Modern Monetary Theory or MMT is supposedly the new kid on the block – espoused by the likes of Paul Krugman, Will Hutton & various other so-called economists – whose claim to fame is a track record of failed predictions worthy of Prof Neil Ferguson of Imperial College.
As a professional research economist with a track record of almost awesome success – I have always been bewildered that these chaps get high ranking academic positions that never been offered to me. Moreover, their speaking fees & book sales outpace me. It seems we now live in a world where consistent failure is the way to the top.
The annual honours list reflects the same phenomenon, celebrities, pundits, failed politicians & civil servants line up for their gongs, the bigger the failure the more prestigious the gong.
Exponents of MMT of course are complete frauds, there is nothing modern about it. It is simply regurgitated Keyensianism. A politically expedient invention of the 1930s. To save the lay reader wading through Keynes’s General Theory, an awesome work of gravity defying balderdash served to university students as holy writ.
I can sum it up in one sentence. ‘Debt doesn’t matter, God made us to consume until we are blue in the mouth on borrowed money & saving money is a sin against your fellow man’.
This dogma is meat & drink to politicians. The electoral message is basically there is such a thing as a free lunch. Indeed a free whatever you want. It also totally disconnects public spending from any fiscal responsibility by governments, banks, consumers, public sector employees. It is a denial of thousands of years of monetary & economic history. But the end is now in sight. The party is almost over. Let us take stock of money & banking today & make your own decision.
I deliberately simplify a bit here as most of us have limited time to devote to information outside our remit to get through another day, at the moment a life of quiet bewildered desperation. Unless you are an holy anointed civil servant or academic protected from real life & its tribulations.
Money can be defined relatively simply. It is a store of wealth & a medium of exchange. To be both it must enjoy trust. Without that confidence it will not be accepted, modern fiat currencies have nearly exhausted that confidence. For five thousand years gold has been money. Or perhaps silver. But precious metal is heavy & cumbersome. So paper money was invented, probably in China but we don’t know for sure. But paper money until relatively recently was in the form of a promissory note drawn on gold or silver. Much easier & safer to carry about. Indeed a very good solution.
But it only works if the paper can be turned back into gold or silver. If there is no asset backing the paper it will revert to its intrinsic value, which is of course nothing. So when President Nixon took the world’s reserve currency off the gold standard it became a licence to print more paper. Initially to pay for the Vietnam war. Subsequently more wars & recently welfare.
The purchasing power therefore naturally enough tanked. Since 1971 the value of the dollar has fallen 93%. Other paper currencies likewise. That first pint of bitter in 1967 for me cost one shilling, about 5p in today’s money. The same applies to the family house, car, or anything else you care to think of.
The governments of the world now actually aim at 2% inflation per annum. Currency degradation is their goal. Yet only fifty years ago inflation was the bogeyman, something to be avoided. But the establishment cleverly wrote itself out of the game. It indexed their salaries & pensions to that very degradation. So only the poor, the pensioner or the prudent private sector citizen were punished.
We are certainly not ‘all in this together’. Now your small town hairdresser or cab driver funds monster town hall salaries & perks.
The establishment protects the central banks, the central banks underwrite the retail banks & the wealth creating taxpayer underwrites the whole thing. We got a taste of this in 2007. But the debt burden now is $200 trillion globally. Beyond human imagination. But markets have seen this coming, banking shares have fallen on average by 85% in Europe.
The party is over. Now the word on the street is ‘reset’. What does that mean exactly ? I don’t know but I see the dismantling of the principles of English law & the British constitution under the cover of saving us all from Coronavirus. The removal of our real protection for a fake protection which involves locking us up.
What we can be very sure about is ‘reset’ will be about locking us up permanently & stealing our property.
Editorial & First Publising Credit To Open Dialogus https://opendialogus.co.uk/