The following is probably not entirely accurate in places, that’s because I am still learning and looking behind the myths and bullshit. It’s not easy because the myths and bullshit rule.
One the many egregious crimes of George Osborne was to liken the national economy to a household economy. He knew it was a lie and yet it was a necessary lie if he was going to get away with an even bigger crime – Austerity.
People may recall David Cameron making much of the note (a tradition) left by Liam Byrne for his successor at the treasury, which read, “no money, kind regards” [1]. It was a joke and, as it happened, it was a pretty good one, given the crisis the bankers had created and passed on to the entire world. It was a joke because it was not remotely true. Britain cannot run out of money. Let me just shout that –
BRITAIN CANNOT RUN OUT OF MONEY!
Between them, Cameron and Osborne were in the process of setting the stage for their bogus austerity which required some incredibly deceitful stage management and bluff if they were to get away with it. They succeeded because of wide spread ignorance about how a national economy actually works and the myths that have been deliberately promoted to maintain that ignorance. It’s an ignorance that is as common amongst members of parliament and economists as it is amongst us bog ordinary folks.
So let’s do some myth bashing and hope that the heads of Cameron and Osborne get in the way of my custom made twat bat, because nothing would give me more pleasure as I swing it.
Britain cannot run out of money because Britain is a sovereign money (currency) provider. We make our own money and even have a money factory, where Theresa May’s magic money tree lives, which is called the Bank of England (BoE). The job of the BoE is to provide currency and to destroy currency, to advise governments on managing the economy and to control inflation. Like any factory, as long as the BoE has the materials, the machinery and the means to run it, it can produce money until the moon turns blue and it’s as cheap as chips to make [2]. Unlike the Eurozone, where nations have surrendered their independence, if Britain needs money, the BoE can shout, “Roll the presses” and print money or “Hit the keyboard” and just add magic numbers.
Magic numbers? Yes. Between 2009 and 2012 the BoE gave the banks free gifts amounting to £445bn from the magic money tree, called Quantitative Easing [3]. The banks took the money and ran and made a fortune on the financial markets with very little trickling down into the real economy where the rest of us live. In fact, if the money had been given to us to circulate in the real economy, every single one if us would have been better off by £6,834 and the return on that investment, as we used and spent it for living, would have more than doubled on the initial investment[4].
Next up – taxes don’t pay for anything nationally. The only time taxes pay for anything is at a local level for local government expenditure, because local government can’t make money and therefore does work like a household economy. At the national level, taxes do not pay for fire, police and ambulance services, education or anything else, like housing and infrastructure. It’s all a very grand myth. Even stuff we contribute to like pensions is, at its heart, a scam. National Insurance payments don’t go into a big pot, which the government invests for our benefit, and then pays out when we retire. Anything we pay to the government no longer exists because taxes and the like are imposed to maintain how much wealth is in the economy and are just scrapped, vanishing into thin air. We no more give money to the government than we give fruit to a green grocer. Taxes are real money to us, paid out of our real incomes, but they are not to government which never actually sees a penny of them, nor needs to.
The job of taxation is to keep the economy balanced, preventing inflation and slumps, think of it like a tap, controlling how much money is in the economy. The more we are taxed the less we have to spend which can cause the economy to slump and stagnate, so taxes are reduced to increase our spending power, but too much spending power eventually leads to inflation. We are such productive creatures that we are constantly making wealth via work, not least from converting natural resources into things which are sold and from which is extracted increased value and profit. Ideally we want the economy in the Goldilocks spot, not too much and not too little, but just right, that’s what taxes do.
Debt, what debt? This is the big one. The so called national debt is, in reality, the amount of money the government has invested in the real world real economy to pay for anything that nation needs, like hospitals and schools. After WWII Labour took the UK with a massive war debt and threw money at it, building the NHS, the Welfare State and the greatest social house building project in history, but look a graph of the ‘national debt’ and it plummeted as the investment immediately paid off as we made real things, paid real wages and the investment circulated on, through society [5]. This process meant the Gross Domestic Product (GDP), which is the total value of goods produced and services provided in a country during one year, rose and we were able to pay off foreign war debts, which we finished paying in 2006.
So why isn’t that happening now? The Tories have been paying out shed loads of money, but we are not benefiting. Where’s the money going? This is the great Tory money scam, telling us we have to pay off the debt, imposing austerity on us, yet the so called ‘debt’ has gone through the roof under Tory misrule. Well, like the quantitative easing given to the banks, the money isn’t going into society and the real economy, it’s being siphoned into private hands, flooding into tax havens, and we are being robbed blind. All the money that should have gone into the NHS is being thrown at corporations like Virgin, which means reduced services, reduced wages, staff cuts and losses across the board. The absolute exact opposite of what is required, so that as the Tories pour money into the hands of their business mates, the people and the country are impoverished. If you look at a graph of the ‘national debt’ today, what you are really looking at is a robbery, the greatest domestic heist in our history, the transfer of the nations wealth to the corporate elite.
The Tories are asset stripping the nation and that’s all they’re doing, that’s why people are suffering and dying, because they’ve been robbed.
Keith Ordinary Guy
[1] https://www.theguardian.com/global/2010/may/17/liam-byrne-letter-wider-tradition
[2] https://www.taxresearch.org.uk/Blog/2015/06/28/let-me-say-it-loud-and-clear-the-uk-can-never-run-out-of-money/
[3] https://positivemoney.org/2017/02/qe-for-people/
[4] https://positivemoney.org/2014/06/waste-375-billion-failure-quantitative-easing-video/
[5] https://www.economicshelp.org/blog/11697/debt/post-war-boom/
