“For too long, working people have been at the sharp end of Conservative cuts and disastrous economic mismanagement – and they will be again if that party takes power on 8 June. The reality of Conservative rule is that for those not protected by power and wealth, life gets tougher.

“In every aspect of life – from an affordable home to a safe NHS, from a decent education for all our kids to a living wage and a decent job – the story of the Tory party is that our communities suffer. The Labour party will put a halt to this. Under Labour, working people and their communities will stand tall again.”

UNISON general secretary Dave Prentis said: “Labour has produced a manifesto that delivers for public services. Ending the pay cap will make a huge difference for hard-pressed public sector employees. Proper investment in the NHS and social care will have a huge impact on patients and staff too.

“When the other parties unveil their manifestos later this week, they would do well to take a leaf out of Labour’s book – and stand up for public services and those who work in them.”

GMB general secretary Tim Roache said: “Labour’s manifesto is one that would practically change millions of lives. From social care, to housing, to Sure Start and our NHS – it’s a manifesto that makes sense for working people.

“It’s a manifesto about fairness and about helping real people to get by and get on in life. It’s not paying lip service to the issues people face, it’s taking them head on. The country is crying out for change. This is a manifesto that can deliver it. People need to get out there and vote for it.”

Usdaw general secretary John Hannett said: “Universal Credit will plunge far more working families into poverty, which will be almost impossible to work their way out of. We supported the initial intentions of Universal Credit, to simplify benefits and improve incentives to work.  However, severe cost cutting has turned Universal Credit into a real threat to the incomes of low-paid working families,

“Although we won the argument on the proposed massive cuts to tax credits, forcing a u-turn from the Government; those cuts are still being applied to Universal Credit and will hit millions of working families over the next 3 years. This is a ticking time bomb that will leave many working families thousands of pounds worse-off when they are transferred onto Universal Credit.

“We are looking to a Labour Government to restore the original purpose of Universal Credit, to encourage entry to and progression in work. The low work allowance and high clawback of net earnings are particular disincentives to work. There needs to be a fresh look at what Universal Credit means in practice for low and middle income earners and get this troubled project back on track to support not penalise working families.

“Whilst the Prime Minister has talked about supporting families struggling to make ends meet, only Labour has the policies to provide crucial support to help make working family incomes meet the cost of living.”

TUC general secretary Frances O’Grady said: “This is an impressive set of pledges from the Labour Party. Their commitments to improve workers’ rights and drive up wages would make a real difference to millions of workers.

“There’s clearly a growing political consensus to address issues affecting working people. Decent jobs and fair pay must top of the list for the new government.

“Nobody voted for Brexit to lose their hard-won protections at work. That is why Labour is right to protect existing rights at work, and pledge to at least match future EU rights. British workers shouldn’t miss out on rights enjoyed by other European workers.

“With one in ten workers now in insecure jobs, it’s good to see a real attempt to improve workplace rights. Banning zero-hours contracts would give nearly a million workers the certainty and security they deserve. And abolishing employment tribunal fees would make it easier for people to defend their rights at work.

“Labour rightly recognises that Britain still needs a pay rise. Wages still haven’t recovered from the financial crash, and far too many working people struggle to pay the bills.

“Increasing the minimum wage, and expanding collective bargaining coverage, are proven and effective ways to drive up stagnating pay.

“And ending artificial pay restrictions in the public sector will stop the real pay cuts for public servants after seven long years. Hard-working nurses shouldn’t be forced to turn to food banks.”

RMT general secretary Mick Cash said: “Labour’s commitment to British state ownership of our rail,  power and water, ‎as opposed to the foreign state-backed exploitation of our essential services supported by the Tories, shows that Jeremy Corbyn’s Labour is clearly fighting to protect our national interests.

“Labour’s manifesto recognises the dangers of Driver Only Operation and commits to safe and accessible railways for all.  The manifesto represents a massive boost for public transport after more than two decades of Tory privatisation and RMT welcomes this departure from the failed, profiteering model that has dragged Britain into the slow lane.”

Why the ‘Magic Money Tree’ Matters

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 On BBC Question Time, the Prime Minsiter, Theresa May told a young nurse who hasn’t had a pay rise in eight years and is trying to earn a living that there was no more money, and that there isn’t a magic money tree. (See link)

The Tories know full well, that funds are available for the UK government to use as they think fit,  as we are a sovereign state, and have our own currency which the government releases for investment. But while in 2010 they made a public  fuss about a piece of paper which was saying ‘no money left’, they knew, all along’ what they wanted to do. They used this (ill-advised) joke to add credence to their Austerity agenda which has resulted in cuts so severe it has left people disabled suicidal, people homeless, and people who are working very hard, in poverty. Yet they  wanted those funds for the few, not for the many.

Since Margaret Thatcher’s cruel government snatched our children’s milk, and did not replenish our social housing, and decimated our industry,  and yet helped itself to public assets, the media has reinforced myths about mainstream economics. It continues in 21st Century, while  today’s Tories want to finish the job by, for example, cutting Police and Army personnel, and now they want to privatise our National  Health Service.

We cannot progress in redressing this imbalance  between rich and poor until these myths are exposed for what they are – just lies!

These are myths the Tories want us to believe ( see article) They are untrue, all of them

  • The state money system operates like our own household budget
  • Government spending relies on taxation and borrowing
  • The government needs to reduce the deficit, balance the books and save for the future
  • The government must learn to live within its means
  • The government has to cut public services like the NHS, education or welfare because we can no longer afford to pay for them   

The government is forever saying it’s the ‘taxpayers’ money which funds public services, and this just is not true. The government is the source of the money, and tax a tool for resdistributing  the wealth produced by our working people.   Once we accept this concept, then  we can see that Jeremy Corbyn’s Labour Party Manifesto is not a “Chritsmas Card List”, but a costed plan to invest in our society to rebuild Britain for the many, not the few. This is something which the vast majority want to see, but are still believing the Tory myths.

The Modern Money Matters website is a good source of information 

The Magic Money Tree Exists, Modern Money Matters

“Like the elephant in the room The Tree cannot be mentioned, because then the electorate might start asking awkward questions about public services — perhaps we should have some? — and taxation — are we overtaxed for the size of government we have, given that we still have people without work?

Once you know about The Tree you might have your politicians delay a casino build and build a hospital instead. You might let the rich people keep their coins, but stop them using those coins to reserve scarce doctors and teachers for their own purposes ahead of the general population.

The Tories want to privatise everything, and Labour want to hit rich people hard with taxation sticks. There are no doubt reasons for these fetishes that psychologists would find fascinating. But they are damaging to our nation. They get in the way of doing the job.”

In 1945, a Labour Government, after the ravages of war managed to invest in our society, and the will was there to do so. I believe the will is there now, but generations who have grown up believing what the Tory press have said,  do not realise this is all possible. Here is the Magic Money Tree idea of Labour’s Manifesto. Further economic explanations can be found as Modern Monetary Theory. (These are both known as MMT).

IMG_0939

Let’s dispel the Tory myth, and get the MMT idea of Economics out there. Then we start the rebuild. Our society has become so divided, we need to join together in creating a society for the Many not the Few.

 

 

 

EVERYTHING YOU EVER WANTED TO KNOW ABOUT HOW OUR MONEY SYSTEM WORKS BUT WERE AFRAID TO ASK

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EVERYTHING YOU EVER WANTED TO KNOW ABOUT HOW OUR MONEY SYSTEM WORKS BUT WERE AFRAID TO ASK

by Prue Plumridge

At a time of great political and economic uncertainty you may be scratching your head and asking what on earth has this article to do with you as you’ve enough trouble just keeping your job and your finances in order let alone worrying about getting the government deficit down and paying the national debt back! What a temptation it is to shake our heads and defer to the experts who, we believe, must know better. The subject of economics might seem a little tricky but the basic concepts are simpler to understand than you might think at first glance and, rather than being a dull and arcane subject, it has everything to do with your life and your well-being.

So let’s start with a short economics quiz. No cheating now just answer the following questions with a yes or no without peaking further down for the solutions.

  • The state money system operates like our own household budgets
  • Government spending relies on taxation and borrowing
  • The government needs to reduce the deficit, balance the books and save for the future
  • The government must learn to live within its means
  • The government has to cut public services like the NHS, education or welfare because we can no longer afford to pay for them

If you answered YES to all of those questions you might be surprised to learn that you have fallen into the mainstream trap. This is what mainstream economists and politicians want YOU to believe. But what if everything you ever thought you knew about how the money system works wasn’t actually true but was being used to justify an ideology which includes austerity and cutting the public services we all rely on?

Well that’s exactly the case! YOU have been deceived.

WHAT YOU NEED TO KNOW:

  • The UK government issues the currency out of thin air via keystrokes on a computer – yes really! Banks create money out of thin air too when a customer takes out a loan but that debt must be repaid with interest.

 

 

  • The UK government is not like a household or a business where its finances are concerned
  • When the UK government spends it creates money by crediting the reserves of commercial banks held at the central bank – the Bank of England. A monetarily sovereign government like the UK can never run out of money and can always meet its liabilities as long as they are designated in the local currency, in this case our British pounds
  • The government as the currency issuer spends money into existence and doesn’t need to tax or borrow on the markets to fund its expenditure. Think about it:
    • What sense would it make for the government to borrow money it had issued in the first place?
    • How can the government spend tax before it has received it? Your tax obligations can only be paid once the government has issued the money and it is deducted at source by the taxman from your salary. (And just to shock you a little bit more do you know what happens to your tax? It gets extinguished from existence.

So, tax is not funding government expenditure. We have just been conditioned to believe it does.

  • Tax does, however, have a number of specific functions which include:
    • Ensuring that the economy does not exceed its productive capacity and lead to inflation – taxing more if the economy starts to overheat and taxing less if it is slowing down.
    • Enabling wealth to be distributed more equitably. So, yes, the rich SHOULD pay the tax they owe but not because it is funding healthcare, education or public services. It does not.
  • If our expenditure exceeds our income we will be in debt and it may cause us financial concern. However, a government deficit is far from being the bogeyman it is presented as by experts and politicians. (Just to be clear a government deficit is difference between tax received and the amount government spends and the national debt is the accumulation of those deficits). Deficits are, in fact, normal and necessary. They represent YOUR income. The politicians won’t tell you this (perhaps they don’t know) but in historical terms governments have run fiscal deficits for most of the time and have hardly ever run balanced budgets. Indeed, when it has happened they have occurred just before economic downturns. Think about that. What conclusions might you draw?
  • Budget surpluses are not the equivalent of saving to fund future government expenditure no matter what the politicians tell you. As the currency user you can save for that holiday you’ve always wanted but this does not apply to a sovereign government which is the currency issuer, cannot run out of money and can spend when it chooses. When a government chooses to pursue a public surplus what it actually means is removing wealth from the non-government sector -in other words you and me, the currency users. When that happens poverty and private debt increases instead. And that is exactly what has happened.
  • When you borrow money from the bank you have to repay the debt with interest. If you don’t the debt collector will be round pretty sharpish. This does not apply to a monetary sovereign government which cannot go bankrupt so the debt collectors won’t be knocking on the door of the treasury ready to haul off its assets any time soon.
  • Government funds public services like the NHS through creating money not by borrowing or taxing to pay for it.

But won’t ‘printing’ money create inflation I hear you gasp. After all you’ve heard about all about hyperinflation in Germany and Zimbabwe and politicians keep telling us all about the evils of ‘printing’ money and hyperinflation. As with everything there are caveats – nobody is suggesting for a moment that a government could carry on spending ad infinitum. Money may be infinite but resources are not.

The UK government may not be constrained financially but it is limited by availability of real resources – people, skills, technology, equipment, infrastructure, natural resources and ecological constraints. It is NEVER constrained by money.

We often hear journalists and politicians talk about a government’s financial credibility suggesting that an increase in the debt or deficit is an indicator that a government cannot be trusted to manage the economy effectively. However, this is the wrong measure of effectiveness. We should judge a government on the economic choices it made and whether it advanced public purpose. Did it create the necessary infrastructure to sustain a healthy economy? Did it invest in the health of the nation, in education, transport, food and farming security, renewable energy infrastructure or research and development? Did it ensure that citizens were protected in the event of illness, unemployment and disability or provide good pensions? Did it pursue full employment policies? Did it spend enough during economic downturns and offer a job guarantee for all those who wanted to work? And lastly did it use the available resources in the most effective way possible for the benefit of all?

If the answer to any of these questions is no then a government has failed to deliver in its primary purpose as a servant of the people. “The Government is us”.

Remember, a good government is one which:

  • deficit spends enough in relation to the prevailing economic conditions.
  • makes choices aimed at ensuring the well-being of the many and not just the few using the available resources as effectively and equitably as possible.

So, when people ask you as they invariably will ‘‘can we afford it’ the answer is yes.  The government creates the money and when it spends it benefits the private, non-government sector. In economic parlance, a government deficit equals a private sector surplus.

In short, spending equals income to someone – you, me, public service employees, pensioners, sick and disabled people receiving benefits all of whom will spend that money in the local or national economy not to mention businesses who will invest if they are confident in the government’s handling of the economy.

While we focus on the question of whether we can afford it in money terms we are ignoring the more important question of what the consequences are for the health and economic well-being of the nation if governments don’t spend adequately.  Austerity and cuts to public services have been presented as a financial necessity (however erroneous that argument is) and yet at the same time this government has had no problem at all with magicking up money from thin air to purchase weapons, fight wars, repair the Royal Estate, hand out tax breaks to the already wealthy or give public money to private corporations to run public services. It turns out the government is a real handy cash cow for the corporate sector.

Economic well-being depends not on money but governments making good choices which benefit us all and, given the record of the Conservatives over the last seven years, this is the question that should be on our lips not can we afford it.

 

Credits to:

https://era-blog.com/2016/12/05/paying-for-public-services-in-a-monetary-sovereign-state/

https://www.thepileus.com/economics/jeremy-corbyn-does-not-need-to-borrow-to-pay-for-his-policies/

https://www.thepileus.com/economics/labours-economic-alternative-to-neoliberalism/

http://bilbo.economicoutlook.net/blog/?p=25961

https://www.theguardian.com/commentisfree/video/2015/feb/04/another-economic-crash-is-coming-how-did-this-happen-video

https://www.theguardian.com/money/2017/apr/08/consumer-debt-loans-credit-cards-bank-of-england