As their popularity rises the Green Party of England & Wales will see its policies gain more attention & criticism in the media.
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@ChrisMayLA6
Maybe bond-market actors do not have our best interests at heart.I don't doubt that, but sadly their views & actions have considerable consequence that at the very least needs to be ameliorated in some way if the GPEW is ever to push their (to me very welcome) economic agenda forward
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@ChrisMayLA6
Maybe bond-market actors do not have our best interests at heart.@mrundkvist @ChrisMayLA6 I wouldn't be the first to point out that they don't even understand macroeconomics! A currency-issuing government can always cover the interest on bonds, can never become insolvent, and - this is the kicker - does not even need to "borrow" from markets in order to spend. If the UK can spend money into existence for quantitative easing (QE) or Covid measures, then it can do so for any other purpose.
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@mrundkvist @ChrisMayLA6 I wouldn't be the first to point out that they don't even understand macroeconomics! A currency-issuing government can always cover the interest on bonds, can never become insolvent, and - this is the kicker - does not even need to "borrow" from markets in order to spend. If the UK can spend money into existence for quantitative easing (QE) or Covid measures, then it can do so for any other purpose.
️@ApostateEnglishman @mrundkvist
However, where the monetarists are right is that this is inflationary.... in the UK this is hidden by the impact of QE on asset prices (see the housing market) being left out of the metrics for inflation.... I'm not against 'spending money into existence' but it needs to be managed to ensure the expansion in the money supply is directed into productive investment not inflating (rentier) assets.... in this sense Reeves 'new' fiscal rules help (if she'd use them)
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@ApostateEnglishman @mrundkvist
However, where the monetarists are right is that this is inflationary.... in the UK this is hidden by the impact of QE on asset prices (see the housing market) being left out of the metrics for inflation.... I'm not against 'spending money into existence' but it needs to be managed to ensure the expansion in the money supply is directed into productive investment not inflating (rentier) assets.... in this sense Reeves 'new' fiscal rules help (if she'd use them)
@ChrisMayLA6 @mrundkvist For once, we somewhat disagree! The monetarist view that expanding the money supply is always inflationary is overly simplistic: in order for there to be runaway inflation, there has to be too many pounds sterling chasing too fews goods and services. In other words, where there is unused
productive capacity
in your economy, national spending can't add to inflation. If we have the raw materials, willing and able workforce, ecological space etc., we can always afford it. -
As their popularity rises the Green Party of England & Wales will see its policies gain more attention & criticism in the media.
The FT has run a long analysis of various policies this morning, suggesting that while popular, they may be under-estimating the need to find ways to convince bond-market actors their economic policies are 'credible'.
If the GPEW is not already reaching out to calm such actors, they might want to think about quietly (and pragmatcally) doing so.
Can someone explain to a non-expert what a bond-market is, and why every government of every colour seems to scared and subservient to them?
Isn't just a market betting on the ability of a future government to pay up when a bond bought today is redeemed in future?
That's seems far too simplicity and insufficient to cause such fear in policy-makers ... so I've clearly misunderstood.
And also, even if a future economy is in downturn, the gov can always invent money to pay up?
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As their popularity rises the Green Party of England & Wales will see its policies gain more attention & criticism in the media.
The FT has run a long analysis of various policies this morning, suggesting that while popular, they may be under-estimating the need to find ways to convince bond-market actors their economic policies are 'credible'.
If the GPEW is not already reaching out to calm such actors, they might want to think about quietly (and pragmatcally) doing so.
@ChrisMayLA6 Have they run a similar analysis on whatever Reform happen to be spouting at the moment?
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As their popularity rises the Green Party of England & Wales will see its policies gain more attention & criticism in the media.
The FT has run a long analysis of various policies this morning, suggesting that while popular, they may be under-estimating the need to find ways to convince bond-market actors their economic policies are 'credible'.
If the GPEW is not already reaching out to calm such actors, they might want to think about quietly (and pragmatcally) doing so.
The West as a whole is long-overdue a public debate on the incestuous relationship between politics and finance and the degree to which our democratic choices can be compromised by embedded financial systems.
Other ways of working are clearly possible, if not necessarily easy to navigate, but too many politicians have spent too long accepting the TINA mantra and claiming to be grownups for supporting a broken status quo.
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@ChrisMayLA6 @mrundkvist For once, we somewhat disagree! The monetarist view that expanding the money supply is always inflationary is overly simplistic: in order for there to be runaway inflation, there has to be too many pounds sterling chasing too fews goods and services. In other words, where there is unused
productive capacity in your economy, national spending can't add to inflation. If we have the raw materials, willing and able workforce, ecological space etc., we can always afford it.@ApostateEnglishman @mrundkvist
I'm not sure we are disagreeing; I think the monetarist point is right where there is now dynamic of advance for the economy & in the UK that was channelled into property.... but your point & my last point are parallel - I would see 'productive investment' as the driving of the Green Transition & infrastructure investment - I agree the monetarist point it simplified but it is not (entirely) without merit when linked with other analytical approaches in he round
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Indeed.... I'm expecting that to follow on from the FT's 'reasoned' engagement with their economic policies
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Can someone explain to a non-expert what a bond-market is, and why every government of every colour seems to scared and subservient to them?
Isn't just a market betting on the ability of a future government to pay up when a bond bought today is redeemed in future?
That's seems far too simplicity and insufficient to cause such fear in policy-makers ... so I've clearly misunderstood.
And also, even if a future economy is in downturn, the gov can always invent money to pay up?
Its all about the yield on Govt. debt. Yields are inversely proportional to price - the higher the price of the public debt instrument the lower the effect yield (interest payments)... so when bond traders lose confidence in the Govt.s ability to control inflation (which if high reduces the value of there loans as assets), then the price of bonds drops, driving up the yield paid by Govt.s when issuing new debt... and thereby squeezing the public finances....
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