tag:blogger.com,1999:blog-8764541874043694159.post135220524307479777..comments2024-03-28T12:23:39.665+00:00Comments on Coppola Comment: The Troubles of Kier Frances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-8764541874043694159.post-87593872626385063532019-06-23T11:37:28.003+01:002019-06-23T11:37:28.003+01:00(2) Houses are cheap (enough) to make, the shortag...(2) Houses are cheap (enough) to make, the shortage is of land with planning permission. Government or central bank funding for houses will primarily benefit the owners of land with planning permission...<br /><br />(3) Rewards irresponsible behaviour at the expense of prudent people.<br /><br />(4) Risk of gov. picking the wrong tech and turning it into a broken windows policy. Also people who care about climate change are usually very rich (relatively to the median human, planet survival is a hobby for people whose personal survival is not at stake).<br /><br />(5) Spend on healthcare OK as such, but GCSE Math fail on the law of compounding. 10% a year for 10 years is a giganormous increase, at that speed you quickly end up with the NHS the most expensive health system in the world (per head). Brits are not so sick that they need to spend more than everyone else on health.<br /><br />(6) The feeling of poverty is relative, so the poverty line goes up as you throw money at it, it may help to an extent.<br /><br />(7) Infrastructure better funded by grants than project bonds, which need a cashflow which doesn't work well with public goods. Only good for toll roads.<br /><br />(1) is probably best, though the amount needs to be better calibrated than a dumb division of another number from another policy with a very different action mechanism.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-82521227483833414932019-06-21T22:07:24.948+01:002019-06-21T22:07:24.948+01:00Hi Guy,
Ramanan told me you were trying to contac...Hi Guy,<br /><br />Ramanan told me you were trying to contact me. No, you aren't nuts. The Government and the Bank of England between them could have done much of what you suggest. <br /><br />I think helicopter money (suggestion 1) should have accompanied what we now know as QE in 2008, and there should also have been a partial or total debt jubilee (suggestion 3, which has also been made by Steve Keen, Johna Montgomerie, and the Bank of England's Michael Kumhof). <br /><br />Suggestion 2 is needed right now. The house price crisis has really built up since the 2008 crisis. We need to make housing affordable again. SImilarly, suggestion 4 is desperately needed now, and in large quantities. <br /><br />The Government & BoE couldn't have done your suggestions 5, 6 and 7, because as both the NHS and the Treasury are part of the Government, this would have breached Article 123 of the Lisbon Treaty which prohibits direct monetary financing of government. The UK government has a specific opt-out from Article 123 to allow it to maintain the Ways and Means overdraft facility at the Bank of England, but it is otherwise obliged to comply. <br /><br />Suggestion 8 has some merit, which may surprise you. Buying toxic investments from damaged banks can be the best way of resolving them. This has been tried and tested in many countries now. The debate is over the extent to which the private sector should bear losses before governments get involved. In Europe, the private sector must now bear substantial losses first. But that creates social problems when bondholders are small investors, elderly people whose life savings are in bank bonds, as is the case in much of Southern Europe. Government intervening to protect these people may be socially the best solution. <br /><br />However, suggestion 8 is technically flawed. Bailouts aren't usually done by exchanging newly-created government debt for toxic securities. They are nearly always done by partial or total nationalisation. Also, there is no money multiplier - banks don't lend "ten times" the reserves the Bank of England provides. Further, most bank lending is not to wealthy people, it is to middle class people. Nor do banks lend to people to enable them to buy stocks and bonds. The wealthy don't need banks to lend them the money for investment. <br /><br />Your "option #12" (did you mean 8?) is incorrect, I'm afraid. Central banks generally bought bonds from institutional investors such as pension funds, not directly from banks. And they didn't (and still don't) buy derivatives at all. Most QE purchases are of government debt. <br /><br />It would be useful to discuss this further offline, I think. You can contact me via my email frances@coppolacomment.com. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-89972226373330495182019-06-21T18:58:05.972+01:002019-06-21T18:58:05.972+01:00Dear Frances,
I am completing writing a book on Th...Dear Frances,<br />I am completing writing a book on The Economics of Kindness: The Birth of a Green Cooperative Economy, where I found myself referencing People's QE in these terms. My question to you is "am I nuts?" It seems a little too easy, as if there must be something I have missed. <br /><br />"When the Bank of England came to the rescue there were many ways in which its £375 billion could have been distributed. The Bank of England is not governed democratically, however, and most politicians don’t understand how central banks create money, so there was no public debate over the way the money could have been distributed. These could have been their options:<br /><br />1. The Bank of England could have distributed it to every woman, man and child in the form of Helicopter Money, amounting to £6,000 per person, or £18,000 for a family of three.<br /><br />2. The government could have created Affordable Housing Bonds, given the bonds to approved housing agencies, and asked the Bank of England to buy the bonds off the agencies, giving them the funds to build affordable housing. If each new home received £100,000 in seed money, allowing it to attract private investment, the Bank’s money could have built 3.75 million affordable homes, towards the four million homes that are needed. <br /><br />3. The government could have created Household Debt Bonds, given the bonds to approved debt agencies with various strings attached, and asked the Bank of England to buy the bonds off the agencies, giving them enough money to retire most of Britain’s household debt (£428 billion in 2019, £15,400 per household excluding mortgages). <br /><br />4. The government could have created Climate and Ecological Emergency Bonds, given the bonds to approved agencies, and asked the Bank of England to buy the bonds off the agencies, giving them £375 billion to spend on solutions. With leverage from the banks, this could have increased to £1.5 trillion. <br /><br />5. The government could have created Health Care Bonds, given the bonds to the National Health Service, and asked the Bank of England to buy the bonds off the NHS, giving it £375 billion to invest in improved health and social care, including writing off its £4.3 billion accumulated deficit and increasing its annual operating budget of £130 billion by 10% a year for 30 years.<br /><br />6. The government could have created Abolish Poverty Bonds, given the bonds to the Treasury, and asked the Bank of England to buy the bonds off the Treasury, giving it the income needed to increase welfare payments, increase minimum public sector wages to a Livable Wage of £9/£10 an hour, offer a tax incentive to every Livable Wage employer, and raise the taxable income threshold, lifting millions of households out of poverty.<br /><br />7. The government could have created Green Infrastructure Bonds, given the bonds to the Treasury, and asked the Bank of England to buy the bonds off the Treasury, giving it the income needed to finance infrastructure investments in roads, sewers, water, and so on.<br /><br />8. The government could have created Plutocratic Bonds, given the bonds to the banks in exchange for toxic investments, and allowed the banks to lend ten times that much money to wealthy people, enabling them to speculate in the housing market and buy stocks and bonds.<br /><br />Option #12 was chosen without any debate. The central banks used their newly created QE money to buy bonds and derivatives off the banks, pouring money into their accounts with no strings attached. <br /><br /><br />Guy Daunceyhttp://www.thepracticalutopian.canoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30510110903977502502019-06-19T14:36:10.387+01:002019-06-19T14:36:10.387+01:00This comment has been removed by the author.jerred seiysllhttps://www.blogger.com/profile/17375770046164311780noreply@blogger.com