That dreaded Fiscal Credibility Rule…

I listened to a radio interview with James Meadway, who is, I understand, now John McDonnell’s former economics advisor. No matter.

He came accross as highly intelligent and with a good grasp of ideas (even, rather shamefully to me, some I hadn’t encountered!)

The real question which he was almost asked and which he almost replied to, was why he didn’t say straight up how money is created.

He replied to the almost question: that you need an anchor point to lock in place the finances because you want to be radical. You need that point to be stable, so stable that it becomes boring. Then your radicalism is the issue and the money is obvious and not important.

So this is the Fiscal Credibility Rule he is talking about and in doing so he has really admitted that he doesn’t want to convince anyone how money is created – he really does just want an anchor to sell to the Treasury and to the electorate and doesn’t want to get bogged down in monetary origins. It is in effect, a quick fix because there is so much else to fix.

It is understandable I suppose, but in his desire to get everyone talking about radical possibilities, by not admitting where money comes from, which I was rather critical of here, he has stymied much of the creative flair of those whose education he says he wants to improve and let flourish.

Really I’m suggesting that if John McDonnell thinks he has to take these short cuts then, as he is a politician, that may be understandable, but James Meadway as an ‘enlightened’ economist, should surely be talking the real deal and not a rather contrived and confected Fiscal Credibility Rule.

Especially so, if he has ideas about education.


  1. MigT -

    Half-arsed fiscal conservatism just sounds to electorates like incompetence. Progressives need to challenge household fallacy economics unequivocally, or they’ll always be on the back foot.

    1. Peter May -

      Agreed entirely. Trouble is McDonnell seems to think MMT is applicable only to the reserve currency of the Dollar. Let’s hope (and I didn’t think I’d say this) he keeps on board with Simon WrenLewis who at least understands MMT even if he does’nt seemingly entirely agree with it!

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