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Government funding: Carol Wilcox replies

January 26, 2023


Readers were asked earlier if they could explain why government doesn’t fund its requirements directly


Carol Wilcox (Secretary, Labour Land Campaign) replied:

“The government is a currency creator, it is not like a household or a business, it can’t go broke. Countries go bankrupt because they have debt in a foreign currency.

“An understanding of how money is created is necessary to avoid having the wool pulled over your eyes. This is Modern Monetary Theory (MMT) – a description of how the monetary system actually works.

“What happens when the government spends – when it pays state benefits, public worker salaries, funds local authorities, schools and hospitals, buys all that useless PPE – is this: it instructs the Bank of England to credit personal and business accounts at commercial banks. That’s it. No taxes are involved.

“When the Chancellor says he has to cut public expenditure or tax you more or increase the public debt by borrowing, he’s fooling you.

“Government borrows by issuing interest-bearing bonds which are traded on financial markets. Finance loves them because it gives them a safe haven for their spare dosh. Government borrowing its own money is just corporate welfare”.

Created currency could:

  • help to tackle the skilled labour shortage in the public sector government could pay nurses, doctors and dentists more than the private sector;
  • renationalise utilities by instructing the Bank of England to credit the private companies’ bank accounts with what it thinks the businesses are worth
  • and pay generous benefits according to need and handle any potential excess demand by targeted taxation – not by raising interest rates.

(Ed: bullets added)

Carol ends, “The only constraint that government has is the real resources available for purchase in sterling, and as we know the UK has plenty of them”.

Carol’s paper for Labour Briefing September 2022 (subscription only) may be read here.






Can any reader explain why government doesn’t fund its requirements directly via QE?

December 28, 2022

James Robertson wrote, in his Attwood Memorial Lecture at the Birmingham & Midland Institute (above), “When in 1816 manufacturing industry in Birmingham was in deepening crisis, Thomas Attwood campaigned, not only against restoring the gold standard, but for the money supply to be increased by the Bank of England issuing more banknotes” – regulating the money supply to meet the economy’s needs.

Today’s government borrows money by buying bonds, known as “gilts”, from the Bank of England via its Asset Purchase Facility as part of its quantitative easing operations (OBR). Government bonds are seen as very safe, with little risk that the money won’t be repaid. Gilts are mainly bought by financial institutions, such as pension funds, investment funds, banks, insurance companies and private savers from the UK and abroad (BBC).

In September, when the Bank of England stepped in with a circuit-breaking bond-buying programme, it sent gilts prices soaring. Some investors were lucky or skilful enough to catch the wave:

“We came in on Wednesday morning and looked at the gilt market, and the longest inflation-linked bond was at 40p on the pound,” says Craig Inches, head of rates at Royal London Asset Management. “We bought it, and then after the Bank of England came in, sold it at 90p. We made about 150 % in three hours” (FT)

The investors/speculators’ comments indicate that these operations provide financial institutions, pension funds, investment funds, banks, insurance companies and private savers from the UK and abroad with welcome opportunities – but does this system assist the ‘real economy’ in any way?

Robertson notes that an awareness many of us share with Attwood today is that the money system needs to be brought up to date. “For over two centuries political democracy has been spreading through the world, thanks to Attwood and others like him. But our capacity to control the power of money and harness it to the public good has lagged far behind”.

Transferring responsibility for creating money to the central bank and issuing it debt-free to the government to spend into circulation, would result in extra public revenue of about £45 billion a year (2003 figures). Also, by withdrawing the present hidden subsidy to the banks, it would result in a freer market for money and finance, and a more competitive banking industry.

A debt-free money supply would help to reduce present levels of public and private debt, which are partly caused by the fact that nearly all the money we use has been created as debt.

The value of a common resource – the national money supply – would become a source of public revenue rather than private profit. That will remove an economic injustice.

Professor Joseph Huber, on his website, Sovereign Money, adds: “Debt-free sovereign money may not be a promise to repay, but it is a promise to be productive, and a promise to keep control of the money supply so that there is neither too much nor too little money around in correspondence with actual levels of productivity” .

As James Robertson (left) stressed, the failure to control the power of money and harness it to the public good, bringing the workings of money and finance into line with economic justice and the realities of the Information Age, is damaging confidence in political democracy itself.







Addressing a recession on a scale not seen since the 1930s: three perspectives

August 31, 2022

Carol Wilcox (left), a retired software engineer with a degree in economics, asks in the FT:

“Could Andrew Law, head of Caxton Associates, one of the world’s oldest and biggest macro hedge funds (Report, March 7) explain why the UK government needs to borrow its own money, no matter how low the cost, in order to “fund targeted projects that stimulate productivity and growth”.

Juliet Samuel (right), a financial journalist who has worked in asset management, criticises ‘purveyors’ of “modern monetary theory”.

In a recent article she complained, “Not long ago, we were being forced to listen to proponents of ideas like “modern monetary theory” (MMT: a series of tautologies masquerading as a new economic theory) . . . telling us why there was little practical constraint on printing or spending money . . . “

Her preferred proposal – put forward by Andrew Law who has donated millions of pounds to the ruling Conservative party – is that the UK should borrow more, presumably from his hedge fund, to finance targeted projects that stimulate productivity and growth.

Today three economists, US Professor David G Blanchflower (left), UK Professor Lord Sikka and UK Professor Richard Murphy foresee the likelihood of recession on a scale not seen since the 1930s

They explain that households that cannot pay for energy, food, their rent or mortgages will stop spending on everything else. The knock-on effect of that on the retail, leisure and hospitality sectors will be significant. Many companies will fail. It is likely that millions of jobs will be lost. Mortgage repossessions and tenant evictions will increase. Public services in education, health and care will also be drastically impaired due to rising bills.

In 2008 and 2020 economic crises were averted using government-created money and the Bank of England’s quantitative easing process. Interventions on those occasions were of £150bn or more. It is quite likely that a further £200bn will be necessary in the coming year if the meltdown of our economy is to be avoided.

Their proposal: “Intervention on such a scale, coupled with cuts in interest rates, energy price reform, nationalising energy supply and investment in new technologies could save us from the catastrophe currently awaiting us. Not much else can”.


Ellen Brown: an update

July 3, 2022

Some readers will remember meeting Ellen Brown many years ago at a monetary reform weekend in the Waseley Hills near Bromsgrove (left, taken at that event). Economic analyst and lawyer, after practicing civil litigation in Los Angeles, she founded and chaired the Public Banking Institute, a nonpartisan think tank devoted to the creation of publicly run banks.

She has written twelve books, including the Web of Debt and The Public Bank Solution, in which she traces the evolution of the private banking system, showing how it usurped the power to create money from the people and how people can take that power back through public banks operating in the public interest.

Quoted on this site from time to time, more substantial contributions were published here in 2013, 2017 and 2018.

She cites the success of the public Bank of North Dakota

BND holds its home state’s revenues as deposits by law, acting as a sort of “mini-Fed” for North Dakota. According to reports, the BND is more profitable than Goldman Sachs, has a better credit rating than J.P. Morgan Chase, and has seen solid profit growth for almost 15 years.

The BND continued to report record profits after two years of oil bust in the state, suggesting that it is highly profitable on its own merits because of its business model:

  • It does not pay bonuses, fees, or commissions.
  • It has no highly paid executives,
  • It does not speculate on risky derivatives.
  • It does not have multiple branches.
  • It does not need to advertise.
  • It does not have private shareholders seeking short-term profits
  • and the profits return to the bank, which distributes them as dividends to the state.

During the oil crisis and later facing the pandemic in North Dakota, a Washington Post analysis found that, per capita, North Dakota community banks secured more Paycheck Protection Program money in the early rounds of funding than most other states, due in part to the efficiency of the state-owned Bank of North Dakota, which served as a clearinghouse for information (Energy Now).

Four years ago, Dr Ian Jenkins (Plaid Cymru) proposed a Public Bank for Wales. There have also been calls for a public bank in Scotland, spurred on in part by anger at the damage done to the image of the nation by the actions of private banks such as RBS and HBOS. There have been articles in the Scotsman and Ellen lectured on the subject at the Royal Society of Arts in Edinburgh.

In April this year, Ellen wrote: The Coming Global Financial Revolution: Russia Is Following the American Playbook: “No country has successfully challenged the U.S. dollar’s global hegemony—until now. How did this happen and what will it mean?

She joined Robert Scheer to discuss how Russia’s decision to undermine the dollar as the global reserve currency changes everything. In a piece for ScheerPost, she explained the history of the “PetroDollar” and outlined how Russia’s response to Western sanctions—aimed at strengthening the rouble—could be the start of a “Petro Rouble” revolution, which threatens the dominance of the dollar (podcast).

Her most recent message expressed her sorrow on receiving the news of the death of Ken Palmerton, whom she met during her Waseley Hills visit.






Celebrating Ken Palmerton: a life well-lived

April 13, 2022


The writer shared several interests with Ken, including devolution of political power to the regions and campaigning for the use of state-created money for the benefit of the 99%. 

He was kind, cheerful, generous and public-spirited man. 

Dr Frances Hutchinson* recently wrote:

“The news of Ken’s death reached me somehow, after a very long and puzzling silence. In the early days I often visited Ken in Hebden Bridge. 

“He was such a good net-worker, introducing me to many people, ideas and books, for which I am eternally grateful. He was so devoted to Kathleen, who needed constant care, yet he always had time to put the world right, sharing thoughts and giving out literature. Through him I began to understand the role of money in the social framework.

“He was one of the best read and knowledgeable people I have ever met, second only, perhaps, to Bill Krehm, and a man of deep faith.

“After Kathleen’s death, and the year of deep sadness that followed, he met Dorothy through the internet. That was in the very early days of finding someone in that way. “There are too many lonely people around,” he used to say. And it worked well for Ken and Dorothy. *

Ken is far right on the back row, Frances, far left on the front row.

Articles to which he contributed:

Ken was the co-founder of a small ecumenical group (Muslim, Jewish, Christian) called the Institute for Rational Economics, which has been active in several areas, including the promotion of local currency schemes and reform of banking systems.

On 15/02/2014 14:48, Barbara Panvel wrote:

Are you still librarian for the Christian Council for Monetary Justice?

Ken: I have little contact with the CCMJ now, too London-centric for my involvement I fear, though I still add to the library of related books.

Has the Institute for Rational Economics survived?

Ken: The institute for Rational Economics still pokes its nose in when the opportunity raises its head.

From 2013 we were able to correspond using email and in the extended version of this tribute readers may learn a little about Ken’s interest in the work of Professor Christa Bouwman, Campaign for the North, Jersey (where Ken was born) and its creation and circulation of their own currency, fracking, Thomas Attwood, the institute for Rational Economics, the Christian Council for Monetary Justice and Edward Holloway.

I sent the above message to his daughter, Paula Freeman. who had asked how I knew Ken.

The last record: in 2018, Diana Schumacher wrote (after reading his Gosaba article), “This is fascinating and I am forwarding it to the Jeevika Trust and the Gandhi Foundation. Perhaps Ken Palmerston might like to send it on to The New Economics Foundation which in the past did some work and reports on local currencies and similar systems? The Gandhi Foundation and Focolare Movement would also be interested in the ecumenical aspects of the scheme”.







A new massive ‘security QE’ programme is needed to tackle our social, environmental and defence shortfalls

April 6, 2022


An extract follows from an article by Colin Hines, the convenor of the UK Green New Deal groupwritten in a personal capacity. It may be read in full on the blog hosted by the Green Alliance

He sees a way forward shown by the way the systemic shocks of the 2008 banking crisis and Covid were mitigated. Between 2009 and 2021, the government, via the Bank of England, created £895 billion of new money using quantitative easing (QE).

A report by Richard Murphy and Colin Hines showed last year how this could be leveraged to raise the tens of billions of pounds needed to make all the UK’s 30 million buildings energy efficient and create jobs in every constituency. The potential for further social purposes for these savings clearly exists. The Office for National Statistics recently estimated that there are £1,933 billion of net savings in the UK, in addition to pension wealth of £6,445 billion.  Together these represent 55% of the UK’s total wealth, including property ownership.

Major sources of additional taxes could be used to help fund the social infrastructure and jobs required for a secure green economy, building on the new determination to sanction oligarchs, shell companies, tax havens and their facilitators.

This combination of funding sources is what Hines has referred to before as a QuEST: Quantitative Easing, Savings and Taxation, a concept developed with Richard Murphy, in consultation with other members of the Green New Deal group.

Such epoch making shifts in policy, underpinned by funding as described, could result in the achievement of crucial national and regional security goals. These would encompass adequate defence, tackling the climate and cost of living crises, and a massive increase in the provision of basic social needs. This could be organised to provide secure, adequately paid jobs and predominantly local business opportunities.







Are the central banks really powerless to stop printing money on behalf of bankers and corporations, ‘the new barons’?

January 28, 2022

Yanis Varoufakis (right), a distinguished economist and former Greek finance minister, founded a new party and was returned to the Hellenic Parliament in 2019. He recently spoke to Daniel Powell on several subjects. Of particular interest to people on the Attwood mailing list will be his views on central bank money.

He firmly states that central bank money has replaced profits as the capitalist system’s fuel and that big tech’s digital platforms have replaced markets as the mechanism for value extraction:

“Central bank money replaced profits as the system’s driver: profitability no longer drives the system, even though it remains the be-all-and-end-all for individual entrepreneurs. Indisputable evidence that central bank money, not profits, power the economic system is everywhere.

“A great example is what happened in London on August 12, 2020. It was the day markets learned that the British economy shrank disastrously — and by far more than analysts had expected (more than 20% of national income had been lost in the first seven months of 2020). Upon hearing the grim news, financiers thought: ‘Great! The Bank of England, panicking, will print even more pounds and channel them to us to buy shares. Time to buy shares!’

“This is just one of countless manifestations of a new global reality: in the US and all over the West, central banks print money that financiers lend to corporations, which then use it to buy back their shares — whose prices are thus decoupled from profits. The new barons, as a result, expand their fiefs, courtesy of state money, even if they never earn a dime of profit!

“Moreover, they dictate terms to the supposed sovereign — the central banks that keep them ‘liquid.’ While the Fed, for example, prides itself over its power and independence, it is today utterly powerless to stop that which it started in 2008: printing money on behalf of bankers and corporations. Even if the Fed suspects that, in keeping the corporate barons liquid, it is precipitating inflation, it knows that ending the money printing will bring the house down.

“The terror of causing a bad debt and bankruptcy avalanche makes the Fed a hostage of its own decision to print and ensures that it will continue printing to keep the barons liquid.

“This has never happened before. Powerful central banks, that today keep the system going single-handedly, have never wielded so little power. Only under feudalism did the sovereign feel similarly subservient to its barons, while remaining responsible for keeping the whole edifice together”.










Climate QE can finance the energy transition & keep the 1.5C limit alive until COP27

November 26, 2021

Colin Hines has drawn attention to a crucial, but shamefully under-reported argument made at the Glasgow COP by Mia Amor Mottley, the prime minister of Barbados, which is under threat from rising sea levels (EU Observer)

“The central banks of the wealthiest countries engaged in $25 trillion of quantitative easing in the last 13 years. Of that, $9 trillion was spent in the last 18 months to fight the pandemic.

“Had we used that $25 trillion to finance the energy transition we would now be reaching that 1.5 degrees limit that is so vital to us.” 

John Vidal, the Guardian’s veteran environmental correspondent, also made the same point in his analysis of the shortfalls of COP26, stating that within a few weeks trillions of QE were found by the rich world to tackle the banking and Covid crisis and asking why it can’t be used for the climate crisis

It is clear that massive upfront money is URGENTLY required to respond to the global climate and nature emergency. The advantage of Climate QE is the speed at which trillions can be made available by central banks printing money, and since it doesn’t need to be paid back to any lenders, it can be invested as grants.

Private and public loans for such areas as the shift to renewables, with a clear financial profit potential, can be covered by those private and public investment sources requiring a return.

In a Guardian letter, Richard Murphy and Colin Hines added that the prime minister of Barbados said “The central banks of the wealthiest countries engaged in $25tn of quantitative easing in the last 13 years. Of that, $9tn was spent in the last 18 months to fight the pandemic.

Some of the Climate QE will allow trillions to be rapidly used to help fund a transition that does not make the majority poorer in the rich countries, enhancing political support for the transformation required. The majority must of course be used for funding the massive mitigation and the transition programme required by poorer countries.

As Hines and Murphy say, civil society which will play a crucial role in keeping 1.5 alive in the run up to the next COP in Egypt, should focus on Mia Amor Mottley’s call for ‘Climate QE’.


Liddle: no need to tax for social care or the NHS, use government issued bonds

October 19, 2021

Painting 4 by Gordon Liddle, 

An extract from Gordon Liddle’s latest six page blast.

Don’t forget, the government is not just taxing the poor with these new NI taxes (10% rise), it is gaslighting us as well. There was no need to tax at all for social care, nor for funding the NHS.

It could easily order the Bank of England to buy some government issued bonds. The debt is rolled on and sometime in the future will be cancelled.

But to do this, it would undermine the absolute message that we can’t ‘afford’ the public services that we need.

There are a lot of rich people who control the politicians and the government with the argument that there is no ‘Magic Money Tree!’ 

This debt narrative is why we are having this NI increase of ten percent now. It is criminally and consciously cruel on those most in need and will for instance, instantly give nurses, and health care ‘essential’ workers a pay cut.

The real purpose of this chance is to ring fence the wealthy and allow them to pass on their inheritance to their children.

In essence, it, as Richard Murphy has pointed out, transfers money from the poor to the wealthy.

This should be an open goal for Labour, but Sir Rodney Woodentop is too busy purging socialists and left-wing Jews out of the Party.

During this zombie apocalypse, the rich have seen their wealth grow by 35% whist foodbank usage has risen 33%.

This latest poll tax is just another insult to ordinary workers.

The Unions should be calling for a general strike, but I suppose we will just roll over and remember when we were affronted when a politician called for communist broadband during the election.’ Maybe we deserve these bastards?


Gordon Liddle was born 1956, Horden, County Durham, United Kingdom. Married, lives and works at his Derbyshire studio. BA Hons, Sheffield Psalter Lane Art College Gordon has had numerous positions and travelled extensively through the Middle East, Saudi Arabia, Dubai, Yemen, Lebanon, Bahrain, Africa and Europe, with particular interests in religion, democracy, politics, economics, MMT, and culture. Read more on his website.






Dodge mass extinction: combine Carbon QE with regulation and taxation to channel private capital into survival-oriented projects

September 11, 2021

Kim Stanley Robinson’s long FT Weekend Essay, ‘A climate plan for a world in flames’, opens by recalling that a few weeks ago, he and his wife drove across the US east to west. In Wyoming, they hit a pall of wildfire smoke so thick that they couldn’t see the mountains just a few miles away on each side of the road. It went on like that for 1,000 miles.

The following notes from one section of the essay will be of particular interest to those on this website’s mailing list.

He notes that we declared peace with the biosphere at the 2015 Paris agreement. In effect we agreed to decarbonise our civilisation across the board: in energy generation, transport, construction — everything.

But since all these activities were run largely by the burning of fossil fuels, this change is a stupendous challenge, equivalent to the mobilisations made in the 20th century to fight world wars. He considers the funding of decarbonising.

It is not true that leaving finance to the market will arrange everything well

The market systemically misprices things by way of improper discounting of the future, false externalities and many other predatory miscalculations, which have led to gross inequality and biosphere destruction. And yet right now it’s the way of the world, the law of the land, the market requirement: capital invests in the highest rate of return.

Pulling thousands of billions of tons of compressed & cooled carbon dioxide (dry ice) out of the atmosphere is simply a cost — the cost of survival, but not the highest rate of return.

So private capital will not invest in it, and if we allow that judgment to stand, we are cooked

In a nation-state system, the money we trust is money that is nationally backed. The richer the country, the more we trust its money. Fiat currency – backed by a country’s government – is what we’ll need to deal with the existential emergency that climate change represents.

We are soon going to be testing out how many trillions of dollars our central banks can create per year without altering people’s trust in money.

Carbon quantitative easing

This will be an experiment, an improvisation. The quantitative easings of 2008-11 and 2020-21 gave strong evidence that a large amount of new money can be created every year without negative results.

The idea of spending newly created money first on decarbonisation and other biosphere-friendly activities is being called carbon quantitative easing – something many central banks are now investigating.

Carbon quantitative easing won’t be enough to do all that is needed but, combined with regulation and taxation channelling private capital into useful, survival-oriented projects, Kim Stanley Robinson thinks we might ‘squeak through’.

Full employment is very much implied in all this; there’s so much work to be done. He gives a few examples:

“We’ll need to re-establish wild land to maintain biodiversity, as in the various “30×30” plans; we may start growing food in vats from micro-organisms, freeing up land for other purposes; we’ll have to green our cities; we have to replace much of our infrastructure; and so on. All this implies a stupendous amount of work, all of which will have to be paid for”. And asks:

“Can we leverage all that needed work toward climate equity between nations and to the lessening of the grotesque inequality between rich and poor? It seems like we could”. He ends:

The time has come to admit that we need to control our economy for the common good. Even in our current political economy . . . we might be able to pay ourselves to do the necessary things and dodge the coming mass extinction event

Kim Stanley Robinson will be speaking at the UN’s COP26 climate change conference in Glasgow in November