-
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="515969" data-time="1442299117">
<div>
<p>Read Warrens book and it all becomes clear</p>
<p> </p>
<p>There are hundred of dry economic articles backing his ideas up but this book is interesting (and I know for a fact the details in this book are correct whereas many economists are badly lost and confused)</p>
<p> </p>
<p>When the UK Govt spend (pays Mary who banks at Lloyds)</p>
<p>the treasury</p>
<p>DEBIT Expenses (or asset)</p>
<p>CREDIT BoE Reserve held balance = DEBT</p>
<p> </p>
<p>The BoE</p>
<p>DEBIT Treasury account = BoE ASSET / (Treasury Liability)</p>
<p>CREDIT Lloyds Bank account = BoE LIABILITY / (Lloyds Asset)</p>
<p> </p>
<p>Bank (Lloyds)</p>
<p>DEBIT Reserves held at BoE = ASSET</p>
<p>CREDIT Bank account Mary = LIABILITY = New money held by Mary</p>
<p> </p>
<p>So this Govt expenditure automatically created new reserves and new money. It also makes Mary richer. Taxes simple reverse this process and makes Mary (or the non Govt sector) poorer.</p>
<p> </p>
<p>T bonds simple drain the bank credit and reserves BUT LEAVE THE WEALTH OF THE NON GOVT SECTOR THE SAME AS BEFORE</p>
<p> </p>
<p>It's really simple so unsure why so many are confused by all of this.</p>
</div>
</blockquote>
<p> </p>
<p>So basically you'd have the BOE print GBP & put it into tax payers bank accounts.... well that wont be inflationary at all...</p>
<p> </p>
<p>The better & I've have thought more obvious route would be set up a company called Infrastructure UK. With a contract to re do all the rail lines & tubes in the UK (which all need upgrading) and re lay all the water pipes (its mostly victorian & leaks like you would not believe). That company issues 100bn in convertible bonds with a PIK rather than actual interest.</p>
<p> </p>
<p>Government prints 100bn. Buys bonds. Company then spends the 100bn on the infrastructure. Bonds eventually mature & the government owns all the infrastructure. Or can sell it on. Its still massively inflationary, will crush the pounds credability & you risk shit being built for no reason - as has happened in Alaska with the bridge to nowhere, but it has a basic grounding in sound economics.</p>
<p> </p>
<p>I actually thought that route was where you were heading, but then you went waaaaaaay out into "I have no fucking idea" with the BOE paying directly into peoples accounts & lost all credability. That is LITERALLY the stupidist thing I've read on the Fern, and I used to read Davidavs comments on rugby.</p>
<p> </p>
<p>Of course you can now go "well that's what I meant obviously!!" only if that's what you meant thats what you would have used as an example rather than the total fucking madness you actually used. </p> -
<blockquote class="ipsBlockquote" data-author="gollum" data-cid="516008" data-time="1442308512">
<div>
<p>So basically you'd have the BOE print GBP & put it into tax payers bank accounts.... well that wont be inflationary at all...</p>
<p> </p>
<p>The better & I've have thought more obvious route would be set up a company called Infrastructure UK. With a contract to re do all the rail lines & tubes in the UK (which all need upgrading) and re lay all the water pipes (its mostly victorian & leaks like you would not believe). That company issues 100bn in convertible bonds with a PIK rather than actual interest.</p>
<p> </p>
<p>Government prints 100bn. Buys bonds. Company then spends the 100bn on the infrastructure. Bonds eventually mature & the government owns all the infrastructure. Or can sell it on. <span style="color:#ff0000;">Its still massively inflationary, will crush the pounds credability & you risk shit being built for no reason</span> - as has happened in Alaska with the bridge to nowhere, but it has a basic grounding in sound economics.</p>
<p> </p>
<p>I actually thought that route was where you were heading, but then you went waaaaaaay out into "I have no fucking idea" with the BOE paying directly into peoples accounts & lost all credability. That is LITERALLY the stupidist thing I've read on the Fern, and I used to read Davidavs comments on rugby.</p>
<p> </p>
<p>Of course you can now go "well that's what I meant obviously!!" only if that's what you meant thats what you would have used as an example rather than the total fucking madness you actually used. </p>
</div>
</blockquote>
<p> </p>
<p>Complete nonsense. It will not even be inflationary let alone massively inflationary etc.</p>
<p> </p>
<p>And where did I say the BoE pays direct into people accounts???? Follow the journal entries and its clear that this does not (and can't) happen</p> -
<blockquote class="ipsBlockquote" data-author="dogmeat" data-cid="516016" data-time="1442309216">
<div>
<p>Its not Wingers diatribe - he's just not attributing his sources which I personally find very dubious.</p>
</div>
</blockquote>
<p> </p>
<p>What diatribe. what in gods name are you referring??</p> -
<blockquote class="ipsBlockquote" data-author="dogmeat" data-cid="516016" data-time="1442309216">
<div>
<p>Its not Wingers diatribe - he's just not attributing his sources which I personally find very dubious.</p>
</div>
</blockquote>
<p> </p>
<p>Well the nonsense about neo liberalism came from here, <a data-ipb='nomediaparse' href='http://www.corpwatch.org/article.php?id=376'>http://www.corpwatch.org/article.php?id=376</a></p>
<p> </p>
<p>Have a look and try to remember its not a comedy site .</p> -
<blockquote class="ipsBlockquote" data-author="jegga" data-cid="516020" data-time="1442309807">
<div>
<p>Well the nonsense about neo liberalism came from here, <a data-ipb='nomediaparse' href='http://www.corpwatch.org/article.php?id=376'>http://www.corpwatch.org/article.php?id=376</a></p>
<p> </p>
<p>Have a look and try to remember its not a comedy site .</p>
</div>
</blockquote>
<blockquote class="ipsBlockquote">
<p>THE RULE OF THE MARKET. Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. <span style="color:#ff0000;">Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone." It's like Reagan's "supply-side" and "trickle-down" economics -- but somehow the wealth didn't trickle down very much.</span></p>
<br><p> <span style="color:#ff0000;"> CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply -- again in the name of reducing government's role. Of course, they don't oppose government subsidies and tax benefits for business.</span></p>
DEREGULATION. Reduce government regulation of everything that could diminsh profits, including protecting the environment and safety on the job.
<p> PRIVATIZATION. <span style="color:#ff0000;">Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.</span></p>
<p> ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility." <span style="color:#ff0000;">Pressuring the poorest people in a society</span> to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy."</p>
<p> </p>
</blockquote>
<p> </p>
<p>Red has all been done or is being done</p> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="516014" data-time="1442309169">
<div>
<p> </p>
<p> </p>
<p>And where did I say the BoE pays direct into people accounts???? Follow the journal entries and its clear that this does not (and can't) happen</p>
</div>
</blockquote>
<p> </p>
<p>Government pays into Lloyds, Lloyds pay into Marys account.</p>
<p> </p>
<p>That's effectively Government giving straight to Mary, they are just using Lloyds as the intermediary.</p>
<p> </p>
<p>Also of course, the government is still the majority owner of Lloyds.</p>
<p> </p>
<p>As for inflation, I'm struggling to think of a single case of mass money printing that hasn't been... the recent QE in UK & US hasn't had a long enough run, but its undoubtedly pushed up comodity & share prices - you could argue that its avoided being inflationary in the wider market (yet) because the way in which it was structured funnelled all the cash onto bank balance sheets & into the stock & junk bond market (creating a massive bubble) rather than into wages & spending. But you want to go direct to the people, can you think of a single instance where that hasn't been inflationary? Thats in fact the entire point Bernanke made that earned him the nickname helicopter Ben. </p> -
<blockquote class="ipsBlockquote" data-author="gollum" data-cid="516033" data-time="1442311361">
<div>
<p>Government pays into Lloyds, Lloyds pay into Marys account.</p>
<p> </p>
<p>That's effectively Government giving straight to Mary, they are just using Lloyds as the intermediary.</p>
<p> </p>
<p>Also of course, the government is still the majority owner of Lloyds.</p>
<p> </p>
<p>As for inflation, I'm struggling to think of a single case of mass money printing that hasn't been... the recent QE in UK & US hasn't had a long enough run, but its undoubtedly pushed up comodity & share prices - you could argue that its avoided being inflationary in the wider market (yet) because the way in which it was structured funnelled all the cash onto bank balance sheets & into the stock & junk bond market (creating a massive bubble) rather than into wages & spending. But you want to go direct to the people, can you think of a single instance where that hasn't been inflationary? Thats in fact the entire point Bernanke made that earned him the nickname helicopter Ben. </p>
</div>
</blockquote>
<p> </p>
<p> </p>
<p>This is how it actually operates right now in the UK</p>
<p> </p>
<p>And has for a long time. Even in the days of tally sticks the ruler issued tally sticks to pay people then got then back though tax</p>
<p> </p>
<p><a data-ipb='nomediaparse' href='http://www.parliament.uk/about/living-heritage/building/palace/estatehistory/from-the-parliamentary-collections/fire-of-westminster/tallysticks/'>http://www.parliament.uk/about/living-heritage/building/palace/estatehistory/from-the-parliamentary-collections/fire-of-westminster/tallysticks/</a></p>
<p> </p>
<p>So its no different today except reserves are used instead of tally sticks. And banks add one extra level between the main bank (BoE) and the people</p> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="516032" data-time="1442311356">
<div>
<p>Red has all been done or is being done</p>
</div>
</blockquote>
<p> </p>
<p>So what? All they've done is put the worst possible spin on everything they mentioned. I laugh when leftards or labour mps call national neolibs, this is the party that just extended paid parental leave and increased benefits. National are actually pretty left leaning by comparison with other conservative governments around the world just not left leaning enough for the sorts of weirdos that vote Mana and the greens [who loathe the rich, see them as parasites but when a german billionaire hands them a pile of cash to fund their parties to help avoid being extradited, well they are cool with that....]</p> -
<blockquote class="ipsBlockquote" data-author="gollum" data-cid="516033" data-time="1442311361">
<div>
<p>Government pays into Lloyds, Lloyds pay into Marys account.</p>
<p> </p>
<p>That's effectively Government giving straight to Mary, they are just using Lloyds as the intermediary.</p>
<p> </p>
<p>Also of course, the government is still the majority owner of Lloyds.</p>
<p> </p>
<p>As for inflation, I'm struggling to think of a single case of mass money printing that hasn't been... the recent QE in UK & US hasn't had a long enough run, but its undoubtedly pushed up comodity & share prices - you could argue that its avoided being inflationary in the wider market (yet) because the way in which it was structured funnelled all the cash onto bank balance sheets & into the stock & junk bond market (creating a massive bubble) rather than into wages & spending. But you want to go direct to the people, can you think of a single instance where that hasn't been inflationary? Thats in fact the entire point Bernanke made that earned him the nickname helicopter Ben. </p>
</div>
</blockquote>
<p> </p>
<p>And re inflationary</p>
<p> </p>
<p>The main reason for inflation has been non Govt debt. More debt = more money</p>
<p> </p>
<p>But Governments issue bonds. So the money is drained and replaced with a T bonds (a new asset)</p>
<p> </p>
<p>Whereas new non Govt debt often means more money and increasing prices</p>
<p> </p>
<p>QE is where the BoE buys back t bonds = more reserves held by banks + more money held by non banks. This may lead to rising share prices etc</p> -
<blockquote class="ipsBlockquote" data-author="jegga" data-cid="516035" data-time="1442311901">
<div>
<p>So what? All they've done is put the worst possible spin on everything they mentioned. I laugh when leftards or labour mps call national neolibs, this is the party that just extended paid parental leave and increased benefits. National are actually pretty left leaning by comparison with other conservative governments around the world just not left leaning enough for the sorts of weirdos that vote Mana and the greens [who loathe the rich, see them as parasites but when a german billionaire hands them a pile of cash to fund their parties to help avoid being extradited, well they are cool with that....]</p>
</div>
</blockquote>
<p> </p>
<p>This thread is about BRITISH Politics</p> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="516034" data-time="1442311718">
<div>
<p>This is how it actually operates right now in the UK</p>
<p> </p>
</div>
</blockquote>
<p> </p>
<p>Ok, now THATS the stupidest thing I've read on the fern... 2 records for this thread.</p> -
<blockquote class="ipsBlockquote" data-author="gollum" data-cid="516049" data-time="1442314404">
<div>
<p>Ok, now THATS the stupidest thing I've read on the fern... 2 records for this thread.</p>
</div>
</blockquote>
<p> </p>
<p>ok how do you think it works</p>
<p> </p>
<p>What are the (final) journal entries when the UK Govt pays someone</p>
<p> </p>
<p>(By final I mean exclude the entries that cancel out like creditors. and do not include the bond sales side. Just the actual payment)</p> -
<p>Basically?</p>
<p> </p>
<p>Bank owns govt bonds. Government print cash to buy back those bonds (putting cash on bank balance sheet). Bank then uses cash to prop up its reserves, maintain its dividend, speculate on the junk bond market & emerging market accounts where yeilds are high & pay off its fines incured on PPI, Libor etc.</p>
<p> </p>
<p>Thats the beauty of why its not been inflationary yet (except in emerging markets where is been VERY inflationary), people (tho' not the banks & probably not the BOE nor Fed) didn't realise quite how fucked the banks were, nor how debt averse most businesses were, so the Govt - Bank - Small business / consumer flow that QE normally follows stopped before getting to the 3rd bit.</p>
<p> </p>
<p>Where it has got through (to "Mary"), its not "free" as it was in your example, <em><strong>its debt</strong></em>. Which we already have far too much of. Owed by Mary to the bank. The banks don't just fucking give it to her. So if Mary has 0% equity in her house & goes "can I have another loan?" the banks answer is "go fuck yourself Mary". Equally if they do give it to Mary she has to pay interest on it & pay it back. Your journal entries missed the biggest bit -</p>
<p> </p>
<p>Credit "Loan payable to Lloyds" (Mary's books)</p>
<p>Debit inpending bad debt where Mary owes us our money (Lloyds)</p>
<p> </p>
<p>And then every month</p>
<p> </p>
<p>Credit Marys bank account, interest paid back to bank on loan Mary can't actually afford in the first place (Mary)</p>
<p>Debit interest received at Lloyds from Mary (Lloyds)</p>
<p> </p>
<p>Then finally -</p>
<p> </p>
<p>Credit Marys house when Lloyds take it for non payment of loan (Mary) (Mary at this point has no assets)</p>
<p>Debit shit house taken off Mary (Lloyds)</p>
<p>Debit bad debts, being the difference between amount Mary owed Lloyds & the fuck all her house is worth after a housing crash (Lloyds)</p>
<p> </p>
<p>Thats the terrorfying bit - you thought it all the way thru - even doing nice T accounts,<strong><em> but missed the bit where it needs to be paid back.</em></strong> You could be part of Corbyns treasury team.</p>
<p> </p>
<p>In contrast, if you are an incredibly well capitalised multinational (say Apple), the bank will go "you want to sell us $500m in corportate bonds? OK". And then Apple spend that $500m on share buy backs. Which is exactly whats happened... in you know.. the real world</p> -
<blockquote class="ipsBlockquote" data-author="gollum" data-cid="516061" data-time="1442316688">
<div>
<p>Basically?</p>
<p> </p>
<p>Bank owns govt bonds. Government print cash to buy back those bonds (putting cash on bank balance sheet). Bank then uses cash to prop up its reserves, maintain its dividend, speculate on the junk bond market & emerging market accounts where yeilds are high & pay off its fines incured on PPI, Libor etc.</p>
<p> </p>
<p>Thats the beauty of why its not been inflationary yet (except in emerging markets where is been VERY inflationary), people (tho' not the banks & probably not the BOE nor Fed) didn't realise quite how fucked the banks were, nor how debt averse most businesses were, so the Govt - Bank - Small business / consumer flow that QE normally follows stopped before getting to the 3rd bit.</p>
<p> </p>
<p>Where it has got through (to "Mary"), its not "free" as it was in your example, <em><strong>its debt</strong></em>. Which we already have far too much of. Owed by Mary to the bank. The banks don't just fucking give it to her. So if Mary has 0% equity in her house & goes "can I have another loan?" the banks answer is "go fuck yourself Mary". Equally if they do give it to Mary she has to pay interest on it & pay it back. Your journal entries missed the biggest bit -</p>
<p> </p>
<p>Credit "Loan payable to Lloyds" (Mary's books)</p>
<p>Debit inpending bad debt where Mary owes us our money (Lloyds)</p>
<p> </p>
<p>And then every month</p>
<p> </p>
<p>Credit Marys bank account, interest paid back to bank on loan Mary can't actually afford in the first place (Mary)</p>
<p>Debit interest received at Lloyds from Mary (Lloyds)</p>
<p> </p>
<p>Then finally -</p>
<p> </p>
<p>Credit Marys house when Lloyds take it for non payment of loan (Mary) (Mary at this point has no assets)</p>
<p>Debit shit house taken off Mary (Lloyds)</p>
<p>Debit bad debts, being the difference between amount Mary owed Lloyds & the fuck all her house is worth after a housing crash (Lloyds)</p>
<p> </p>
<p>Thats the terrorfying bit - you thought it all the way thru - even doing nice T accounts,<strong><em> but missed the bit where it needs to be paid back.</em></strong> You could be part of Corbyns treasury team.</p>
<p> </p>
<p>In contrast, if you are an incredibly well capitalised multinational (say Apple), the bank will go "you want to sell us $500m in corportate bonds? OK". And then Apple spend that $500m on share buy backs. Which is exactly whats happened... in you know.. the real world</p>
</div>
</blockquote>
<p> </p>
<p> </p>
<p>Are you drunk gollum</p>
<p> </p>
<p>I asked a simple question</p>
<p>
</p>
<blockquote class="ipsBlockquote">
<p>What are the (final) journal entries when the UK Govt pays someone</p>
<p> </p>
<p>(By final I mean exclude the entries that cancel out like creditors. and do not include the bond sales side. Just the actual payment)</p>
<p> </p>
</blockquote>
<p> </p>
<p>I'm not too sure what you have have posted above. Or why. But it hasn't answered my simple question. And the last paragraph has nothing whatsoever to do with my question. But is also not correct.</p> -
<p>I think thats the basic problem... "The government pays someone". Under QE & even under Corbyns QE, the government is not paying anyone. It is buying bonds.</p>
<p> </p>
<p>IE I don't see that you understand how QE works in theory, how it has worked in practice, or even what it actually is...</p> -
<blockquote class="ipsBlockquote" data-author="gollum" data-cid="516068" data-time="1442319003">
<div>
<p>I think thats the basic problem... "The government pays someone". Under QE & even under Corbyns QE, the government is not paying anyone. It is buying bonds.</p>
<p> </p>
<p>IE I don't see that you understand how QE works in theory, how it has worked in practice, or even what it actually is...</p>
</div>
</blockquote>
<p> </p>
<p>QE is an asset swap. Where bonds are bought back by the BoE using BoE reserves created out of thin air</p>
<p> </p>
<p>So the BoE's JE is (if bonds are purchased from Lloyds or a Lloyds customer)</p>
<p>DEBIT Govt bonds (= ASSET)</p>
<p>CREDIT Lloyds reserve account</p>
<p> </p>
<p>But so called 'QE for the people' is different. Its using reserves to fund asset purchases without issuing bonds. Its only done this way to get around our irrational fear of Govt debt</p>
<p> </p>
<p>DEBIT Asset purchases or asset building costs = AN ASSET</p>
<p>CREDIT Lloyds reserve account</p>
<p> </p>
<p>Although more likely the asset would be held by treasury and treasury and the BoE would have two matching offsetting entries in their books. Like this<br>
</p>
<blockquote class="ipsBlockquote">
<p>TREASURY</p>
<p>DEBIT Housing Asset</p>
<p>CREDIT Peoples QE Investment Capital account (or whatever) ********************</p>
<p> </p>
<p>The BoE</p>
DEBIT Treasury QE Account = BoE ASSET / (Treasury Liability) ***************<br><p>CREDIT Lloyds Bank account = BoE LIABILITY / (Lloyds Asset)</p>
<p> </p>
<p>BANK (Lloyds)</p>
DEBIT Reserves held at BoE = ASSET
<p>CREDIT Bank account Contractors building houses = LIABILITY = New money held by ABC House builders Ltd</p>
<p> </p>
</blockquote> -
<p>Winger, I'm not trying to be obtuse here but in your posts about the hypothetical Mary, are you suggesting that Mary is in receipt of the new QE or that Mary is a civil servant working for the Government?</p>
-
<blockquote class="ipsBlockquote" data-author="Catogrande" data-cid="516071" data-time="1442321049">
<div>
<p>Winger, I'm not trying to be obtuse here but in your posts about the hypothetical Mary, are you suggesting that Mary is in receipt of the new QE or that <span style="color:#ff0000;">Mary is a civil servant working for the Government?</span></p>
</div>
</blockquote>
<p> </p>
<p> </p>
<p>Mary is a CS or any recipient of Govt money</p>
<p> </p>
<p>if you want more read this</p>
<p> </p>
<p><a data-ipb='nomediaparse' href='http://moslereconomics.com/wp-content/pdfs/MMT-Scott-Fullwiler.pdf'>http://moslereconomics.com/wp-content/pdfs/MMT-Scott-Fullwiler.pdf</a></p>
<p> </p>
<p>or this</p>
<p> </p>
<p><a data-ipb='nomediaparse' href='http://papers.ssrn.com/sol3/papers.cfm?abstract_id=115128'>http://papers.ssrn.com/sol3/papers.cfm?abstract_id=115128</a></p>
<p> </p>
<p>Its boring thats why I recommend Warrens book above</p> -
<blockquote class="ipsBlockquote" data-author="Winger" data-cid="516072" data-time="1442321796">
<div><br><p>Its boring thats why I recommend Warrens book above</p>
</div>
</blockquote>
<p> </p>
<p>You're recomending socialist economics, as laid out by a guy who lost hundreds of millions betting Russia wouldn't default... </p>
British Politics