“We want to see a genuinely mixed economy of public and social enterprise, alongside a private sector with a long-term private business commitment, that will provide the decent pay, jobs, housing, schools, health and social care of the future. Labour will always seek to distribute the rewards of growth more fairly. But to deliver that growth demands real change in the way the economy is run,” Corbyn said.
Earlier on Saturday, shadow chancellor John McDonnell said the Blair and Brown governments had created an unfair tax system that made Britain a haven for the super-rich and that Labour would rewrite the rules of the economy.
McDonnell said the party must aspire to be another great reforming government when it returned to power.
“The last Labour government relied too heavily on tax revenues from financial services, and too heavily on off-balance sheet spending through the private finance initiative,” he said. “It didn’t do enough to clamp down on tax evasion and avoidance. It helped create an unfair tax system.”….The Guardian
Jeremy Corbyn calls for new economics to tackle 'grotesque inequality'
Chris Johnston
8 comments:
Oh well, they don't make Trotskyists like they used to.
We can start by making money and credit creation ethical and that requires deprivileging the banks which also requires eliminating a great deal of private debt in a manner that does not disadvantage non-debtors.
It turns out that ethics (and inexpensive fiat, which, btw is the ONLY ethical money form for government use) is the unused tool to get us out of this quagmire of legitimate competing interests.
If the bankers created the money out of thin air, why does a debt write off hurt then so much? German banks want their money back, but the loans to Greece were manufactured out of nothing. So, how can a haircut hurt? The fictitious money could be written off in an instant, and no one would lose their money.
Pension funds could get affected, but could not the money be created to neutralize the loss?
If it was created, some would say inflation would eat into its value.
It's weird how money works. No wonder no one can get a grasp on it, and there is even minor disagreements among some MMTers.
Kaivey, you have to remember loans are 'money' to banks.
When banks lend, they create an IOU (demand deposit) that they swap with the borrower's IOU (Promise to pay back principal and interest.)
There is a good explanation here. I recommend reading all of it:
http://www.3spoken.co.uk/2014/07/on-nature-of-banks-insured-vs-in-specie.html
"If a bank's lending turns out to be bad and the loan section therefore shrinks, then the losses accrue to the right hand side of the balance sheet from the bottom upward. Ordinary shareholders lose out first, then preferred shareholders, all the way up to insured depositors."
If I could create money out of thin air, I wouldn't loan it. I'd spend it.
If the bankers created the money out of thin air, why does a debt write off hurt then so much?
In extending credit (loans) by creating liabilities (deposits), banks but capital (equity) at risk.
Government only guarantees bank liquify, not bank equity.
Default reduces bank equity and puts banks at risk of insolvency.
IN the case of bank insolvency, the bank is put into receivership, equity charged, debt crammed down to equity as needed, and the bank is reopened under new management. This generally happens over a weekend, so that bank customers don't notice anything.
Pension funds could get affected, but could not the money be created to neutralize the loss?
If it was created, some would say inflation would eat into its value.
Kaivey
You're on the right track. But the solution is not to write off the loans but to distribute new fiat equally, ala Steve Keen, to all citizens of the Eurozone to allow the debts to be paid plus restrictions* on new credit creation to prevent new bubble blowing.
*Or allow all Eurozone citizens to have inherently risk-free accounts at the ECB itself so people could flee banks if they so desired without having to devolve to using physical Euros.
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