In his own dumb way, Matt Hancock just summed up the survival strategy for global capitalism. Blinking into the camera lights, Britain’s hapless Health Secretary assured viewers that he could promise to build 40 new hospitals with just £100m because “the rest of the money will come in the future”. He was instantly ridiculed but he was right.
Yes, he was – and austerity was always the promise of jam tomorrow and additionally without clarity on what flavour it was or indeed how it would arrive. Johnson’s government statements endeavour to promise what the flavours will be, without any certainty on the arrival time. That is really remarkably little improvement on the Osborne version of austerity.
Paul Mason continues:
Eleven years after the financial crash, the only dynamism still left in the system is being driven by the twin engines of rising debt and money creation by central banks. Each of these represents a claim on the future: the problem is, it’s a future that may not exist.
Whilst there is much to agree within the general conclusions, I don’t think he is correct to claim that money creation by central banks is a claim on the future. The only way that money creation is a claim on the future is that it is eventually going to be restored to the government in payment of tax. In fact, that is the whole point of issuing money in the first place. Yet here the expectation seems to be that Quantitative Easing will be unwound. It’s been ‘issued’ now for ten years or more and there is no logic as to why it would be. Government might, I suppose, refuse to renew the existing QE for bankers and the City and substitute something similar in equal or greater amounts to tackle new infrastructure requirements or social housing, for example, but we could have both of those without having to cancel existing QE.
Not for the first time Paul Mason shows his Gold Standard thinking. He should not forget that when Churchill took Britain back onto the Gold Standard, the result was, a year later, the general strike – because there was not enough gold to back the money that needed to be issued to operate the economy properly. Unquestionably Paul Mason cannot imagine that this thinking is beneficial for society.
The government creates money all the time – that’s it’s job.
The central banks are essential to this process but are usually government-owned and always government-directed.
Hence the basic conclusion that:
the entire era of financial globalisation has been based on borrowing from and speculating against a future income stream that may not exist.
is fine but should not be including sovereign governments and their central banks.
Unless he considers that we have really moved on from the eighteenth-century idea that ‘Tis impossible to be sure of anything but Death and Taxes’?