Friday, 4 July 2014

Ann Pettifor descends to abuse.

AP recently published an article criticising full reserve banking, which sparked off plenty of debate, e.g. here and here.
However, she has failed to answer the large majority of the criticisms made of the above article. Instead she has descended to, 1, simply repeating herself, 2,  abusing her critics, and 3, pointing on Twitter to as many articles as she can that that she thinks agree with her.
She HAS RESONDED to a few criticisms (including a few of mine). And that’s appreciated. But for the most part, she just won’t enter into a debate.

As regards abuse, Ben Dyson (founder of Positive Money) asked her to respond to the criticisms he made of her above article. Her response was to claim that PM’s approach was “narrow” and ignored “interest, employment, and control over the mobility of the money created..”, and that PM is in danger of turning in to a “kind of cult”. Let’s take those daft and insulting points in turn.
As regards interest rates, if AP had actually bothered studying PM literature, she’d have discovered that PM and co-authors had a large amount to say about interest rates in their submission to the Vickers commission.
As for the idea that PM is not concerned about “employment” that is just hilariously stupid and rude. Again, if AP had bothered reading PM literature, she’d have discovered that employment and unemployment are mentioned in approximately every other paragraph!
As for “control over the mobility of money”, God knows what that’s supposed to mean. But under a PM system, having created £X of money, holders of that money would be free to do what they want with it as they are under the existing system – with the exception that the rules of full reserve DO STOP people having their cake and eating it -  that is having their money loaned on while the taxpayer carries the ultimate risk involved in lending.
As for the idea that PM may become a “cult”, that criticism is plain thick headed. I could say the same of AP in person, or any political party, religion, scientific theory, you name it.

AP’s response to my criticisms.
Anyway, for those interested in the details of this argument, let’s have a look at the incompetent response she gave to my most recent criticism which is here.
That criticism of mine consisted of several distinct points, only one of which she tackled. The point of mine she did tackle was on the subject of monetarism and was as follows:
“Ann, you say in reference to the Positive Money / Wolf proposal, “….the notion to my mind is preposterous. It is an approach reminiscent of the misguided and failed monetarist policy prescriptions for controlling the money supply in the 1980s.” Really? It’s difficult to answer that point because you don’t tell readers exactly what the similarities are between Wolf’s proposal and monetarism. I can make a guess, but it’s not the job of readers to have to guess what an author is trying to say.”
AP’s response was:
 “My biggest concern is that the monetarist proposal to contract economic activity by contracting the money supply, hits those who need employment most…I am a full employment advocate.”
Now that’s just drivel.
First, monetarists (certainly Milton Friedman) do not suggest “contracting” the money supply: they advocate the DIRECT OPPOSITE!! That is, Friedman advocated a steady year on year INCREASE IN the money supply. (And, BTW, I’m not in favour of ALL ASPECTS of monetarism.)
Second, as AP would have noticed if she’d actually studied PM literature in more detail, the committee advocated by PM is not called the “Money Destruction Committee”. It’s called the “Money Creation Committee”. And if AP had read further, she’d discover that PM advocates that the MCC creates whatever amount of money is needed to bring full employment. Thus AP’s saintly claim that “I am a full employment advocate” is just nonsense.
Third, it’s possible AP is concerned that on implementing full reserve, there might be an INITIAL reduction in the money supply. Well that possibility is catered for by the MCC. To repeat, the MCC creates whatever amount of debt-free money the economy needs to bring full employment. I.e. if there were a deflationary effect stemming from introducing full reserve, the MCC would simply counteract that by creating some extra debt-free money (aka base money).
Now hopefully I don’t use the word “stupid” without good reason. But when it comes to someone who claims in an extremely loud voice to be an authority on some subject, and it turns out they’re clueless, then I reach for the rotten eggs and tomatoes and words like “stupid”.

AP’s earlier answers to critics.
In fairness, I should mention that in the comments section after an earlier article on the subject of full reserve, AP did give some slightly more detailed responses to her critics, me included. However, those responses were as badly flawed as her above hopeless “monetarist” point, and I just cannot be bothered dealing with those responses now. Perhaps at a later date.

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