tag:blogger.com,1999:blog-7530776363222965313.post690203475980075943..comments2023-10-07T13:16:34.756+02:00Comments on Simon Thorpe's Ideas on the Economy: Light at the end of the tunnel? Simon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-7530776363222965313.post-55718114886129587202013-03-28T14:11:35.044+01:002013-03-28T14:11:35.044+01:00On the Toynbee comment: it is hard to see that eve...On the Toynbee comment: it is hard to see that even if Osborne is no financial genius, there are not some in government, the Treasury, or the BoE who do not completely "get it" about financing the deficit by money creation. So one falls back on what might look like a conspiracy theory about them wanting to roll back the welfare state. While I try to avoid the more outlandish conspiracy theories, it can also be said that conspiracy theories abound because sometimes there genuinely are conspiracies!<br /><br />For example, if we accept Ellen Brown's account of what happened to Canada after 1974,( http://www.webofdebt.com/articles/canada.php ) we see that the BIS (truly "international bankers") forced Canada's government to stop borrowing from its central bank to fund public spending (which had been very successful since 1939), and from then on its national debt rocketed, and it has now been forced into austerity measures, although it is an incredibly resource-rich country.<br /><br />We also have the evidence of the former "economic hit-man" John Perkins.<br /><br />Getting back to the here and now, on 5th March 2013, the FT published a letter from Professor Richard Werner of Southampton University in which he called for the government to stop issuing bonds to finance its deficit, and instead borrow from commercial banks, This would kick-start bank borrowing, and lead to a recovery in 6 months.<br /><br />Now that I've had chance to properly read "Where does Money come from?" (NEF - my edition is the hardback 2012 one), I see that this is something he has been calling for since the early 90s, initially regarding Japan. It is also mentioned in papers of his one can download from the university website.<br /><br />It took me a little while to understand why this would be a good thing, but then it clicked that of course this would lead directly to an increase in the money supply. The money would be spent on public works and filter into the "real economy". The government is still a solid low-risk borrower, so the banks should not have any qualms about lending to it, and the interest rates should be very low, e.g. 1% over 3 years, which could be rolled over. There is apparently nothing in BIS or EU rules to stop it, so it could be done now, without any changes to the system (except that the government would stop issuing bonds).Simon Thorpehttps://www.blogger.com/profile/02605233720415886802noreply@blogger.com