Category Archives: Government 2020

COVID-19 bulletin 27: misgovernment – arms manufacturers thrive, US/UK economies suffer


Mark Shapiro draws attention to an article by Alan Macleod reporting that –  though the US economy is suffering – American arms manufacturers are thriving.

It opens:

“The American economy has crashed – only the military industrial complex is booming. A nationwide pandemic that has (officially) claimed some 84,000 Americans has also led to an estimated 36 million filing for unemployment insurance and millions frequenting food banks for the first time”. But weapons manufacturers are busier than ever, advertising for tens of thousands more workers:

  • Northrop Grumman announced that it was planning to hire up to 10,000  employees this year.
  • Last month, the Air Force commissioned Raytheon to develop and build a new nuclear cruise missile.
  • Raytheon is still advertising 2,000 new jobs in the military wing of its business.
  • Boeing is looking to add hundreds of new workers in its defense, intelligence, and cybersecurity departments and
  • Lockheed Martin, the world’s largest arms dealer, announcedon Friday that it is “actively recruiting for over 4,600 roles,” in addition to the 2,365 new employees it has taken on since the lockdown started.

Washington has designated weapons manufacturers as “essential” services during a pandemic (CNN report)

In February, the Pentagon released a $705 billion budget request for 2021, revealing that there would be a “shifting focus from the wars in Iraq and Afghanistan and a greater emphasis on the types of weapons that could be used to confront nuclear giants like Russia and China.”

Confronting nuclear giants like Russia and China

MacLeod points out that, just as Donald Trump was increasing the military budget, he slashed funding for the Center for Disease Control and for the World Health Organization, perhaps the only international body capable of limiting the spread of the virus.

In America and the rest of the world, poverty and disease have inflicted a far higher death toll than warfare

Yesterday US COVID-19’s death toll was 99,886. The United States has suffered the highest death toll from COVID-19 and the pandemic has led Americans to ask whether the enormous military budget is making them safer or whether well-funded healthcare, education and social care would have saved or enhanced more lives.

(War figures include American military deaths in battle, and in-theatre deaths as available. DEPARTMENT OF VETERANS AFFAIRS; JOHNS HOPKINS UNIVERSITY)

Alan Macleod ends: “However, that question appears not to have been debated within the walls of the White House, where it is full steam ahead with weapons production”. 


Journalist Simon Jenkins reported last year that the British government boasted of record sales with 80% going to the Middle East.

He asserted that Britain should not be weaponising the suppression of dissent in Egypt, Bangladesh, Colombia, Uzbekistan or Saudi Arabia and other Gulf states – their national defence better termed, regime defence.

Calling the last London arms fair (above) “a stain on the nation . . . the most awesome glamorisation of death on the planet”, he added “The reality is that Britain and the US are in an arms race with the Russians in this theatre – with no remotely peaceful objective”.

And Symon Hill, in an article on security, points out that for years, “security” and “defence” have been euphemisms for war and preparations for war, adding that the coronavirus crisis is a fatal reminder that security, safety and defence cannot be found in armed force.

He ends: “In the long term, we must put our resources into addressing real threats, not into the waste and destruction of war”.






COVID-19 bulletin 26: FT, “The pandemic risks delivering a knockout blow to globalisation”

This fear, expressed today by the FT’s editorial, will not be shared by some, who see globalisation as ”another version of colonialism or imperialism – with Amazons, Facebooks and Googles, Nikes and the garment industry in many aspects of their conduct as more acceptable looking British or Dutch East India companies” (reader’s comment). 

Manila port ‘bursting at the seams’ in the Philippines on Tuesday, March 31, 2020. Read more here.

Following an FT report of drops in rail freight and containerised exports from the UK of as much as 50 to 60% while imports are also declining, its editorial points out that supply chain disruptions and struggles to obtain medical supplies, have accelerated calls for countries and trading blocs to ensure they have sufficient capacity at home — prioritising resilience over producing goods where it is cheapest.

The US trade representative, last week hailed the end of “reflexive offshoring” (NY Times, log in) and in the EU Thierry Breton, the EU’s internal market commissioner, wants government grants, loans and direct intervention to build up European supply capacity.

The FT editorial points out that, in shifting manufacturing jobs out of rich countries and into poorer ones, globalisation reduced poverty in the developing world and prices in the rich ones.

But those working in these sweatshops (a small section of a sweatshop in Karnataka is shown above) still live in poverty and cramped conditions, working far from home in unhealthier conditions than the subsistence agriculture (Karnataka below) which was formerly their lot.

The low prices for their products in rich countries have encouraged a wasteful throwaway culture there, which has added to the waste mountains

The editorial also admits that millions in the ‘rich countries’ lost their jobs in the process, and lost the sense of pride and ownership people felt in their once thriving communities.

But the FT asserts that global supply chains and co-operation are a source of resilience, allowing countries to focus on their strengths and share expertise.

“Spreading people and factories around the world allows companies to guard against risks by diversifying”:

But it has also broken family circles and communities, increased deforestation and reduced the amount of land available for food production

“There will be higher prices and lost export markets”

But higher prices (due to higher wages) will mean a greater market for local goods and better tax revenues. A reduction in exports will lead to a great reduction in transport-related greenhouse gases.

“The direct cost to the taxpayer of subsidising domestic production . . . will make (economies) more fragile, not less”

But huge subsidies are currently given by government to foreign water, energy and transport utilities (including nuclear projects and fossil fuel producers) working in this country, to arms manufacturers and other exporters. That money could be redirected to domestic production which would reduce welfare payments and transport-related pollution.

It can be argued that a knockout blow is long overdue and that purposeful employment created by import substitution and Green New Deal projects might, in time, bring about an environmentally aware, low-crime, harmonious and employment-rich society.






Brexit 13: Continued EU access to the UK’s fishing waters required

On January 8th, prime minister Boris Johnson told European Commission president Ursula von der Leyen that Britain would insist on “maintaining control of UK fishing waters” after it leaves the EU.

During his first meeting with Ms von der Leyen, the prime minister laid down his terms, insisting that any trade deal with the EU must be complete by the end of 2020 and that Britain would “not align” with the bloc’s rules.

An EU condition for future trade & financial services deals is access to the UK’s fish-rich waters

In January, Ireland’s prime minister Leo Varadkar warned of a fish-for-financial-services Brexit clash on the 27th, suggesting that the City of London could lose access to European markets unless the UK opens up its coastal waters to EU boats. Britain has long suspected that Brussels would demand continued EU access to the UK’s fish-rich waters as a condition of a future trade deal, with an explicit link being drawn to an agreement on financial services.

Alex Barker notes that French, Dutch, Belgian, Swedish and Danish fishing fleets are highly dependent on operating in UK waters, and abruptly losing access would potentially deal a devastating shock to many coastal communities. In what he describes as “an admission of the bloc’s vulnerable position over the politically sensitive industry”, Brussels has recognised that EU member states may need to negotiate country-by-country fishing deals to access to UK waters if there is a no-deal Brexit.

In March, the first round of negotiations on the EU’s future relationship with the UK in Brussels took place. Michel Barnier, the EU’s chief Brexit negotiator, said the meetings highlighted areas of “very serious divergence”:

  • the role of the European Court of Justice,
  • Britain’s determination not to align with EU rules and standards,
  • and Britain’s insistence that fishing rights to its waters must be decided by annual negotiations with the EU (Norway-style model).

The BBC reports that in the latest round of UK-EU trade talks this week, there were detailed discussions on access to UK fishing waters and other top EU priorities this week. The UK’s negotiator David Frost said a far-reaching free trade agreement could be agreed before the end of the year “without major difficulties”, but it was being held up by the EU’s desire to “bind” the UK to its laws and seek unfair access to fishing waters.

Boris Johnson ruled out any agreement that guarantees EU fishermen’s long-term access to British waters and also rejected EU demands for a binding “level playing field” of labour market, environmental and competition standards that would draw heavily on European law.

Mr Barnier stated clearly that the EU will never agree a trade deal with Britain unless access to UK fishing waters and the level playing field arrangements are settled to the bloc’s satisfaction.

Robin Healey foresees that French labour unions ‘in solidarity, no doubt, with their fishermen confrères, the French port, customs, immigration, dock and railway workers’, could paralyse all Calais-Dover transport facilities and no commercial or private traffic could move in either direction.

In its detailed account the FT’s George Parker explains that the 26-mile Dover-Calais route (above) is a commercial and physical chokepoint for the UK. No other cross-Channel route can match its two-way traffic capacity; Dover’s roll-on roll-off ferries handle about 10,000 trucks on a busy day, many carrying perishable goods.

Barker suggests the development of east coast ports for greater “roll-on, roll-off” ferry traffic in the event of disruption in France. This would allow Britain to carry out more trade with Belgium or the Netherlands. Business Live reports that a new daily service from Calais to Tilbury, is saving up to 75 road miles each day compared with the Calais-Dover crossing, using less fuel and landing goods on London’s ‘doorstep’.

As strikes by French fishermen have previously blocked Calais, Parker warns that Mr Johnson’s ‘hardball negotiating tactics’ on fishing quotas in post-Brexit trade talks risk triggering another protest – and as Healey says “the UK will be truly cut off, not the Continent”.

Which side will blink first? The UK faces disruption of supplies, but as a bloc, EU countries sell more goods to the UK than vice-versa, so would seem to have more to lose in financial terms.









COVID-19 bulletin 24: though death toll rises in Yemen, BAE-assisted airstrikes continue

Flooding struck Aden in April, leaving several areas submerged in sewage and water for weeks and this month over 600 people have died in Yemen’s capital.

In a detailed account, the World Health Organisation says there is no way of assessing how many other deaths there have been in this war ravaged country.

Andrew Smith (Campaign Against the Arms Trade) said that UK-made Typhoon Eurofighter jets (above) have played a key role in the devastating Saudi-led bombing of Yemen and despite the humanitarian crisis and the outbreak of Covid-19, the war is still raging. He ended:

“We are in unprecedented times and this should not be happening”.

British arms manufacturer BAE is also responsible for the maintenance and support of the kingdom’s 72 jets and has continued to supply military equipment, including spare parts, to Saudi Arabia throughout the Covid-19 crisis.

New Labour MP Sam Tarry (right) asked the Secretary of State for Defence two questions:

  • why have weekly flights continued from a BAE Systems factory in Warton to a military base in Saudi Arabia from where air strikes on Yemen are launched
  • and why those flights have been assessed as essential during the covid-19 lockdown.

Though a Saudi-led coalition of Gulf states announced a ceasefire in April, the Yemen Data Project reports that the bombing has continued, with three civilians injured by an air strike as recently as May 2nd.

But as its AGM had to be cancelled, BAE has been spared angry questions about its trade in weapons – an annual ordeal.

Industry editor Alan Tovey notes that there is one bonus to the lockdown: BAE’s annual meeting, scheduled for May 7, is normally a testing time for the board, with proceedings routinely disrupted by anti-arms activists who gatecrash and forcefully question BAE’s trade in weapons.

He adds that BAE’s “sleepless enemies” see opportunities in the dispersed working.

BAE’s Systems’ chief executive Charles Woodburn (left) wouldn’t give details to Tovey, but confirms that BAE has seen a spike in attempted cyber intrusions since the pandemic hit.

Sadly, Woodburn describes higher military spending as a way of stimulating the economy once the current crisis passes.  No going back? Or business as usual?






COVID-19 bulletin 23: will a ‘shock-resistant food system’ be adopted?

Since the coronavirus pandemic took over and some supermarket egg and flour shelves are still bare here – and in parts of America – there has been greater public awareness of the fragility of our food system.

An earlier post said: “After 50 years of unjust returns for perishable produce, the coronavirus is beginning to affect food imports, just as bombing and submarines did during the last war”.

As one article in Prospect magazine commented earlier this month, supermarkets currently dominate the retail sector, with the “Big Four” often lobbying together and using their significant bargaining power to push down prices paid to farmers.

It is widely quoted that in 2016, according to ‘official estimates’, producers on average received 9p for every pound spent in a supermarket, compared with 45-60 per cent of the money consumers spent on food in the 1950s.

Yasemin Craggs Mersinoglu reports that more farms have turned to home delivery services and a YouGov survey has found that three million people are trying box schemes or buying food from a local farm for the first time.

A Share of The Crop, a veg box supplier which sources produce from southeast England, received a year’s worth of additional orders during a single week in March.

Lauren Simpson, a farmer based in West Wales, hopes that this shift to local food will create a fair transition into a more sustainable food system.

She is a member of the Landworkers Alliance which is lobbying for the government to build a shock-resistant food system.

An emergency support fund for small farms during the pandemic, would be followed by provision of grants to new entrants to the industry, citing the need to grow more food in the UK and further assistance to create local supply chains, processing facilities and distribution networks.

To these measures should be added promotion of the Ripple Farm model: good practice which attracts reliable local workers (right):

  • holiday pay,
  • sick pay
  • good protective clothing
  • year-round employment five days a week,
  • job rotation: a hard stint outdoors in the morning, balanced by a less arduous indoor job in packing and admin in the afternoon.

Security: relying on imports or increasing the supply of home-grown food?

The government has consistently asserted that improving international trade relationships is the route to food security, but, as climate instability and Covid-19 have shown, the UK is vulnerable to global political, economic and public health challenges.

Yasemin concludes that short supply chains, with veg boxes and comparable schemes supplying fresh fruit, dairy and poultry, are not only better for the environment — they also help small producers to get a fair price by enabling smallholder farmers and smaller-scale retailers to sell directly to members of the public. They are then in control, having direct support from their community, no longer harassed by overnight order changes by the big supermarkets.








COVID-19 bulletin 21: an account of government’s disregard of warnings (2016-2018) & ‘woeful’ response to the 2020 coronavirus crisis


But for those who would rather focus on the future than play the blame game see The green road to post crisis recovery and the Future Generations movement.

Speaking on the BBC’s Question Time on 26 March 2020, Richard Horton, the editor-in-chief of the Lancet medical journal, described the Government’s response to the Coronavirus pandemic as “a national scandal”. A comprehensive countdown to how Britain came to have one of the highest COVID-19 per capita death rates in the world by Ian Sinclair and Rupert Read is summarised in this blog. For the full text click here.


October 2016:

Exercise Cygnus, a three-day training exercise on how to deal with a pandemic, is carried out, involving all major Government departments, the NHS and local authorities. “It showed gaping holes in Britain’s Emergency Preparedness, Resilience and Response plan.” A report on the exercise has never been published, with a senior former Government source with direct involvement saying that the findings were deemed “too terrifying” to be revealed. (Sunday Telegraph)

14 September 2017:

A National Risk Register Of Civil Emergencies is published by the Cabinet Office. The report notes that “there is a high probability of a flu pandemic occurring” with “up to 50% of the UK population experiencing symptoms, potentially leading to between 20,000 and 750,000 fatalities and high levels of absence from work”. (Cabinet Office)

30 July 2018:

A UK biological security strategy is published, addressing the threat of pandemics. It “was not properly implemented, according to a former Government chief scientific advisor… Prof Sir Ian Boyd, who advised the environment department for seven years until last August and was involved in writing the strategy, said a lack of resources was to blame”. (Guardian)

2 January 2020:

“Chinese authorities have launched an investigation into a mysterious viral pneumonia which has infected dozens of people in the central city of Wuhan”. (BBC News)

21 January 2020:

“China’s health ministry has confirmed human-to-human transmission of a mysterious Sars-like virus that has spread across the country and fuelled anxiety about the prospect of a major outbreak as millions begin travelling for lunar new year celebrations”. (Guardian)

23 January 2020:

China implements a lockdown in Wuhan province, the centre of the outbreak. All transport into and out of the city is stopped (with no exceptions even for personal and medical emergencies), shops, schools and universities are closed, public transport halted, and private vehicles barred from the roads without special permission. (Guardian)

30 January 2020: 

The World Health Organisation (WHO) declares that the Coronavirus is a “public health emergency of international concern”. (Guardian)

31 January 2020:

The UK decided not to participate in any of four EU procurement schemes to buy medical equipment in response to the Coronavirus crisis.” (Guardian)

13 February 2020: 

Between 13 February and 30 March the UK missed a total of eight conference calls or meetings about the Coronavirus between EU heads of state or health ministers. (Reuters)

26 February 2020:

A memo from the Government’s National Security Communications Team warns that, in a worst-case-scenario, half a million Britons could die from the Coronavirus. (Mirror)

29 February 2020:

First recorded case of local transmission in the UK. (BBC News)

Read the rest of this entry

COVID-10 bulletin 20: Can governments afford the debts they are piling up?

In the Financial Times an economist and a financial historian debate the long-term viability of the Covid-19 rescue packages  – an issue which is concerning many thoughtful members of the public.

Stephanie Kelton is professor of economics and public policy at the State University of New York and a former chief economist on the US Senate Budget Committee. Last year she was on Bloomberg’s list of the 50 people most influential on global markets. Her forthcoming book is “The Deficit Myth”.

“Yes” says Professor Kelton: “While public debt can create problems in certain circumstances, it poses no inherent danger to currency-issuing governments, such as the US, Japan, or the UK. This is not, as some argue, because these countries can currently borrow at very low cost, or because a strong recovery will allow them to grow their way out of debt”. She gives three reasons:

  • First, a currency-issuing government never needs to borrow its own currency.
  • Second, it can always determine the interest rate on bonds it chooses to sell.
  • Third, government bonds help to shore up the private sector’s finances.

“No” says Edward Chancellor, a financial historian, journalist and investment strategist. In 2008, he joined Grantham, Mayo, Van Otterloo’s asset allocation team. He is the author of a forthcoming history of interest.

He believes that governments can print money to cover their costs only as long as the public retains confidence in a currency. When the crisis passes, the excess money must be mopped up, but politicians are unlikely to raise taxes in time to nip inflation in the bud. Though bonds can be issued to withdraw money from circulation, once inflation is under way, bondholders demand higher coupons (the amount of annual interest paid by the bond’s issuer to the bondholder).

Others would argue that, as new money is created at the stroke of bankers’ pens – or the click of a computer key, when they approve loans (see Bank of England Quarterly Bulletin) money can be deleted in the same way.

Nick Boles who formerly served as MP for Grantham and Stamford, writes In a recent Financial Times’ article:

“The usual objection to printing money to pay for government spending is that it will unleash inflation. That would be true if the spending being financed were increasing the overall level of demand in the economy, and if markets expected the government to resort to monetary financing as a matter of course. Neither of these conditions holds true today”.

Martin Wolf (below) was a senior World Bank economist and Director of Studies at the Trade Policy Research Centre, in London. He joined the Financial Times in 1987, where he is associate editor and chief economics commentator. He agrees with Professor Kelton on this subject, writing in the FT:

“Our financial system is so unstable because the state first allowed it to create almost all the money in the economy and was then forced to insure it when performing that function . . .

“A maximum response would be to give the state a monopoly on money creation. A 2012 study by International Monetary Fund staff suggests this plan could work well. Banks could offer investment accounts, which would provide loans. But they could only loan money actually invested by customers. They would be stopped from creating such accounts out of thin air and so would become the intermediaries that many wrongly believe they now are”.

Wolf talks about the issue (from 8.37mins) in a very interesting videoed interview on Indian television which focusses on the global economic impact of the coronavirus.








COVID-19 bulletin 17: should corporate bailouts be restricted?

Amid criticism of attempts by business owners such as Sir Richard Branson to receive government help, senior clergy have written to the press saying that companies registered in offshore tax havens should be refused corporate bailouts.

On April 25th, Business Insider reported that France is now barring firms registered in offshore tax havens from its government coronavirus bailout, following similar bans in Denmark and Poland.

And as Tata Steel – though continuing to pay out handsome dividends – seeks about £500m in government support, Richard Bravo in BloombergPolitics questions government spending on large but struggling companies.

He notes that European governments are proposing to spend more than $2 trillion supporting national industries amid the coronavirus pandemic and asks: “throwing good money after bad?“ (Paywall)

Many of the companies looking for bailouts, such as Air France-KLM and Renault SA, were struggling long before Covid-19 ground the continent’s economies to a halt. Bravo points out that these governments might be creating scores of national zombies that will require taxpayer support long after the crisis has passed. More detail in Regina Leader Post.

He suggests that decision-makers will be weighing the political costs of allowing companies which support national export markets and create thousands of well-paying, middle class jobs to fail.

Yesterday’s FT editorial warned that the judgment from the court of public opinion may be harsh – and after such criticism, Shake Shack, the US burger chain, decided to return the $10m it had received under their government’s bailout for small business. The verdict of the Moseley reader who sent the lead to this article: “No company should be too big to fail !!”

The FT advised firms seeking bailouts to curb excessive executive pay and governments to award payments only to those placing a moratorium on share buybacks and dividend payments. 





COVID-19 bulletin 16: Pandemic exposes ‘the need for parallel supply chains’

These are the words of Gavin van Marle (right). editor of the Loadstar. In an article last week he wrote:

“The coronavirus pandemic has exposed the vulnerability of long-distance, intercontinental supply chains, as governments around the world scramble to acquire large quantities of drugs and PPE”.

Some shortening of global supply chains is inevitable, according to the FT’s Philip Stephens, because the pandemic has exposed just how far even the richest nations are from strategic self-sufficiency

The Loadstar article records that Dr Samuel Roscoe (left), whose doctoral research was on developing environmentally and socially responsible capabilities in the supply network, spoke via video link to the House of Common’s select committee on international trade. He said that glaring gaps in the supply of some products should lead to the creation of parallel supply chains with the capacity to make drugs available in the UK in times like these: “It’s just good business sense – the longer the supply chain is, the more unresponsive it is”.

Arjun Kapur New York, NY, US Investment strategist (Comcast, Blackrock), in a letter to the FT’s editor, stated that, “Company leaders and world leaders would be wise to ditch their reliance on vulnerable supply chains in favour of more resilient, self-sufficient means of delivering health, economic, and business outcomes for their constituents and shareholders”.

Dr Roscoe’s outlook ranged further than financial and electoral self-seeking measures; he pointed out that government support to expand environmentally and socially responsible capacity in the UK will be needed; it won’t be cheap, but will further the government’s industrial strategy, create employment and make the country more self-sufficient.






COVID-19 bulletin 15: Prof. Huber on emergency payouts (helicopter money) and monetary financing

The COVID pandemic has revived the debate on helicopter money. This post presents some of the points made by Professor Joseph Huber (right) in his recent paper, ‘Monetary Financing of Helicopter Money’ which may be read here.

In the after­math of the 2008/12 crisis Adair Turner, last chairman of the UK Financial Services Authority relaunched the idea of direct monetary financing.

The central-bank money thus issued for government spending was soon dubbed ‘helicopter money’, a derogatory metaphor used by economist Milton Friedman in 1969; he  thought that helicopter money would simply raise price levels, not productivity and wealth.

But in a severe recession or crisis, extra government spending to prop up the economy has been a policy tool for decades, even if not openly funded by the central bank.

In contrast to what is generally assumed, monetary financing is not unheard-of. In a way it was common practice at all times, but in the latter half of the 19th century, the central banks underwent a role change. They turned from ‘bank of the state’ to ‘bank of the banks’, primarily or even exclusively supplying the banks with notes and account balances. This role change was advanced under the influence of neoliberalism in banking and finance and monetary financing became taboo.

A core doctrine of neoliberalism, which became ultraliberalism since around 1980, was: ‘Restrict or prohibit money creation by the government as well as money creation by the central bank for the government. Money shall primarily be created by the private banking sector. The role of the central banks is to refinance the banks, not financing government expenditure which must be funded by taxes and sovereign debt’.

However, contrary to what is claimed, ‘money printing’ continued to be practised more extensively than ever. In place of the treasuries it was the banking sector which made reckless use of the ‘printing press’ in the form of creating bankmoney on account.

Sovereign debt became an important profitable investment opportunity for banks, investment trusts, wealth funds and insurers. The treasuries issued bonds, the central banks bought them on the open market from banks and other financial institutions.

This kind of monetary and financial system has now definitely manoeuvred itself into a dead end. A better balanced and functionally more sensible role needs to be developed regarding the sovereign control of the currency and money creation and the division of powers between monetary competences, budgetary-fiscal responsibilities and financial-market functions.

In a crisis such as the subprime and debt crises of 2008/12 and the current covid-19 crisis, temporary and limited helicopter money is an effective measure. Monetary financing of QE for the real economy is certainly preferable to the previous policies of QE just for finance which flooded the banks with unprecedented amounts of central-bank reserves.

The sensible way to get the money out into general economic circulation, is by issuing the money in the form of central bank digital currency (CBDC) to be used by everyone. This is now on the agenda. The special type of money in which CBDC will be issued is not definite yet (deposit money or crypto tokens or mobile-phone tokens; accessed directly or indirectly), but issuance of CBDC is only a matter of time and of the particular design principles of implementing CBDC in coexistence with bankmoney.

In the UK the law does not prevent the Bank of England (BoE) from monetary financing. After long years of hesitation, the covid-19 pandemic has now prompted the BoE to raise the ways-and-means facility for the government from 0.37 to 20 billion pounds and to act as a primary dealer of newly issued British gilts if need be. adding to the money supply according to well-defined monetary-policy criteria, giving to the state what is of the state

Finally, CBDC can and ought to be created free of debt. A plan devised to that end was conceived of by David Ricardo in his 1824 Plan for the Establishment of a National Bank. Ricardo was the most prominent representative of the Currency School, opposing the Banking School of the time. According to his concept, the Bank of England was subdivided into an issue department, responsible for the note issue, and a banking department, concerned with the central bank’s banking operations. The separation of the note issue from the banking operations exists to the present day, although it never gained too much importance because of its inconsistent implementation, notably, leaving the notes of the country banks and, more importantly, bank deposit money untouched outside the arrangement.

The approach can be implemented in an up-to-date way by separating a money-creating currency register from the balance sheet of a central bank’s operational banking activities. The currency register would create the additions to sovereign money (solid cash as long as it exists, reserves or CBDC, the latter possibly of not just one type). The register would issue the money either into the central-bank balance sheet as a non interest-bearing but callable assignment for financial uses, or transferred to the treasury as genuine seigniorage.

* * *

The three issues addressed in this paper – CBDC, genuine seigniorage (omitted in this summary), money tokens beyond debt – are likely to be too much to handle all at once. They do not necessarily include one another, but build well on each other. They would make monetary financing of helicopter money, which today appears to be an extraordinary thing, an ordinary integral part of the money system.

This opens up the perspective of a change in the current crisis-ridden bankmoney regime towards a money system eventually dominated by sovereign money. This too would certainly not be heaven on earth, but, if run competently, it would be free from the kind of monetary non-safety and financial instability we know today.