Thanks for this Morgan. It would, I suggest, be much more readable if terms were written in full rather than as acronyms. I find it surprising how lttle extra space is taken by writing terms/titles in full v much more readable.
This is an excellent and timely call to rethink the prevailing narrative around public debt. You compellingly highlight how the relentless focus on debt reduction has come at the expense of vital public goods, particularly infrastructure and the health system. These are the very foundations of societal well-being, yet they continue to be undermined by orthodoxy.
Even for those indifferent to the needs of future generations, the consequences are already evident in the everyday challenges faced by current ones. Too bad to have such a long life expectancy, am I right?
Where does the money to pay the 'coupon' and the 'maturity' come from? The Crown Settlement Account?
Why is it normal practice to issue bonds rather than just maintain an overdraft on the CSA? Some bonds, yes- to allow for the stability of pension funds etc- but to voluntarily turn the whole lot into interest bearing assets for the already wealthy smells at best like a hangover from the gold-standard (where a government might reasonably have to borrow private gold at interest to settle an international account), at worst like collusion between state and private finance- a perception exacerbated by Treasuries and Reserve Banks being largely staffed by revolving-door transplants from private banking.
When nominally progressive leaders such as Starmer "the UK government will continue to raise the money it needs through the capital markets" and Hipkins " we will work within a budgetary limit of 50% of GDP and aim to be in surplus by 2028/9", they are clearly signalling to the finance sector rather than citizens. Are the IMF (through their regular country-by-country financial outlook briefings) and the ratings agencies blackmailing current and future national leaders into declaring fealty to 'business as usual'? Since MMT/PK is becoming quite a mainstream talking-point now, and many countries are moving away from the old hegemony, not making these pledges of allegiance could be seen as an invitation to political interference by the core countries of the hegemony- USA, UK etc. against dissident parties. Perhaps even publicly acknowledging these pressures exist could be seen as an act of dissidence to be punished.
Your comment makes me think of countries who wanted to nationalize their energy(oil), nek' minute they had to be "freed from their oppressively leaders" by the US/UK.
When we talk of the 'national interest' of US/UK, typically we were talking of what Wall Street and City of London wants. For several decades, the political apparatus of those countries have acted as enforcers for those institutions, both at home and abroad. Trump (not a fan btw, just saying) has re-written the rules to some extent whereas the Dems have had Wall Street's back 100%. The UK & EU don't have the same options as the USA though. They put all their resources into the relationship with the USA that they presumed would remain the 'daddy' of the Neolib world, then Trump kicked them out of bed! Aus and NZ are relatively more well resourced relative to population size, but very tied to the 'traditional allies' hegemony, both sentimentally and financially.
Very interesting, thank you! We need more people explaining how these things work.
The depressing thought is that governments don't want to fully fund public services, they choose not to and justify it with simplifications, misleading stats, and made up stories. Why do you think they do that? (Genuine question.)
My feeling is
1) they don't have any policy ideas that will actually make meaningful change and so settle with compromise - this stuff isn't easy and choosing a different path may not win friends
2) they are funded by people who aren't harmed by the lack of public funding or perhaps even benefit from it eg big banks
3) the advice they get on the economy is based on maths modelling that is abstracted from the realities of people's lives
I’ve heard people making the same argument that debt doesn’t matter here in the USA because “we owe it to ourselves.” All you have to do is look what happened when Trump recently pissed off bond holders to understand that no country is immune to the risks of running up a lot of debt.
Thanks for this Morgan. It would, I suggest, be much more readable if terms were written in full rather than as acronyms. I find it surprising how lttle extra space is taken by writing terms/titles in full v much more readable.
I have to admit, I kept needing to scroll back up to find the full phrase, to remember what the acronym meant.
Wonderfully written article but yes, I agree with Andrew on this point.
Hi Andrew - thanks for this! I'll keep this in mind for future posts - old habits die hard.
This is an excellent and timely call to rethink the prevailing narrative around public debt. You compellingly highlight how the relentless focus on debt reduction has come at the expense of vital public goods, particularly infrastructure and the health system. These are the very foundations of societal well-being, yet they continue to be undermined by orthodoxy.
Even for those indifferent to the needs of future generations, the consequences are already evident in the everyday challenges faced by current ones. Too bad to have such a long life expectancy, am I right?
Where does the money to pay the 'coupon' and the 'maturity' come from? The Crown Settlement Account?
Why is it normal practice to issue bonds rather than just maintain an overdraft on the CSA? Some bonds, yes- to allow for the stability of pension funds etc- but to voluntarily turn the whole lot into interest bearing assets for the already wealthy smells at best like a hangover from the gold-standard (where a government might reasonably have to borrow private gold at interest to settle an international account), at worst like collusion between state and private finance- a perception exacerbated by Treasuries and Reserve Banks being largely staffed by revolving-door transplants from private banking.
When nominally progressive leaders such as Starmer "the UK government will continue to raise the money it needs through the capital markets" and Hipkins " we will work within a budgetary limit of 50% of GDP and aim to be in surplus by 2028/9", they are clearly signalling to the finance sector rather than citizens. Are the IMF (through their regular country-by-country financial outlook briefings) and the ratings agencies blackmailing current and future national leaders into declaring fealty to 'business as usual'? Since MMT/PK is becoming quite a mainstream talking-point now, and many countries are moving away from the old hegemony, not making these pledges of allegiance could be seen as an invitation to political interference by the core countries of the hegemony- USA, UK etc. against dissident parties. Perhaps even publicly acknowledging these pressures exist could be seen as an act of dissidence to be punished.
Your comment makes me think of countries who wanted to nationalize their energy(oil), nek' minute they had to be "freed from their oppressively leaders" by the US/UK.
When we talk of the 'national interest' of US/UK, typically we were talking of what Wall Street and City of London wants. For several decades, the political apparatus of those countries have acted as enforcers for those institutions, both at home and abroad. Trump (not a fan btw, just saying) has re-written the rules to some extent whereas the Dems have had Wall Street's back 100%. The UK & EU don't have the same options as the USA though. They put all their resources into the relationship with the USA that they presumed would remain the 'daddy' of the Neolib world, then Trump kicked them out of bed! Aus and NZ are relatively more well resourced relative to population size, but very tied to the 'traditional allies' hegemony, both sentimentally and financially.
Yup, we are basically living in a Frederick Forsyth novel. 🫠👍
I feel like this needs a visual description, and a visual comparison of the 2 perspectives (current Government approach versus alternative).
Hi Em, great idea! I'll put my (limited) graphic design skills to use, that'd be an excellent way to show these perspectives.
Can I suggest having a print friendly and PDF format available like that provide by the
CASSE Steady State.org
I like to print out, read and share with others who would not normally read this valuable information for a more informed public.
Hi Phillip, excellent idea! I'll put my design hat on and publish something soon, thanks for reading!
Very interesting, thank you! We need more people explaining how these things work.
The depressing thought is that governments don't want to fully fund public services, they choose not to and justify it with simplifications, misleading stats, and made up stories. Why do you think they do that? (Genuine question.)
My feeling is
1) they don't have any policy ideas that will actually make meaningful change and so settle with compromise - this stuff isn't easy and choosing a different path may not win friends
2) they are funded by people who aren't harmed by the lack of public funding or perhaps even benefit from it eg big banks
3) the advice they get on the economy is based on maths modelling that is abstracted from the realities of people's lives
All the best with your work!
I’ll go for (2)!!
I’ve heard people making the same argument that debt doesn’t matter here in the USA because “we owe it to ourselves.” All you have to do is look what happened when Trump recently pissed off bond holders to understand that no country is immune to the risks of running up a lot of debt.
Public Risk-free Debt
no comment needed