Notes for Canvassers: Magic Money Tree

Magic Money – note for Canvassers
Canvassers for the Labour Party are familiar with the question, ‘Where will the money come from?’
Many economists, not all of them left-wing, support the Labour Party Manifesto because they know finance is available for whatever projects a government proposes and they recognise that infrastructure, education, housing and health and have been trashed since 2010 as an act of political will, not necessity.
It’s worth reading some of the great economists who explain the system in an accessible way. For example, David Graeber writes:
‘…there are plenty of magic money trees in Britain, as there are in any developed economy. They are called “banks.” Since modern money is simply credit, banks can and do create money literally out of nothing, simply by making loans. Almost all the money circulating in Britain at the moment is bank-created in this way.’
He explains: ‘Falling unemployment no longer drives up wages. Printing money does not cause inflation. Yet the language of public debate and the wisdom conveyed in economic textbooks, remain almost entirely unchanged.’
It suits the 1% to make sure that the textbooks don’t change, even though the Bank of England published an official report called ‘Money Creation in the Modern Economy,’ making the point that the dominant monetarist orthodoxy is wrong.
Money was produced to bail out the banks in 2008, for a bung to the Democratic Unionist Party in 2017 and, over the years, countless wars and Royal events. The magic money tree has a longer history though:
‘Immediately after the 1833 law abolishing slavery in the British Antilles, Mauritius, and the Cape Colony, the British Parliament had no qualms about passing a generous compensation law: £20 million (around 5 per cent of British GDP at the time, on the order of 100 billion Euros today) was paid out by taxpayers to some three thousand slave owners (the equivalent of more than 30 million Euros each).’ – Thomas Piketty, Chronicles on our Troubled Times.