RALPHONOMICS: Mortgage repayments as % of incomes.

Wednesday, 14 May 2014

Mortgage repayments as % of incomes.

Here are the percentages for the UK.

Dramtic stuff. Too dramatic in fact.

H/t Economics help.

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Article at the "Alliance for Just Money" site, entitled "Subsidies are Built into the Existing Bank System."

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Article at the "Full Reserve Banking.com" site entitled "Two Flaws in Fractional Reserve Banking".

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Malcolm Sawyer claims advocates of full reserve banking are "cranks".

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Ann Pettifor should be congratulated on her support for the Green New Deal, but her grasp of money and banks is not too good. See the following articles.

1. Article entitled "Ann Pettifor says £10 notes are not a form of money."

2. Ann Pettifor’s incompetent criticisms of Positive Money and Martin Wolf.

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A new jusfication for full reserve banking.
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The arguments for a permanent zero interest rate.

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An Employer of Last Resort Scheme which Resembles a Free Labour Market.

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I take issue with Mariana Mazzucato's "mission orientation" idea in the comments after this article of hers.

Stop press: I've just noticed my comment has been removed. But no big surprises: as anyone with half a brain knows, academics are not too keen on free speech, especially (far as I can see) at the University of London.

I'll re-write the criticisms and publish them (perhaps on this blog) when time permits.

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My articles at Seeking Alpha.

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3rd edition of my book on full reserve banking.

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My site which adopts a very un-PC attitude to "hate".

Older articles etc by yours truly.

1. A Market Imitating Employment Subsidy, in The Future of the Welfare State, (editor: Bent Greve), 2006, published by Ashgate.

2. Flaws in the Benefit Transfer Programme, The Review of Policy Studies, Vol 3 No.3, 1997.

3. Giving pensioners a bigger state pension would be a better way of helping them than free travel, in Local Transport Today, Issue 457, Nov. 2006.

4. Abolishing Unemployment, Economic Research Council Research Study No 7, 1980.

5. Let’s Print Money and Buy Back National Debts. Positive Money.

http://www.positivemoney.org.uk/2011/05/let%E2%80%99s-print-money-and-buy-back-national-debts/

6. Why the excitement about debt? The Progressive Economics Forum.

http://www.progressive-economics.ca/2011/10/11/ralph-musgrave-debt-excitement/

7. The Debt and Deficit. Jefferson Tree. http://www.thejeffersontree.com/the-debt-and-deficit/

Non-peer reviewed (or only lightly peer reviewed) publications. The coloured clickable links below are EITHER the title of the work, OR a very short summary (where I think a short summary conveys more than the title).

1. Having government as employer of last resort is a flawed policy: remove the flaws and you’re left with an employment subsidy that might worth a try.

2. The Flaws in Keynsian Borrow and Spend.

3. Government Borrowing is Near Pointless.

4. Pensioners’ Travel Concessions: a Misallocation of Resources.

5. Infrastructure and Other Costs of Immigration.

6. Marginal Employment Subsidies Don't Work.

Notes.

i) The above is not a complete list in that earlier versions of some papers have been omitted. For a more complete list see here, and “browse by author” (top of left hand column).

ii) 7 deals with a wide range of alleged reasons for government borrowing, including Keynsian borrow and spend. 6 is an updated version of the "anti-Keynes" arguments in 7. 5 is an updated version of 1, which in turn is an updated version of 4.

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New stuff - well new to this blog.

1st Dec 2021. Joseph Stiglitz on economists' lack of any real concern about real world economic problems.

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1st Dec 2021. Whatever you do, don't speak the truth.

Regardless of what society you live in – Ancient Rome, Ancient Egypt, Europe in the Middle Ages, etc – it always pays to go along with the lies put about by the elite, rather than question those lies. If you'd questioned the wonders of having lions eat Christians in Ancient Rome, that would have damaged your career.

In Britain in 2021, promoting a war in Iraq which kills a million Muslims is not “extremist” because that's what many of the charlatans, poseurs and clots who make up Westminster and the British intellectual elite think. In contrast, backing the British National Party, which opposed the war from day one makes you an extremist.

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19th Nov 2021. Feet cold this Winter? Get pair of shoes two sizes too large and wear two pairs of wooly sox to fill up the spacei.

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10th Nov 2021. Tim Worstall takes the p*ss out of the ever gushing Mariana Mazzucato.

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10th Nov 20211. Biden's nomination for top bank regulator, Omarova, has novel ideas on banks which are similar to full reserve banking, though it's hard to tell.

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10th Nov 2021. Beveridge said MMT was right.

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25^th Oct 2021. I’ve done nothing on this blog for a good two weeks: reason is that I was rushed to hospital two weeks ago with a mysterious medical problem. Medics are fairly sure it was caused by a drug I’m on: Azothioprine, which is an immuno-supressant. People can be on this drug for YEARS ( as I’ve been) with no problems, and then it suddenly turns nasty. I could hardly walk and still have problems balancing. So if you get put in it, make 100% sure you get the monthly blood tests you’re supposed to get.

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3rd Oct 2021. Nasty little "hate" motivated creep, Richard Murphy, claims the desire to cut immigration proves a hared of immigrants. Presumably this idiot also thinks the desire to live in an apartment proves a “hatred” of houses, and the desire not to have daffodils in your garden proves “hatred” of daffodils.

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3rd Oct 2021. Well this is a new use for renewable energy: El Salvador to use heat from a volcano to power Bitcoin mining.

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1^st Oct 2021. I’ve draw attention on this blog recently to the incompetence of Marianna Mazzucato and Robert Skidelsky, e.g. scroll down this column to 27^th Sept. Yet another example is their bizarre claim in respect of fiscal policy that “There is, however, little evidence that any new fiscal thinking is underway.”

Well for a start there is dollar for dollar coordination of fiscal and monetary policy advocated for about ten years by Positive Money, MMT, with Ben Bernanke giving the thumbs up that that sort of coordination. Still we can’t expect Mazzucato or Skidelsky to know about that.

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29th Sept 2021. Positive Money's “Money Question” site claims to be “...the place to find the latest debates and discussion on the bedrock of economics: money.”

Now there's just one teensy problem there, which is that the last article on the Money Question blog was A YEAR AGO.!!! “Latest debates and discussion” my arse.

I honestly don't know what they do at Positive Money nowadays apart from stare out the window, sip tea and bank the salary cheques which are funded a several (evidently very gullible) charities.

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29th Sept 2021. Interesting development in renewable energy: solar and wind generated in Morocco to be transmitted to the UK thru an under-sea cable. Given the energy loss over a cable that long I wouldn’t have thought that was worthwhile, but seems I’m wrong.

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27^th Sept 2027. Looks like Robert Skidelsky is losing the plot in his old age. I dealt with some of his nonsense here about a week ago. But a recent article of his in the Guardian asks how we “…ensure that the fruits of increased productivity are passed on to the mass of the people in the form of higher wages and non-work income.” Well the economically literate have always known the answer to that: competitive forces are always tending to reduce employers’ profits to what economists call “normal” levels - in terms of profit on capital employed and profit on turnover.

I.e. wherever an employer or group of employers make extra profits for WHATEVER reason (not necessarily more automation) then assuming competitive forces are working, other employers will pile into the area of economic activity concerned and drive down prices. Doh!

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25^th Sept 2021. Silly article at the Social Europe site claims that taxing millionaires is a good way to pay for the Green New Deal. As MMTers (and indeed many others) have long pointed out, raising taxes on millionaires may be desirable to iron out inequalities, but it won’t cut the average millionaire’s weekly spending by much. Thus it does not cut demand by much, thus it does not make room for the extra demand stemming from increased spending on the GND.

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25^th Sept 2021. Being a prat is no bar to being a leader writer for a broadsheet newspaper. Simon Nixon, chief leader writer for The Times claims that if people quit jobs to become truck drivers, it’s those in jobs paying MORE THAN the truck driver wage who would quit. Now why would anyone quit a job for the privilege of getting a LESS WELL PAID job?

With the help of my galaxy brain, I reckon it would be those with jobs paying LESS THAN the typical truck driver gets who would quit.

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24^th Sept 2021. Whoopee: there’s an “all female” Eventbrite webinar on the 27^th Sept about financial stability featuring Mariana Mazzucato and Pavlina Tcherneva and presumably others. I expect this to be much the same standard as the all male rubbish webinar mentioned below in this column (see item just below starting “22^nd Sept 2021. Well I watched…”).

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24^th Sept 2021. Tory tosspots have voted for mass immigration with about the same enthusiasm as Labour supporters over the last thirty years, but Tory voters refuse to let more housing be built for the new arrivals: at least they object to new housing “near where I live”. Like I said . . tosspots.

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23rd Sept 2021. China has enough empty apartments to house 90 million people: that's the entire population of the UK plus Sweden, Finland, Norway and Denmark.

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22^nd Sept 2021. Well I watched the NIESR webinar referred to below (See item starting: “19th Sept 2021. NIESR webinar coming up shortly…”). I predicted it would be a car crash. It wasn’t so much that as vacuous waffle. For a taste of the “vacuousness” see this NIESR “Policy Brief”.

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21st Sept 2021. I like the claim by Chris Dillow that "the difference between classical & "popular" music is not so much the music itself as the audiences." I take that to mean that a proportion of those who claim to like classical music don't actually enjoy it all that much. It's rather that they tend to be upper middle class people who look down their noses at music enjoyed by the masses. There's certainly a finite element of snobbery in the arts: the only question is exactly how much.

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20th Sept 2021. As Bill Mitchell rightly says, a number of senior members of the economics profession are a long way from being entirely honest. That is, now that MMT is being widely accepted, they cannot bear the idea of upstarts like MMTers appearing to be more clued up on economics than said senior members of the profession. So instead of saying they agree with MMT, they claim they were aware of the basics of MMT all along and that those basics are contained in orthodox economics.

Only problem with the latter story is that if you look at what those senior members of the profession were actually saying ten years ago, it turns out they were not advocating the basic ideas of MMT at all. Quite the opposite: they were advocating Neanderthal orthodox ideas e.g. that the SIZE OF the debt and deficit mattered, rather than (as per MMT) the inflationary effect of the debt and deficit.

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19^th Sept 2021. NIESR webinar coming up shortly: this Wednesday (22^nd Sept). My prediction is that this event, entitled “Resetting Fiscal Frameworks” will be a car crash, and for three reasons.

First, two out of the three speakers are accountants.There is a high probability they will make one of the most common mistakes in economics, namely applying accountant type thinking, i.e. micro economic thinking to what is a macro economic problem. Second, the NIESR has considered MMT once or twice before and made a hash of it. Third, the history of so called "fiscal rules" can best be described as a joke - see the item in this column just below which starts "17th Sept 2021. The great Tory Party..."

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19th Sept 2021. The right royal pillock who occupies Buckingham Palace recently announced that she supports Black Lives Matter. Does she realise that blacks in the US are responsible for about a HUNDRED TIMES as many attacks on Asians as Asians perpetrate against blacks, and thus that blacks' claim to be concerned about "lives" is a load of hypocrisy? Source of the above "hundred times" figure is here.

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17^th Sept 2021. Brazilian police say crypto has led to a big increase in kidnappings. Reason seems to be that kidnappers can now just grab people and demand that they pay them there and then using their smart-phones.

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17th Sept 2021. The great Tory Party fiscal rule farce enters its 11th year. The story so far...
George Osborne (former Tory finance minister): "We will eliminate the deficit by 2015." (13th Oct 2010).
Osborne: "We will eliminate the deficity by 2017 (Tory Manifesto, 2015, p9.)
Osborne: "We will eliminate the deficit by 2020." (Budget speech 8th July 2015)
Osborne: "We will eliminate the deficit by 2025" (Tory manaifeseto, 2017, p64.)
And now . . . wait for it . . . . the present Tory finance minister, Rishi Sunak, says he wants to stop borrowing to fund day-to-day spending within three years and will start to cut the underlying debt by 2024-25.
When will these pillocks realise they are talking thru their rear ends?
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16^th Sept 2021. Intelligent people define their terms. It is completely UNHEARD OF for those involved in the racism debate, including anti-racism campaigners, to define the word “racism”. Draw your own conclusions.

And for the benefit of sociologists, leftie journalists and others who are too dim to draw their own conclusion, the conclusion is that 99% of the debate surrounding racism is drivel.

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12^th Sept 2021. Ann Pettifor blames the chaos in Lybia on “the international financial 'architecture' that facilitates cross-border flows of corrupt, criminal and dirty money”. Yes, I’m sure if the World Bank, UN, bank regulators etc managed to get the right laws to control those “cross-border flows”, the migrant smugglers, slave traders, arms delers etc in Lybia would immediately come to heal and obey those new laws to letter. Libya would then be transformed into a stable, liberal democracy. Why did no one think of this before?

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12^th Sept 2021. Large numbers of dim-wit academics have been appearing on social media claiming that Emma Raducanu’s success supports the case for large scale immigration. Actually the fact that JUST ONE immigrant makes good does not prove much: ONE is not a statistically significant number. The British National Party has never claimed that because JUST ONE immigrant is a criminal, that that’s some sort of argument AGAINST immigration. Provisional conclusion: BNP members have higher IQs then the average academic.

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11th Sept 2021. I've always been baffled as to what so called “critical race theory” actually consists of. Certainly it's proponents don't seem to bother explaining in any sort of clear way what it actually consists of. Anyway according to Rebecca Liu in a Prospect Magazine article, Ali Meghji, who is a sociology prof at Cambrige claims CRT “cannot be reduced to “just an issue of bad actors”: “one could get rid of all the bigots in society,” he says, yet structural racism would still exist.”

Well hopefully that's cleared that up a bit. Though I have doubts: it won't surprise me if some other amazing well qualified sociologist comes up with a totally different definiton in the near future.

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10th Sept 2021. I've drawn attention on this blog in the past to the incompetence of Mervyn King, former governor of the Bank of England. But Danny Blanchflower (former external member of the Bank of England's monetary policy committee) really digs the dirt on him here.

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8th Sept 2021. I agree with the claim by this Positive Money article that stablecoins should be 100% backed by reserves at the central bank. Frances Coppola and Martin Wolf claimed the same.

However I'm not impressed by the constant use in the Positive Money article of the words “fair”, “democratic” and “sustainable” (in reference to their own ideas).

The word sustainable is of course flavour of the month, and is about the vaguest word in the English language. As for fair and democratic, they're OK as long as you explain EXACTLY WHY your ideas are fair and democratic. Unfortunately the PoMo authors don't.

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8th Sept 2021. Moronic article by Michael Krause of the Richmond Fed claims the big flaw in MMT is that MMTers don't realise that excess money printing leads to excess inflation. Actually anyone who has read a small amount of MMT literature ought to have worked out that MMTers are perfectly well aware of the blindingly obvious point that excess money printing leads to excess inflation.

The central point of MMT is that it is precisely that excess inflation which puts a limit to money printing, rather than, as widely believed by many at the top of of the economics profession, the size of the deficit and debt which place limits.

Looks like someone agrees with me.

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5^th Sept 2021. I see the Scottish government thinks “All learners have a right to learn in an equitable environment where all cultures, identities and languages are recognised and valued…”. What? So Hitler’s Jew gassing culture should be “valued”? And what about Pol Pot’s “kill anyone who wears glasses” culture? Presumably that’s also “valuable”. And what about that lovely Taliban culture where womens' education is suppresed or banned? Oh wait: suppressing womens' education is un-PC. "Oh what a tangled web we weave when first we practice to deceive", as Sir Walter Scott put it (pictured below).

Scots don't have the brians they used to.

As the UK “far right” have long recognised, there's a fair number of nutters in the teaching profession.

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5th Sept 2021. I see from an FT article that Russia's target rate inflation is 4% as compared to our 2% or so. Hmmm.....

As for the alleged "financial crisis" that the Russian central bank claims would come from a Worldwide rise in interest rates, that seems to be based on the over-simple but popular idea that a rise in inflation AND interest rates by X% imposes an additional cost on borrowers. Actually that's not true if debtors have their wits about them: that is, if they adopt inflation accounting techniques. In other words, and taking a simple example, if someone has to pay 5% on the money they borrow and inflation is running at 5%, then the REAL RATE of interest they are paying is 0%.

Hat tip to Mike Norman Economics.

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3rd Sept 2021. I’m working my way thru a Bank of England discussion paper on Central Bank Digital Currency (published June 2021) and to which they invite responses on this form. The discussion paper is very clear and thoughtful. Good bit of work. Far as I can see you don’t need to be a UK citizen to respond. Responses have to be in by 7th Sept.

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1st Sept 2021. Please note that since "offending" anyone is very very bad, and since there's a good chance someone will be "offended" when you disagree with them, all disagreement with anyone on social media is now banned.

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30^th Aug 2021. Facebook supports Muslims who invade other countries and impose Islam on them. At least I got a three day ban from Facebook for objecting to this Muslim cleric who supports the latter “invade and Islamise” policy.

Perhaps wokes can let us know if they also support Hitler’s policy of invading other countries and converting them to Nazism. Given that wokes have views on free speech which are similar to Hitler's, quite possibly wokes also agree with his "invade and Nazify" policy.

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26th Aug 2021. David Andolfatto (vice president of the St Louis Fed) seems to have cottoned onto the point that the actual administration of CBDC accounts can be farmed out to private / commercial banks, which comes to the same thing as Positive Money's "safe accounts". Certainly my instinct is that that farming out arrangement is better than having central banks themselves administer CBDC accounts. First, that administration is not something central banks have experience with, and second, private banks DO HAVE the experience. Obviously though central banks would need to keep a close eye on private banks to make sure they actually had the reserves they claim to have: i.e. that their "100% reserve" accounts really are backed dollar for dollar by reserves at the central bank.

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26th Aug 2021. Wall Street Journal article claims some fiendishly clever economists and sociologists have an explanation for the success of the Taliban: the attractions for a significant % of the population of a movement with strict and simple rules. Actually I think people with brains have known for thousands of years that there is a significant and dumb section of the population who are attracted by strict and simple rules: it saves dummies having to actually THINK, which is too much like hard work for them.

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26th Aug 2021. The Taliban was a US/UK creation according to John Pilger in an article at the Brave New Europe site.

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25th Aug 2021. Hilarious: Tony “won't shut up” Blair will ponder 9/11 and Islamic extremism. Er – this is the Tony Blair who let a record number of Mulims into the UK when he was prime minister and who said at that time that we have “much to learn” from Islam. Idiot.

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25th Aug 2021. John Cleese to do a series on the cancel culture and political correctness on Channel 4. Ironic that this should be reported in the Guardian where they will doubtless be crying their eyes out at this development.

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22^nd Aug 2021. As Richard Murphy rightly says, the word “extremist” is popular with establishment liars. The word is simply code for “not in the interests of, or approved of by the establishment”. He cites the case of the word being used by senior Tories to castigate those demonstrating for better anti global warming measures.

Unfortunately that’s a code which Murphy himself is happy enough to employ when it suits him, I’m pretty sure. The Labour and Tory parties supported the Iraq war which killed about a million Muslims, while the British National Party opposed that war from day one. But of course in the eyes of respectable Labour and Tory party members, the BNP is the “extremist” and “racist” party.

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About this blog.

Nearly all items from this column going back about five years can be found here.

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Re changes I make to articles in the centre column on this blog after publication, I make changes up to 24 hours after publication. I occasionally rectify typos AFTER 24 hours. As for changes to the ideas or information given AFTER THAT 24 hour deadline, I put those at the end of the relevant article in the form of an endnote or PS which is dated. As for material in this right hand column, I sometimes make substantial changes to the wording at any time, even two weeks after initial publication.
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Maximising GDP.

While maximising GDP or GDP per head is often portrayed as a desirable objective on this blog, I am aware of the harmful enironmental effects of increasing GDP. Thus something like “increasing output per hour by X% in the hopes that people will work X% fewer hours to compensate, thus leaving GDP the same” would be better. But the latter is a bit of a mouthful. Thus I normally stick with the conventional “maximise GDP” phrase. But please note that I actually mean something more like the latter “mouthful”.

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MUSGRAVE'S LAW SOLVES THE FOLLOWING PROBLEM.

The problem. Deficits and / or national debts allegedly need reducing. The conventional wisdom is that they are reduced by raising taxes and / or cutting government spending, which in turn produces the money with which to repay the debt. But raised taxes or spending cuts destroy jobs: exactly what we don’t want. A quandary.

The solution. The national debt can be reduced at any speed and without austerity as follows. Buy the debt back, obtaining the necessary funds from two sources: A, printing money, and B, increasing tax and/or reduced government spending. A is inflationary and B is deflationary. A and B can be altered to give almost any outcome desired. For example for a faster rate of buy back, apply more of A and B. Or for more deflation while buying back, apply more of B relative to A

Click here for more on this topic.

Wednesday, 14 May 2014

Mortgage repayments as % of incomes.

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