‘A Yes to Lisbon is A Yes to Jobs’

But there was no jobs.

Then we get saddled with someone else’s debt.

Then we have to pay a tax to an incompetent Govt for the honor of owning our own homes.

Then we have to pay a second tax on water after being given an allowance that’s an utter slap into the face.

You’d think with all the taxes we are paying that we’d be seeing an improvement in Public Services but we are seeing the opposite.

And behind the scenes the EU is dictating our Govts every action.

Is it any wonder Enda is getting pats on the head and offered jobs in the EU after Fine Gael crashes and burns.

Hey Toby,
Im working on a rimbit exchange that considers the Irish deli ma as the major force of exchange and i was wondering if you would be interested in contributing?

@Coddler. What a load of nonsense sprinkled with financial terms to make it look sensible. Uk and US borrowing at a rate they set.!!! Nice one!!!

Simon,

It appears that you don’t know where money comes from. Currency issuing nations like the U.S and U.K do not need to borrow their own currency in the market to finance a budget deficit for example. The Federal Reserve and the Bank of England can simply create as much money as required by pressing keys on a computer. In practice, they are a little more discrete in their money creation. The usual mechanism is that the government will issue new bonds and sell them to the commercial markets. The primary function of this exercise is to influence the market interest rate rather than any real necessity to raise revenue from private sources. The central banks can then at a later stage exchange the previously issued government bonds in return for central bank reserves (base money) in an effective asset swap with the commercial banks. The central bank reserves are created electronically at will by the central bank as necessary to maintain liquidity in the interbank market. In this way a sovereign country can never really default on its own currency denominated debts as the central bank can always ‘buy’ back the debt with newly created central bank reserves which every commercial bank requires to function.
It is also important to add that the creation of new money is not in itself inflationary if there is sufficient real wealth (goods & services) to buy with that new money. This is especially true if the new money is directed to the productive sectors of the economy which leads to GDP growth and so more availability of real goods and services to purchase. The World Bank has recognized this as the primary factor behind the phenomenal growth seen in the post Ww2 economies of Japan, Taiwan etc. Another key factor which prevents inflation is large scale unemployment where the productive capacity of the economy is not close to its peak. In this scenario which we currently face in Ireland and across Europe, the labour of the unemployed can be purchased with newly created money with no risk of general inflation.

Article on this subject from Forbes magazine:
http://www.forbes.com/2011/03/18/deficit-cut-danger-budget-jobs-leadership-managing-employment.html

The world’s central banks can and do create new fiat currency. Since the 1980’s however, the creation of new money (broad money) has been largely privatised and the bulk of new money is now produced by the commercial banks when they extend or create credit, either through making loans or buying existing assets. In creating credit, banks simultaneously create brand new electronic deposits in our bank accounts. Again all that is required to bring new money into existence is the simple act of pressing keys on a computer keyboard.

“By far the largest role in creating broad money is played by the banking sector…
when banks make loans they create additional deposits for those that have borrowed.”
Bank of England (2007)

http://www.neweconomics.org/publications/entry/where-does-money-come-from

This has seen an exponential increase in the broad money supply since the banking deregulation of the 1980s. As well as being the originators of most of the new money in circulation, the commercial banks also determine where in the economy the money is allocated. Even though extractive banking and monetary policy sees a large portion of the new money created by the private banks routed to non productive speculative activity, it still has not resulted in significant monetary debasement (general inflation) as modern economies produce sufficient real wealth to purchase with the extra money in circulation. It does however produce asset bubbles like the recent Irish property bubble and inevitable bust as the banks are incentivized to invest in these sectors rather than the productive economy.

The real tragedy is that none of this imposed austerity is economically necessary. The shortage of money is in fact a political choice here and in Europe. Money doesn’t grow on trees but if you hold a banking licence it grows on your IBM. Money is not a finite natural resource (e.g. oil) and the creation of new money does not cause price inflation in the real things that people need (e.g. food) unless there is a shortage of those goods and services available to buy with that increased money supply. Real wealth (e.g. energy, housing, a health service) on the other hand cannot be created at will and comes from the work which man brings to bear on the raw material of the planet. Money is just the mechanism by which people can access the real wealth of goods and services produced by human endeavour and intelligence.

One of the great cons of modern capitalism is that the power to create money has largely been ceded to private commercial banks who have utter disregard for the wellbeing of society as a whole and care only for their own bottom line. They have created a vast tsunami of new money and funnelled into speculative financial instruments and present this as wealth creation when it nothing of the sort. The hedge funds, currency speculators, private equity funds, commodity speculators etc do not create an iota of real wealth. All that they do speculate on the work of others. At its peak, the size of the global derivative market was around $750 trillion which compares with the total GDP for the entire planet of about $60 trillion. Theoretically over 12 years of every scrap of wealth produced in the known universe was tied up in financial derivatives like Sean Quinn’s infamous CFDs. This demonstrates the sheer folly of handing the money creation privilege to the markets as we found to our great cost in the financial meltdown of 2007/08. The power and privilege of money creation needs to be taken from the parasite banks and returned to the rightful ownership of the state and its citizens so that it can be utilized to restore the real economy and create employment. This is one of key steps necessary to allow us to address the economic crisis and begin again the task of building an equitable society and economy which meets the needs of all the citizens. A sovereign currency issuing state can create as much money as is necessary in order to achieve this objective.

Finally, it’s no accident that the majority of the general population have no real understanding of where money originates from. This is incredible when you consider the central role that money plays in our lives. The vested interests want us to believe that monetary and banking systems are beyond our comprehension. The majority of people will understand perfectly these monetary & economic concepts when they are clearly presented without the jargon and propaganda that is used by the vested financial and political insiders to exclude people from the debate on the future of their own society.
Professor Mary Mellor (Northumbria University) explains the topic much better than I in a series of 4 video lectures here:
https://www.positivemoney.org/2012/12/understanding-money-prof-mary-mellor-videos/

Get a blog or something.

It is you that is ignorant of the monetary system and banking/central banking, Simon Burke (living up to your surname?), Coddler is quite right.

Coddler is quite right, the so called debt (bonds) of fiat, floating, currency issuing governments is a monetary operation to support their ‘target’ interest rate in the interbank funds market, which they believe affects other interest rates pro rata. In effect such governments determine bond interest rates, not ‘markets’ or the bond vigilantes the Euro currency countries are saddled with.

Countries like UK, US and esp Japan have vastly higher ‘debt’/GDP ratios than the Euro ‘bilking’ zone, but interest rates are near zero.

In reality, the only reason Euro countries’ bond rates came down are two fold. First the ECB made its ‘do whatever takes…’ which meant a threat to buy any and all bonds on the secondary market at a strictly (effective) limited interest rate (which has turned out be around 5%). Secondly, I have no doubt whatever that it unofficially told the bankers & finance sector ‘vigilantes’ something like… “… if you lot continue to take the p* and squeeze Euro sovereigns for obscene rip off rates, the Euro currency will collapse…. be satisfied with a mere triple what you could get off $, £ or Yen bonds… and keep the ‘goose’ laying free gratis golden eggs for all (wink wink, a*le dummies!)…”

Thus the fact that Euro ‘periphery’ bond rates fell has nothing whatever to do with economic ‘fundamentals’. As we see, ‘Austerity’ has kept the real economy of ordinary citizens in the toilet, so the elites can complete their program of buying Assets, public & private at ‘firesale’ prices before beginning the next Ponzi asset bubble part of the cycle.

Once again, everybody, ‘macro’ economics and the monetary is NOT the ‘household budget’ BS you have been fed ad nauseam for decades by the well remunerated intellectual frauds of mainstream economists, idiot politicians (useful idiots) and the corporate mass media etc.

This is a fraud of vast proportions perpetrated on the masses with sole purpose of funnelling ever more wealth (extracted from ordinary citizens) upwards to the already wealthy Capital owning elites.

Jeremy,

The Blogs are already there.

Those of MMT (Modern Monetary Theory) advocates, Prof Bill Mitchell (Australia) and its other main centre at the University of Missouri Kansas City. Plus others in the (long and rigorous) ‘Post Keynesian’ schools, such as Steve Keen and many others.

Whose correct understanding of the monetary system was recently (finally) publicly validated in Bank of England statements (& Youtube videos) ie…. ‘…loans create deposits..’ from which it also follows that ‘investment creates savings’ not the other way round that has been taught wrongly for over 30 yrs in near every University economics dept. on the planet & is at the root of why all their alumni (including our Irish muppets) hadn’t the vaguest clue a crash was coming mere weeks before…

The same bogus ‘macro’ thinking saw these same ‘idiot savants’ nod approval for a totally dysfunctional (for ordinary citizens, of course, not elites) Euro system and likewise for the policies that have succeeded in achieving no recovery whatever for 6 years and counting since the crash.

Yes, mainstream macro economics is really this bad. Intellectual fraud, top to bottom, ‘educated’ in. And none of these parasites has made any real effort to address despite occasional muffled acknowledgement of the whole mess… 6 yrs and counting…. I can’t print here what I really think of these people at this stage.

Agreed! But the Germans are terrified of inflation and the rest of Northern Europe has been perfectly happy with austerity.

As unequivocally demonstrated by 6yrs of massive QE in the US and UK, it has no discernible effect whatever, and for the same reasons, has no effect whatever on inflation.

It’s a gift to banks, mostly balance sheet manipulations, often covering for de facto insolvency (‘extend and pretend’) and none of the money gets anywhere near the ‘real’ economy.

Its only other purpose is pure political smokescreen.

As the Bank of England has just (finally) publicly stated…. banks don’t lend ‘Reserves’ & don’t need them either in order lend sufficiently to customers.

The mainstream understanding, pure propaganda for decades (in bankers’ and elites’ interests) of both the monetary system & the macro economics that inherently flow from that is pure horse*t.

The Post Keynesians, MMT and other branches, near entirely excluded from academe since 1950s McCarthyism (reds under the beds) ensured texbooks were removed & lecturers sacked, have had the correct understanding all along.

Including statements in the 1990s (Wynne Godley and others), that the Euro system, as proposed then introduced, would fail to recover and languish in mass unemployment following the first significant ‘shock’, unless the rules were changed to enable +FISCAL+ stimulus. (And at the appropriate level according to the fall in aggregate demand & level of private debt straightjacket etc.).

Exactly as has happened.