Great news: we don’t need to save in order to invest.

I’m thrilled to learn from Ann Pettifor’s letter in the Financial Times today that “investment is not constrained by savings”. So the UK can invest £30bn in the proposed HS2 rail project, and no one needs to save in the form of spending less on beer, home improvements, cars etc to pay for it? This is wondrous news. Instant wealth appears from nowhere.

The relevant paragraph in her letter reads “As Keynes explained and understood, in an economy based on credit, investment is not constrained by savings. Many of those who lay claim to his theories still do not accept this basic principle of a credit-based economy — applied in the UK since the founding of the Bank of England in 1694.”

I’d like to be the first to propose Ms Pettifor is awarded a Nobel Prize for this amazing insight.