If Mr Baker raised problems with fiat money in discussions with colleagues in the Conservative Party what counterarguments was he given? What should the government do about out of control spending on the welfare state?
Steve, I think we (FFF, Jon Moynihan, and The Growth Commission for example) know what needs to be done to fix the broken economy.
A problem I foresee however, is that many of the solutions are long term in nature and the benefits will take time to filter through. Even short-term fixes may not be delivering positive outcomes until towards the end of a parliamentary cycle.
Do you agree with this assessment. If so, how do we overcome it and carry the public with us through what will undoubtedly be some very tough times.
Yes, I agree strongly. I believe the key is to reach those who constantly shape public debate: broadcasters, journalists and influencers. Once they are persuaded the consensus is for freedom, we have a chance of solving our problems.
It will be a hard slog but it’s what we are here for!
What are you main disagreements with proponents of Modern Monetary Theory? I've listened to their theories, they believe money creation by governments and banks can be cancelled out through taxes. I.e. taxes stop runaway inlation. Responsible Governments are only limited in money creation by the amount of resources within an economy - trying to buy resources which aren't there is what creates inflation.
I'm only playing devil's addvocate, interested in your analysis of why you might disagree with MMT.
As we know during the 2010s we lived through a period of ultra low interest rates. Periods of easy money should directly lead to high inflation, but it took the COVID QE to bring about inflation. Why did the 2010 ultra low rates not cause runaway inflation?
Oh, but it did. Look at asset prices. Land. Stocks, classic cars etc. Price rises consequent upon inflation were masked by things like abundant and cheap oil, and energy. China going gangbusters on manufacturers etc etc.
For the reasons mentioned CPI is a shocking measure of inflation. It's also open to manipulation as it's the government marking their own homework essentially
The problem with CPI, RPI whatever is that they are all nonsense. You cannot measure 'inflation' (which the measurers think is price rises) the variables are too great.
There's another perspective too, my take is that inflation can take many forms. Price, quality, size/quantity. (Joe Bryan's What's the Problem video on YouTube explains this very well). Any price only metric such as CPI or RPI only consider the price element, not the other ways which inflation manifests, so they are therefore a poor measure of inflation.
'Inflation' in the strict economic sense is always and forever a function of money. It is the unwarranted expansion of currency and credit by the nationalised currency authorities that progressively writes down the relative value of that currency (NB you cannot 'inflate' sound money). Governments and bureaucrats also increase prices by mandating unwanted ingredients and massive regulationism - aka prodnosery.
My local MP - who I think is basically a good bloke - is a Conservative, and has a 1st Class Honours degree in 'Economics' from Manchester. That is he is a committed Keynesian. And as we all know that Keynes was a socialist and that his oeuvre is just another form of central planning. How do I re-educate him?
As Steve said it’s difficult to do retrospectively. But windfall taxes are a thing now (thanks Tony Blair) so we might be able to classify part of DB pension income as a windfall since it goes beyond normal investment returns.
I think what you have to do is to draw a line in the sand, that from this date all existing defined benefit entitlements stop accruing, but all entitlements earned to that date will be honoured. That is contractually sound. From this date though all future benefits will be money purchase - defined contribution schemes. And that employer - that is the real taxpayer in wealth creating private business - contributions will be capped at - say - 10% of gross pay. And I would also be inclined to stipulate that the pensions were all of the personal type . That is I do not trust state run collective pension schemes not to be politicised - they would be very large funds indeed. By this method the success of the individual state employees pension would be wholly connected to the success of the UK economy. The incentives would be aligned.
How, in the name of all that's Holy, do we leverage Starmer, Reeves, Lammy & Co out of government (and it has to be PDQ) before they finally complete Blair's ambition and turn us into an anti-democratic technocratic managerialist dictatorship?
Whare do you stand on the spectrum of Reverse Discrimination - Equity - Anti-Discrimination - Equal Opportunity - Let Markets Discriminate (ecomnomically and against people, ie abolish the Equality Act 2010, Equal Pay Act etc).
If Mr Baker raised problems with fiat money in discussions with colleagues in the Conservative Party what counterarguments was he given? What should the government do about out of control spending on the welfare state?
Steve, I think we (FFF, Jon Moynihan, and The Growth Commission for example) know what needs to be done to fix the broken economy.
A problem I foresee however, is that many of the solutions are long term in nature and the benefits will take time to filter through. Even short-term fixes may not be delivering positive outcomes until towards the end of a parliamentary cycle.
Do you agree with this assessment. If so, how do we overcome it and carry the public with us through what will undoubtedly be some very tough times.
Hi David,
Yes, I agree strongly. I believe the key is to reach those who constantly shape public debate: broadcasters, journalists and influencers. Once they are persuaded the consensus is for freedom, we have a chance of solving our problems.
It will be a hard slog but it’s what we are here for!
🗽✊🏻
Thanks Steve. I thought you might say that and of course it's one reason why I support FFF and other similar organisations.
I am unfortunately unable to join the Q&A tomorrow but wanted to get a question in to hopefully help your discussion. Hope it goes well.
Thank you!
What are you main disagreements with proponents of Modern Monetary Theory? I've listened to their theories, they believe money creation by governments and banks can be cancelled out through taxes. I.e. taxes stop runaway inlation. Responsible Governments are only limited in money creation by the amount of resources within an economy - trying to buy resources which aren't there is what creates inflation.
I'm only playing devil's addvocate, interested in your analysis of why you might disagree with MMT.
As we know during the 2010s we lived through a period of ultra low interest rates. Periods of easy money should directly lead to high inflation, but it took the COVID QE to bring about inflation. Why did the 2010 ultra low rates not cause runaway inflation?
Oh, but it did. Look at asset prices. Land. Stocks, classic cars etc. Price rises consequent upon inflation were masked by things like abundant and cheap oil, and energy. China going gangbusters on manufacturers etc etc.
That's very true, I was referring to CPI, but CPI doesn't take into account asset prices. So yes, you're making very valid points 👍
For the reasons mentioned CPI is a shocking measure of inflation. It's also open to manipulation as it's the government marking their own homework essentially
The problem with CPI, RPI whatever is that they are all nonsense. You cannot measure 'inflation' (which the measurers think is price rises) the variables are too great.
There's another perspective too, my take is that inflation can take many forms. Price, quality, size/quantity. (Joe Bryan's What's the Problem video on YouTube explains this very well). Any price only metric such as CPI or RPI only consider the price element, not the other ways which inflation manifests, so they are therefore a poor measure of inflation.
'Inflation' in the strict economic sense is always and forever a function of money. It is the unwarranted expansion of currency and credit by the nationalised currency authorities that progressively writes down the relative value of that currency (NB you cannot 'inflate' sound money). Governments and bureaucrats also increase prices by mandating unwanted ingredients and massive regulationism - aka prodnosery.
Do you think that the British voter deserves proper sound money?
And if so, how do we get there?
Thank YOU Mr Baker
Are you aware that in sound money terms, house (aka land), prices have been approximately level from 15/08/1971 but real wages have declined?
Stop making me laugh..
The Big Question. Will you stand again a the PPC for the Conservatives?
I have use Henry Hazlitt's Economics in One Lesson. Would that work as well as The Mises primer?
My local MP - who I think is basically a good bloke - is a Conservative, and has a 1st Class Honours degree in 'Economics' from Manchester. That is he is a committed Keynesian. And as we all know that Keynes was a socialist and that his oeuvre is just another form of central planning. How do I re-educate him?
...thanks. If, and it is a Big If, we are allowed to vote..
My clients 'get' sound money...:-)
I have A Plan as to how to equitably close ALL state employees DB schemes...
As Steve said it’s difficult to do retrospectively. But windfall taxes are a thing now (thanks Tony Blair) so we might be able to classify part of DB pension income as a windfall since it goes beyond normal investment returns.
I think what you have to do is to draw a line in the sand, that from this date all existing defined benefit entitlements stop accruing, but all entitlements earned to that date will be honoured. That is contractually sound. From this date though all future benefits will be money purchase - defined contribution schemes. And that employer - that is the real taxpayer in wealth creating private business - contributions will be capped at - say - 10% of gross pay. And I would also be inclined to stipulate that the pensions were all of the personal type . That is I do not trust state run collective pension schemes not to be politicised - they would be very large funds indeed. By this method the success of the individual state employees pension would be wholly connected to the success of the UK economy. The incentives would be aligned.
How, in the name of all that's Holy, do we leverage Starmer, Reeves, Lammy & Co out of government (and it has to be PDQ) before they finally complete Blair's ambition and turn us into an anti-democratic technocratic managerialist dictatorship?
Whare do you stand on the spectrum of Reverse Discrimination - Equity - Anti-Discrimination - Equal Opportunity - Let Markets Discriminate (ecomnomically and against people, ie abolish the Equality Act 2010, Equal Pay Act etc).
Thanks!