Endgame

The 



All good things must come to an end and so must also interminable things like the Chilcot Inquiry.  Having told us around the end of 2011 that it would not be publishing any more documents, transcripts or witness statements because “publication is imminent” the Iraq Inquiry has as we have observed before been very quiet for the past four years.  So quiet that even politicians have noticed.  

Stop the
                                                          War...


With the assent of Jeremy Corbyn and John McDonnell the previous leadership of “Stop the War” is now suddenly the Labour Party Front bench.  Indeed John McDonnell openly says that he supports George Monbiot’s “Arrest Blair” campaign and wants to see Blair on trial at the Hague.  Anyone remember when Ed Miliband saying the Iraq War might not have been a good idea was controversial? 

To JIC
                                                          page...

Corbyn and McDonnell have built much of their supporter base out of the Stop the War movement tapping into the resentment that Blair’s seemingly magical abilities to evade justice or responsibility has created. 



The movement is strongly pacifist and has crossovers with that other favourite bastion of the hard left the Campaign for Nuclear Disarmament.  Jeremy Corbyn is of course the chair of the Stop the War coalition [till he reigned after I'd written this] and as one might expect it is a result staffed by the kind of people who use words like “economic neoliberalism” even if they don't understand why letting the Chancellor have complete and total direct control over setting interest rates again may not be the world's great idea.  It's carefully hoovered up most of the students who used to flock to the Liberal Democrats because they agreed with Nick ... along with malcontents of all sorts and has crossovers to the Occupy Movement for bringing down capitalism by falling asleep in the middle of the City of London.  Something I do at my desk overlooking the Bank of England every day so I don't know why we're still stuck with economic neoliberalism.

You can't not like Jeremy Corbyn.  It's nice to have a leader of the opposition with worse educational qualifications than myself.  We haven't had a party leader without a degree since John Major. He's a great man.  A totemic figure who believes sincerely everything he says.  The problem is I don't believe it and that's why I've left the party.  After all principles are what we're into and I joined New Labour - that doesn't exist anymore.  To be honest I only really joined a party because I thought it was bad for democracy that the party only had 100,000 members.  Now it has half a million I disagree with I feel I'm a bit of an optional extra and don't have the patience to wait for 34 years for things to turn around like Jeremy...



Jeremy Corbyn is, of course, a pacifist and so are many of Stop the War’s supporters but pacifism is now the new mainstream.  Indeed looking at the new front bench of the Labour party you can see why the likes of John Rentoul have gone to such extreme but doomed lengths to try and protect Blair’s reputation.  As a result from a position of “let’s go to war all the time” Labour now seems to have retreated to a position of “let’s never go to war at all”.  Perhaps this schizophrenic mindset is why when it does do war it doesn’t mess about …



Much of the new Old Labour regime’s policies really are loony left – the same fantastical nonsense the party spouted in the 1980s.  The pinnacle of these stupid policies is of course the so called “people’s Quantative Easing” … a childishly stupid plan to connect the Bank of England's printing presses to government spending and create hyperinflation dreamed up by a man called Richard Murphy



Of course you'd think no one would be stupid enough to defend giving away free money made from thin air to all and sundry but of course those working in the Bond markets who the Bank of England gives the QE money to have a vested interest in talking these mad schemes up.  The great thing about giving money away is you can always find someone who's up for the idea.  Usually the person who's going to get it.  This is how Mrs Thatcher's privatisations went so well...

Whenever you discuss this with anyone on the hard left they seem to be in permanent denial of how catastrophically dangerous such a policy would be.  Disagreeing on taxation levels is one thing.  Agreeing to promote a policy that would destroy the currency is quite another. 

Advocates of this policy constantly shift the debate to try and hide it’s sheer stupidity (which of course can’t be done) by for example claiming that the QE policy of Gordon Brown/David Cameron (with which I do not agree either) is somehow being done secretly (it isn’t it has been loudly trumpeted and you can read the details on the Bank of England website).  Or by claiming that “other countries have done it” – this is a half truth.  Other countries have QE polices and National Investment Banks but no other country has directly connected one to the other completely blurring the line between spending and borrowing.

Bear in mind many of these people are exactly the same people who only a few years ago were telling us that Gordon Brown and Ed Balls making the Bank of England Independent and creating an interest rate target for them to meet under the Bank of England Act 1998 would free us from all time from boom and bust ...

... which it hasn't but that's because Gordon messed up the regulation of financial institutions so instead of fixing that let's destroy the one thing he actually got right just to put the cherry on top... Remember if you can't fix a problem you can always make lots more different problems instead.



It is true that other countries have had QE policies but what Corbyn is suggesting is not a conventional QE program it is directly connecting the central bank printing presses to government spending. No volume of repetitive lies can airbrush this fact away. I cannot find any example of anyone successfully pursuing such a policy before. The nearest example would be when FDR took the U.S. off the gold standard during the 1930s depression. I think it's an incredibly dangerous high risk policy. The UK's currency is not as strong as the dollar so if it goes wrong it will go catastrophically wrong. Moreover FDR had a destination - a target ... To restore commodity prices. The Brown/Cameron QE has a target to kick start inflation and prevent deflation.

Corbyn and McDonnell have no stated economic target for their policy. They have no stated inflation rate they're trying to achieve nor do they have a stated stimulation goal... Their argument is as childish as "if we do this in an emergency why can't we do it all the time"... To which the answer is you'd create hyperinflation you berks. I personally do not want any part in a party that promotes such catastrophically stupid and dangerous ideas.

Cornered on this point advocates then fall back on “the policy should be debated”.  Why?  It is so obviously completely stupid it defies debate.  Why would anyone give their hard earned money or their free time to a political party to promote this nonsense?  After all if I wanted a hyperinflationary boom I could just lobby David Cameron to bring back Nigel Lawson.  And nonsense it is …

http://moneyweek.com/what-is-qe-for-the-people/

…like most of the best nonsense it is ideological.  The people’s QE is touted by people who actually use the words “economic neoliberalism”. 



Anyone who uses these words in any context is an idiot.  They only useful function they serve as far as I have deduced is to end boring conversations.  “Oh, that’s economic neoliberalism” shuts up so many bores on the right or left.  For those of you lucky enough to have gone through life without having to hear this phrase (which like intersectionality suffers from syllable overload) it is basically a shorthand for Milton Friedman’s right wing fantastical theories that the markets don’t need regulating that much and will somehow magically regulate themselves allowing the state to be shrunk to the size of a small rented office with a couple of voluntary staff members somewhere outside Purley. 

People on the extreme left have thus come up with their own ideological fact free logic free economic answers to this dogma in an attempt to beat the right wing at talking economic bollocks.  Richard Murphy is a prime “thinker” in this ocean of moronic ideas and is an adherent to an equally useless, stupid an dangerous philosophy masquerading as economic science known as modern monetary theory or MMT.

MMT

Adherents to MMT believe that all the problems in the markets have actually been created by a small misunderstanding.  According to these people despite millions of economists trying and failing to understand money since the beginning of time “money has only recently been properly understood for the first time” …now.  So as an antidote to the pack of political lies called neoliberalism they invented their own pack of political lies called neochartalism. 

More MMT
                                                          rubbish...

If anyone reading this thinks there’s such a thing as objective economic truth I suggest they stop reading this and fuck off now as I discussed it with Buddy Hell and he told me that economics cannot exist without a political frame of reference so it can’t.  What adherents of MMT believe is that governments with the power to issue their own currencies will always be solvent, and that inflation is caused primarily by resource constraints, rather than monetary growth. 



Chartalism was invented by Georg Friedrich Knapp in his 1905 book The State Theory of Money… these ideas went on to influence people like John Maynard Keynes. 



Following the eternal economic dictum that if you put "neo" in front of a political economic theory you can turn it from something flawed into total bollocks someone then put the word neo in front of Chartalism to create neoChartalism.  The difference is this. 



Chartalism states that "money is a creature of law" rather than a commodity.  This is because at the time money was linked to the “gold standard” and could still in theory be exchanged for precious metal and was thus thought of as a medium of exchange.  It was Alfred Mitchell-Innes who pointed out the advantages of money in terms of deferred payment.  Through fungibility money crosses the fourth dimension of time not just space.  It is a medium of storing wealth not just transferring it.  If you want to see what a completely barter based economy with no fungibility looks like see our article on the Free Fringe

Alfred Mitchell-Innes in his essay The Credit Theory of Money pointed out that the government needs to create money of some kind in order to collect tax.  He theorised from this that government money which comes from taxpayers is therefore a form of debt that the government could reclaim by taxation.  

Ranting about cash he wrote : “So numerous have these government tokens become in the last few centuries and so universal their use everyday life – far exceeding that of any other species of money – that we have come to associate them more especially with the word "money." But they have no more claim to the title than any other tokens or acknowledgements of debt. Every merchant who pays for a purchase with his bill, and every banker who issues his notes or authorizes drafts on the Treasury, or which puts its stamp on a piece of metal or a sheet of paper, and of all the false ideas current on the subject of money none is more harmful than that which attributes to the government the special function of monopolizing the issues of money. If banks could not issue money, they could not carry on their business, and when the government puts obstacles in the way of the issue of certain forms of money, one of the results is to force the public to accustom itself to other and perhaps less convenient forms.

In other words he is slagging off central banks as the ultimate form of monopoly.  Since people must pay their taxes with official “money” it follows that “other forms of money” are disadvantaged.  That Mitchell-Innes had some problems getting people to buy into his ideas is somewhat transparent in his writing – his prose style being one of eternal exasperation.  I particularly enjoyed this attack on the concept of fungibility:

The notion that we all have to-day that the government coin is the one and only dollar and that all other forms of money are promises to pay that dollar is no longer tenable in the face of the clear historical evidence to the contrary. A government dollar is a promise to "pay," a promise to "satisfy," a promise to "redeem," just as all other money is. All forms of money are identical in their nature. It is hard to get the public to realize this functional principle, without a true understanding of which it is impossible to grasp any of the phenomena of money.”

MMT contains some interesting concepts but trying to understand it is basically like climbing one of those Esher staircases because at the centre of its understanding is a confusion (or a cynic might argue an attempt to create confusion) about what government debt is. 

MMT claims that the whole concept of government borrowing is in fact a misnomer because if government bank notes are a series of IOUs then they just a form of debt.  This is a clever piece of semantics but it is really no more than a very complicated denial of the reality of government debt but according to MMT “nobody can borrow back their own debt instruments.”  This is clearly nonsense.  Here are some examples of someone borrowing back their own debt instruments.



1)    Credit card Transfers are borrowing from your own debt instrument.  If I have a £1000 on a credit card and engage in a transfer deal to transfer that money to another credit card for £10 I am borrowing from my own debt instrument - The purpose of doing such a transaction usually being to spread repayments over a longer time period in return for an immediate cash transaction with the creditor betting on the amount of time it will take me to repay the loan.  The fact remains though that both the cards are my debt instruments.  Such transactions happen all the time but if you want to believe something hard enough you can invent an economic argument for white being black.  One can understand why some people may be attracted to such ideas as the government never having a debt because it issues debt but when you boil them down they amount to little more than deficit denial and chrometophobia.  The truth is that government does not create all debt it just regulates one particular form of debt.




If I lend this man a VUE cinema voucher
he has borrowed his own debt instrument?


2)     Selling someone back their own vouchers is selling them their own debt insturment.  Of course you could argue that a credit cards are the banks’ debt instruments so here’s another example which is hopefully even clearer.  Imagine I do a gig for the CEO of Vue Cinema and he pays me in 5 £10 vouchers.  Two months later I bump into him in the Whitgift Centre and he says “Anthony, I’ve lost my wallet can you lend me £10 to get home?”. 
I reply “Sorry, Tim Richards, all I’ve got on me are those VUE cinema vouchers”.  And he says “Well, if you lend me those I might be able to sell them to get some cash” so I lend him the £50 in vouchers and he gives me an IOU for cash. 
But of course the vouchers were also a form of IOU - the only difference between them and money is that they are only semi-fungible (they can be exchanged for other things but only at VUE cinemas) whereas the money is fully fungible (it can be exchanged for anything).  Timothy is the CEO of VUE Cinemas so the vouchers are his debt instrument.  So what has happened by me lending him his vouchers back is that he has effectively borrowed his own debt and his own debt instrument back.  While this situation is extremely unlikely as Timothy and I don’t move in the same social circles and he probably doesn’t lose his wallet much the situation is not impossible.  Therefore it is possible to borrow your own debt instrument and therefore government debt is a real thing even though it exists only in the form of IOUs.  As René Descartes would say “it spends therefore it is”. 



To be fair to be people who are deluded enough to believe in “the people’s QE” the Bank of England and the Government are not entirely honest what their version of QE is themselves… so … after a great deal of effort on Disqus I think I have now got down explaining how the Bank of England’s Qunatative Easing program works.

What is QE at the moment?

On the Bank of England website the Government (in case you’d forgotten the Bank of England was nationalised in 1946 by Clement Attlee) goes to excruciating pains to try and explain that it isn’t “printing money”.  This is how Mark Carney and his minions explain it:

http://www.bankofengland.co.uk/monetarypolicy/Pages/qe/qe_faqs.aspx

The Bank of England electronically creates new money* and uses it to purchase gilts from private investors such as pension funds and insurance companies. These investors typically do not want to hold on to this money, because it yields a low return. So they tend to use it to purchase other assets, such as corporate bonds and shares. That lowers longer-term borrowing costs and encourages the issuance of new equities and bonds and that should stimulate spending.  When demand is too weak, QE can help to keep inflation on track to meet the 2% target.

*This is actually the only bit you need to read to understand QE but we'll go through the pum...

Those readers with company or private pensions will be aware of receiving long documents that they never read explaining that their pension fund is invested in a range of cleverly packaged financial products no one understands.  These are usually categorised into low, medium and high risk investments.  Having had a company pension scheme in the past that specialised in medium and high risk investments so that I put in £2000, the company put in £2000 and after 3 years there was £3000 I made a decision that all future pensions I had should have some money invested in cash.  Of course you can’t do this… the nearest most pension funds will let you get to cash are “cash equivalent” products.  These are basically usually gilts created by the Bank of England or pieces of government debt.  Eventually when you’ve insisted that your pension provider must keep a third of your money in this form they will do so and then write to you every six months saying they’ve found “better forms” to put your money in that they will change your funds into unless they hear otherwise.  Or they will say that the product has been discontinued and offer you a completely different financial product that is not equivalent and keep repeating these techniques until one day you forget to answer and they have invested your money in the financial product they wanted to invest it in in the first place.  Can you imagine if your High Street Bank operated like this? This is of course because they make little money out of bonds and gilts because the interest rates on them are low...

Having found such a wonderful financial product as a sub-prime mortage that is a long time debt timebomb they will then eventually send you another letter proudly announcing that you have put in £2000, the company has put in £2000 and after 3 years there is £3000!  And people wonder why we had a sub-prime mortage crisis. 

Einstein changed the name, investment objective and investment policy of the fund underlying the  Einstein Balanced Fund in January 2015.

The  risk rating and fund charges remain the same.

What's changed?

The table below shows the changes that applied to the  fund:

Previous fund name New fund name
 Einstein Balanced Fund  Einstein Multi-Asset Balanced Fund
Previous investment objective New investment objective

The investment strategy of the fund is to purchase units in the Einstein Balanced Fund. That fund aims to achieve a balance between capital growth and income predominantly from a portfolio of UK and International securities.

The investment strategy of the fund is to purchase units in the Einstein Multi-Asset Balanced Fund. That fund aims to achieve a balance between capital growth and income predominantly from a portfolio of UK and International securities.

Previous investment policy New investment policy

The sub-fund may also invest in derivative instruments, forward transactions and collective investment schemes.

The policy of the sub-fund is to gain exposure to a range of asset classes including, without limitation, equities, fixed income, property, commodities, cash, near cash and deposits. Exposure to these asset classes will be achieved through investment in transferable securities, approved money market instruments, warrants, derivative instruments, forward transactions and collective investment schemes. To the extent the sub-fund gains exposure to property or commodities, such exposure may be through exchange listed securities and/or collective investment schemes.



Of course the people’s or any other time of QE will do nothing to solve any of this and it’s not explaining what QE is but it’s an interesting diversion.  The point is that super-safety conscious investors like me like to have our money in cash and gilts and the Mark Carney’s of the world don’t want us to have it in this form because it doesn’t create inflation. 



How the BBC Explains QE to the plebs

They want me to invest my money in business and create jobs so they lean on these companies by buying up all the gilts cheaply.  Having sold the gilts the company sends me another letter saying “unfortunately that financial product has been discontinued” and tries to sell me a higher risk investment instead in an attempt to kick start economy.  Note that none of this actually creates jobs it just creates more credit for business which might create jobs… but this is a “might” not a “will”… the economy is still shaky so there’s no guarantee that this technique alone will work.  It’s a bit like jump starting a car.  You can put as much energy you like into starting the engine but unless it has petrol in it wont go.



The gilts that avaricious over cautious investors like me like to put our money in don’t have to be bought through a pension fund.  New ones are issued all the time.  Every time the government spends more than it earns it chooses individual creditors and pays them with new money that it has invented by creating a gilt or “bond” that it sells to a third party who agrees to hang onto this debt for a fixed period of time in return for a small interest payment.  (The difference between a guilt and a bond is that guilts are bonds that are issued by the central bank.) You don’t need a pension fund to buy these you can actually buy them through your local high street bank.

It’s basically like having a really shit ISA.  The supposed benefit is that these gilts have no risk because they’re backed by the Bank of England.  You can get high risk company bonds issued by companies but let’s not go there.

So anyway the government’s QE money is invested in buying back these gilts along with other bonds proving Mitchell-Innes wrong  – you can indeed buy back your own debt instrument.  This is similar if not equally analogous to me lending the CEO of Vue Cinemas his own vouchers back.

So where does the money come to buy back these gilts come from?  Here the Bank of England is slightly sophistic and disingenuous.  It says…

QE does not, as is sometimes suggested, involve printing more banknotes.  And QE is not about giving money to banks.  Rather, the policy was designed to help businesses raise finance without needing to borrow from banks.  And also to lower interest rates for all households and businesses.”   <- Half Truth of the 21st Century.

However, if I had bought a government bond through my High Street Bank or a lot of them it is possible that Mark Carney could ring me up personally and say “We’d like to buy your bonds back, Mr Miller”. 
And I’d say “Okay, Mark, how much?” and Mark would think of a number that was slightly above the normal market rate and I’d say “Okay, Mark, it’s a deal”. 

There are of course problems with this.  One of them is that I know that Mark wants to buy the gilts and am in a good position to push the price up. 



Anyway, Mark pays for the bond out of Bank of England money that has been generated from NOTHING simply by someone typing the number £200,000,000,000 into a government computer.  But since that money is digital he can claim that “no new money has been printed”.

This is a purely technical argument however.  If mark gives me £1000 of this money for some gilts I can go to a cash point and take that money out in notes.  There’s only actually £56,400,000,000 in circulation as physical banknotes so if a large proportion of the other gilt sellers and me went to the cash point and took this money out as cash the government would eventually have to print more bank notes to meet demand.  It’s because the government doesn’t want this to happen that it doesn’t buy gilts from individuals like me but from financial institutions.  The overall effect of this is of course that by creating more individual units of money individual units of money become worth less and can’t buy as much thus in 2014 the equivalent buying power of £1 compared to 1971 was 0.08 and today it is 0.78 … so the idea is to encourage people to spend.  You can see why ideologically Marxists might love this...



Credit due: the Bank of England has put an awful lot of thought in to varnishisng the unvarnished truth that they have basically created money from nothing. 

The Bank’s other argument that this is not so runs along the lines that when interest rates return to normal QE will be “unwound”.  That is they pay off the £200,000,000,000 of invented QE money by selling gilts back to people…

In the February 2014 Inflation Report, the MPC said that it plans to maintain the £375bn stock of assets purchased, including reinvesting the cash flows associated with any of those assets that mature, at least until Bank Rate has been reached a level from which it could be cut materially, if that was needed.  See the February 2014 Inflation Report for more information.”

…you’ll notice thought that while the Bank of England insists that its QE program can be unwound it stops slightly short of saying when exactly it’s going to “unwind” it.  My guess is never.  It has just created its self a new debt instrument that it doesn’t have to pay off and doesn’t appear on the government balance sheets.  We just have to trust that one day it will be repaid.  The object of all this sophistry really is of course to try and protect investor confidence.  If investor confidence fell through the floor QE would go from creating inflation to creating hyper inflation and this is why it is a potentially very dangerous policy.  In fact it’s such a surreal policy that when I explain it to people they often simply don’t believe me that this is actually happening. 

“If the government just wants to cancel its debts why doesn’t it just do it?” is one question I’ve been asked.  To which the answer is that the gilts are individually owned so if it simply cancelled individual gilts it would create individual angry investors and this would immediately and greatly damage investor confidence in government gilts.  The whole point of gilts as an investment is they always pay out – there’s nothing much else to recommend them.  Buying the gilts back with invented digital money has the effect of diminishing everyone’s savings be devaluing money but the effect is spread amongst all owners of digital and physical pounds sterling worldwide in direct proportion to the number of £s they own.  From each according to their £s … to the government according to its debts.



Attlee Nationalised the Bank of England in 1946
so we have to take away its "independence"
as it is unfortunately not possible
to Nationalise it twice


Still you can’t really blame Corbyn and Murphy from asking remedial questions like “If you can invent money from nothing why can’t we?” 

A question to which if you are the government there actually is no answer.  This is why the Bank of England was given its “independence” and an inflation target.  As soon as Bank of England was Nationalised in 1946 Chancellors of all different hues made the startling discovery that interest rates are the most powerful lever on the economy as they control inflation.  This resulted in a series of inflationary booms where the economy expanded faster than could be sustained and crashed again.  Most of these booms were the idea of Tory chancellors including Nigel Lawson, Anthony Barber and Reginald Maudling and enabled them to make everyone very well off just in time for the next election before the economy crashed afterwards.  Still nobody ever failed to get elected by bribing the electorate. 



We would remind fans of inflation that
Nigel Lawson is still available

Still, I’m not entirely sure what the point of paying to be in the Labour party is when one could just as easily and probably more cheaply lobby David Cameron to get Nigel Lawson back from the House of Lords. 



Where I part company with the Labour Party is that the Labour Party believes that by the strength of our common endeavour we achieve more than we achieve alone and I believe that by the strength of our common endeavour we achieve more than we achieve alone so long as we don’t endeavour to do something that’s clearly a tiny bit stupid. 

So personally I've left to join the Eccentric Party.  It was bad enough when Labour was caricatured as the party of Tax and Spend… now it will be caricatured as the party of Tax and Spend what doesn’t exist.  Ironic that the chronic bores that witter on about “economic neoliberalism” being the ultimate evil all over twitter seem unable to see that actually Quantative Easing of all kinds is an easy “solution” to a long term chronic problem stolen straight out the Milton “helicopter drop” Friedman handbook of shit economic ideas.  Simply throwing money at problems is exactly what Milton “helicopter drop” Friedman is all about... Older readers may remember Geoffrey Howe's 1981 budget which put up taxes to beat inflation resulting in mass unemployment and the 364 economists who wrote a letter to the times.  Is putting taxes up in a recession that far off a Corbyn policy...? 



Howe makes the point that the problem was that "The traditional Keynesian approach said if you contracted the budget in a recession, you contracted the economy. But," he continues, "that didn't allow for things like credibility... The Walters, and my, thinking was that the boost to credibility would lower long-term interest rates and therefore stimulate the economy."

http://www.pragcap.com/milton-friedman-misunderstood-quantitative-easing/

Let them eat paper.

The US’s Ben Bernanke of course insists that QE is very different to dropping money from helicopters because the Federal Reserve has “a greater degree of control over their eventual reversal”.  The same ludicrous argument the Bank of England makes about its operations.

The pioneer of QE was, of course, the Bank of Japan which experimented with it during a period of domestic deflation in Japan in the early 2000s.  Initially starting with “just a little bit to create stimulus” Japan has been printing more money buying more and more of its own bonds like there’s no tomorrow with the result that today they still have deflation.

http://www.economist.com/blogs/banyan/2014/10/japans-quantitative-easing

And has reached the point where people are asking exactly how many of its own bonds can a government actually buy? And isn’t this just trying to solve a debt problem by creating more debt of a different sort?

“The BOJ has used such a powerful anesthetic to make the financial market feel no pain. But you can’t keep (the financial market) anesthetized forever…” Hajime Takata, chief economist at Mizuho Research Institute

So what’s the point? The US is now on its 3rd round of QE...............................?



I mean you don’t have to be Robert Mugabe to realise there might be problems with printing ever more money.  The Bank of England can claim that its magically created QE money is earmarked for bonds and gilts alone but money is fungible and every pound is swappable for every other pound to that the invented money is separate from the rest of the Bank’s money is simply a theoretical construct and every time a central Bank embarks on a new round of QE this argument becomes less and less plausible because clearly the ring fence fencing the ring fenced invented money from the “real debt” money is growing larger and larger in circumference.  If you do this for years on end too you might start to create inflation in the guilt and bond market because that’s what the government wants to buy.

If the government is buying guilts that it created in the past then the argument that this is not just the cancelling of debt stands up but what if the government starts buying gilts it created during the lifetime of its QE program?

As with all things it’s probably a matter of moderation… QE is an economic lever just as interest rates are an economic lever so there’s no reason not to use it in its self.  The question is how do you stay in control of it. 

There are other problems with QE.  For example the Japanese have found that they have lost money on bonds they bought in their attempts to stimulate the economy when interest rates were low.  A bit of a problem when you’re still buying assets at a pace of Y80,000,000,000,000 (£430,000,000,000) a year.  To the Japanese QE has become a drug...?  Even the  "inventer" of the phrase "Quantative Easing" Prof Richard Werner says that :

a) He thinks the policy as implemented by Japan has failed
b) He thinks the policy as implemented by the Bank of England will fail
c) That isn't want he meant anyway - he never intended a policy of Zero Interest Rates AND Bulk Bond Buying at the same time

"I was promoting a policy that involved more credit creation, rather than changing the price of money," says Prof Werner.  "So when I wrote my article, and after the newspaper's editors insisted on a phrase readers would understand, I added the Japanese adjective for quantity to the standard expression for monetary stimulation. 'Quantitative easing' was the literal translation back into English of these two Japanese words."

Clearly however he and I am in the minority and printing free money is the new black...

Even the Bank of England Museum struggles to explain QE.  It used to explain how you could control inflation by changing the bank rate with a ball inside a wobbling tube…



….when I looked at the numbers on the tube today I noticed the tube now has positive and negative numbers.  Well, of course, you can’t actually have a negative bank rate so this must be QE.  QE it’s self is represented rather quaintly as a sailing boat where QE is wound up and down like a sail...



Anyway, the point is I suppose that it seems as though from the Labour establishment constant apologising for and denying any wrongdoing by Blair it has gone to the other extreme.  This article was supposed to be about the Chilcot Inquiry but it seems to have ended up discussing Corbynomics.  The question I suppose I’m driving at though is will things happen more quickly with Corbyn in charge of the opposition?  Will Blair and Cameron be caught in a spiral of trying to out-slag-off Blair and Chilcot?  And is this why it’s been so hard to get anyone in the establishment to really question what Blair did in the first place?  Next to understanding QE a small war seems preferable.

At the same time David Cameron has spend a lot of time telling Chilcot to “get on with it”.  This has resulted in Sir John Chilcot actually finishing the Maxwellisation process but not being able to come up with a timetable.

Meanwhile the Daily Mail has been campaigning with the relatives of the soldiers who died in the war and has got them to threaten Sir John Chilcot with Judicial Review if he doesn’t come up with a timetable.  And as a result of that Sir John Chilcot has threatened the relatives threatening him with Judicial Review by telling them they’ll have to come up with their own legal costs if they sue.

Sir John’s defence for not coming up with a report or a timetable yet (which he came out with as a result of getting fed up with being followed to the office and back by photographers from the Mail and the Sun) is that the replies from the Maxwellees (people to be criticised in the report who have to be informed before publication … keep up) …has led to the discovery of documents previously unknown to the inquiry which has opened up whole new lines of inquiry … even though the inquiry previously said it had full unfettered access to everything.

If you haven't had enough of the mental poo on MMT some more is available here.  Corbyn's fan club claims that two nobel prize economists have been supporting Corbyn’s economic policy : Stiglitz and Krugman. However, Krugman hasn't actually explictly supported the people's QE as far as I know whereas what Stiglitz says is that "anyone putting their hope in QE is JUST WRONG"... which seems a little far from supporting the People's QE wholeheartedly.



Pear Shaped Iraq_Enquiry_Enquiry Page 1 Covers public evidence from Christopher Meyer, Jeremy Greenstock, Tim Dowse, Edward Chaplin, Sir David Manning, Sir William Patey, Vice Admiral Charles Style, General Sir John Reith, Alistair Campbell, Lieutenant General Sir Richard Shirreff and Geoff Hoon
Pear Shaped Iraq_Enquiry_Enquiry Page 2 Covers public evidence from Jonathan Powell, Lord Goldsmith, Margaret Beckett, John Hutton, Sir Kevin Tebbit, General the Lord Walker of Aldringham, Clare Short, Ann Clwyd, Gordon Brown and endless analysis of what Jaques Chirac meant without asking him.
Pear Shaped Iraq_Enquiry_Enquiry Page 3 Covers public evidence from Douglas Alexander, David Miliband, Cathy Adams,  Sir John Holmes, Sir Jonathan Cunliffe, Mark Etherington CBE and Lord Boateng.
Pear Shaped Iraq_Enquiry_Enquiry Page 4 Covers public evidence from Carne Ross, Lt Gen Sir James Dutton KCB CBE, Stephen White, Baroness Elizabeth Manningham-Buller, Sir Peter Spencer KCB, Lord Prescott, Tony Blair (again) and Jack Straw.  It also covers some ludicrous conspiracy theories.
Most of the first 4 pages are brief commentary with the transcripts re-edited in Xtranormal format (the videos are on Youtube).  For the next article we tried a different approach with a mixture of commentary, transcripts and Xtranormal animation...
MI6 goes Pear Shaped Iraq Covers SIS private evidence from MI6 officers SIS1, SIS2, SIS3,SIS4, SIS5 and SIS6 and C (Sir Richard Dearlove).  The Iraq Inquiry have so far interviewed (as far as I can figure out) at least 12 members of MI6. SIS1, SIS2, SIS3,SIS4, SIS5 and SIS6 have all had their transcripts published in some form whereas statements have been made that SIS8, SIS9 and SIS11’s transcripts will never be published due to the fact that “The Committee has concluded, in line with its Protocols, that it would not be possible to redact and publish the transcript without rendering it unintelligible”. Which leaves open the question of what’s happened to SIS7, SIS10 and SIS12’s testimony and will we ever see a transcript because the inquiry has not made a statement that we wont…?
Reconstruction goes Pear Shaped in Iraq Covers the reconstruction effort after the invasion and the private evidence of Edward Chaplin CMG OBE, The Hon Dominic Asquith CMG and Christopher Prentice CMG, HM Ambassadors to Iraq (2004 – 2009 collectively) and DFID and FCO functionaries JOHN TUCKNOTT, JONNY BAXTER, RICHARD JONES, ROB TINLINE, KATHLEEN REID, LINDY CAMERON, SIMON COLLIS, JAMES TANSLEY and TIM FOY
Kurdistan Goes Pear Shaped With Emma Sky - Emma Sky was sent to the US controlled region of Kirkuk in Kurdistan by the USA who secured her services from the British Council.  She maintains she was acting as effectively as a private citizen (not an employee of the British Government) at the time which is why she has a page entirely to herself.
The JIC goes Pear Shaped in Iraq - Sir John Scarlett and Julian Miller (heads of the JIC during the run up to the invasion) and Sir William Erhman and Tim Dowse (heads of of the JIC after the invasion of Iraq in 2003) discuss the actual evidence or lack of it for the claims within the two dossiers and illuminate us as the JIC intelligence QC processes in what is widely regarded as one of the most boring pages on the internet.
Defence Intelligence goes Pear Shaped - Martin Howard the head of the DIS is interviewed by the inquiry both in public and in private. This page is extremely tedious.
GCHQ goes Pear Shaped - Sir David Pepper tells us what went on at GCHQ after the war and no one tells us what went on at GCHQ in the run-up to the war
Major General Michael Laurie goes Pear Shaped - More fun from the DIS
Major General Tim Tyler goes Pear Shaped - A view of the Major General's view as Deputy Commander Iraq Survey Group and a review of Decision Points insofar as it relates to the Tony Blair/George W relationship
Disaster Points - George W Bush's Autobiography
Tony Blair's Autobiography
Alastair Campbell goes Pear Shaped - reading his diaries