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Monday, 21 March 2016

Thursday, 17 March 2016

Excuse me, but who the fuck do these people think they are?


From the supposed 'public finance experts' the IFS. Perhaps these people should fuck off instead of forcing us into a depression?

Saturday, 12 March 2016

A reply to Mark Wadsworth - on MMT and designing land value tax

MMT does *nothing more* than sweep the excess savings of the non-government sector back into the circulation because, contrary to popular belief, it doesn't do that automatically. To clear 'naturally' you have to have a depression and capital destruction.

So if government budget deficits are 'dangerous' and 'debt is still debt' then so is non-government sector borrowing and spending from saving. But apparently the mainstream are comfortable with that.

You have to see excess saving as voluntary taxation. So the correct calculation for the government injection is

Government Spending - Taxation - Excess non-government savings

which will be zero.

The anchors are the automatic stabilisers which ebb and flow counter-cyclically. Job Guarantee enhances those to provide superior price anchoring capacity - flattening the inflation curve as the economy tightens. 

So in terms of circulation, the auto-stabilisers reduce government spending and increase taxation volume automatically as the economy heats up. 

And we know they work, because they are doing their job right now.

So the trick of policy is to set main taxation/spend policy relatively tight and let the auto-stabilisers loosen it to the correct level.

The way I would do this in practice is to create a counter-cyclical fiscal authority (CFA) as a separate balance sheet from HM Treasury and reportable to parliament as a whole. HM Treasury remains as a creature of the Executive as it is now.

Once you have a tri-party design then the Executive budget *can* be required to balance - it must tax to spend on discretionary projects. To borrow it must apply to the central bank with a project plan just like you or I would have to.

CFA 'funds' the automatic stabilisers, via an overdraft with its central bank subsidiary, and possibly it could be given discretionary powers to vary a land value tax by a certain percentage for fine tuning (chargeable to the freeholder, payable by the mortgage chargee if there is one).

So you have the central bank on a ZIRP - which removes the incentive to excess save for income purpose.

You have the CFA fine tuning the gross taxation policy via a land value tax, and letting the auto-stabilisers do the main work.

Then you have the Executive taxing and spending via the Treasury on their political goals.