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Time to declare independence–5: once again – shamefully – Britain follows US diktat

Sanctions “designed to throttle the economy and force Mr Maduro from power” (Stott, FT)) have been imposed on Venezuela by the US and several allies have been pressed to observe them, with varying responses.

Britain has supported this action, damaging many sectors of the Venezuelan economy. Due to sanctions on the import of spare parts, oil production, the mainstay of its economy, has crashed to levels not seen since the 1940s.

Venezuela’s central bank now seeks access to $1bn of Venezuelan gold ‘safely’ deposited with the Bank of England.

In May, Reuters reported that Venezuela reached an agreement with the U.N. Development Programme to sell part of the gold and lodge it with UNDP which would buy healthcare, food and medicine to combat the coronavirus in Venezuela.

Despite this, Michael Stott reported yesterday that the Britain’s ‘independent judiciary’ has refused the Venezuelan government access to its gold.

Though ‘recognised’ by many US allies, Venezuela’s opposition leader Juan Guaidó  (right) and his party have lost much of the earlier public support gained by stirring rhetoric at countrywide rallies  and a June FT article noted that its reputation had been “stained by financial scandals and a failed armed incursion from Colombia”.

Reuters reported in June that the court had been asked by the Bank of England to determine who the British government recognises as Venezuela’s president

In the High Court, Judge Nigel Teare stated that it was indeed the British government’s prerogative to decide who was Venezuela’s legitimate head of state.

He ruled that opposition leader Juan Guaidó had been “unequivocally” recognised as Venezuela’s president by the UK even though Britain has continued to maintain full diplomatic relations with Mr Maduro’s government after recognising Guaidó

Stott points to the fact that the Maduro-appointed envoy, Rocío Maneiro, serves as the Venezuelan ambassador to London as proof of the UK’s recognition of the Maduro government. The UK also maintains an ambassador and full embassy presence in Caracas.

The Venezuelan central bank’s legal team argued that this proved the UK had in reality continued to recognise the Maduro government and therefore Mr Guaidó had no legal backing for his claim to be president.

Sarosh Zaiwalla (left), senior partner at Zaiwalla & Co, representing Venezuela’s central bank, said it was very rare “for an English commercial court to be told that it can only decide a question in the way that the government says it must”.

The Banco Central de Venezuela will be seeking leave of the court to appeal this judgment, which entirely ignores the reality of the situation on the ground; as Zaiwalla points out: Mr Maduro’s government is “in complete control of Venezuela and its administrative institutions and only it can ensure the distribution of the humanitarian relief and medical supplies needed to combat the coronavirus pandemic”.








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.





Goodbye British made steel: would a Corbyn-led government say “we can’t favour domestic production in the face of Chinese dumping”

british steel demo football match

The 99% don’t agree with this government policy

Why not favour British production? As festivities celebrating the visit of President Xi Jinping proceed apace, Richard Murphy’s Green Deal colleague, Colin Hines, describes the collapse of the steel industry as “A triple whammy forced on Europe by the Treaty of Rome’s open borders diktat”. He adds – in the Guardian:

The Magic Money Tree: there is a way out of this – and a funding source to finance it

  • The EU must be reformed by a “treaty of home”, allowing national economies to flourish via border controls to goods, money and people. The problems of protecting domestic sectors like steel could then be overcome.
  • Future mass migration could be limited once its causes are tackled; in the interim massive aid should be given to those countries hosting refugees.

David Cameron’s recent assertion: ‘let me tell you a plain truth: there isn’t a magic money tree’, is contradicted by Peter Spence in the Telegraph and Isabel Hardman in the Spectator:

cameron magoc money tree

“The Bank of England’s quantitative easing programme has created £375 billion of magic money, which keeps interest rates artificially low, thus engineering a recovery, or at least the illusion of one. But this sort of magic money tree is more at home in a Grimm’s fairy tale than a modern one where everyone is destined to live happily ever after. Because not everyone’s a winner under QE. If you’re rich and you’re able to borrow, then you’re laughing all the way to the bank as it boosts the value of assets and keeps debt cheap . . . But if you’re prudent – a saver, or a pensioner – then you see the opposite happen”.

And Positive Money points out that creating money is as easy as the flick of a pen and the clattering of some computer keys. While the UK’s “magic money tree” is currently controlled by the private banking system, the UK government is quite capable of altering this situation. All it requires is the political will to act.

Colin Hines recommends that next month, the ECB could instead print:

  • €20bn of “migrant QE” to help cope with the refugee crisis,
  • €20bn of “jubilee QE” to deal with the continent’s debt problems and secure the future of millions of future global warming migrants and
  • €20bn of “climate QE” put on the table at next month’s climate change conference in Paris.


As Scots rescue their shipyard the government merely says “Goodbye British made steel” and buys shares in foreign steelmakers.

Corbyn would do better: the banks have had more than their share: now for migrant, jubilee debt and climate QE.

Martin Wolf: alive and well, despite his challenges to mainstream profit-led orthodoxy

$RNDSI3VOn Saturday a reader asked, “What has happened to Martin Wolf?” He can now be answered: Yes, to date Mr Wolf has survived under the new Nikkei FT.

Witness his bittersweet article: A radical and rational plan for a post-crisis Labour party, with its promising sub-title: ‘Land-use planning, housing, local government finance and tax structures all cry out for reform’

He opens: “Jeremy Corbyn is, we are told, likely to become leader of the UK’s opposition Labour party. This prediction may even prove correct, though the experience of May’s general election has taught us to be wary of pollsters”.

His analysis – bearing over-lightly on the calamitous errors of the banking sector:

martin wolf“Labour is in trouble partly because it was in power when the financial crisis hit. Conservatives were also highly successful in suggesting, wrongly, that the cause of the fiscal deficits they inherited was Labour’s profligacy rather than misplaced trust in the health of the financial system”

He then appears to agree with the Corbyn platform in saying that land-use planning, housing, local government finance and tax structures all cry out for reform and adds: “no strong economic case can be made for cutting the share of public spending in gross domestic product to close to its lowest level in 70 years by 2019-20 or for simultaneously slashing benefits for the working poor and inheritance tax”.

Wolf then states that is the left’s job to challenge such choices – as Corbyn is doing

He continues: “New Labour assumed the big economic questions had been decided: socialism had failed and the market had triumphed. Its job was not to reshape the economy in any meaningful way but to redirect the fruits of growth towards public spending and the relatively worse off. Yet Labour cannot now begin from the assumption that the economy is working well, because it is not. After a recovery slower than from the Great Depression, this should not need arguing”. He continues:

“The party cannot just imitate the Tories. It needs to craft its own policies”. Wolf – as would Corbyn – approves of:

  • higher public investment at a time of low interest rates,
  • letting the Bank of England inject the money it creates directly into the economy in restricted circumstances.
  • the operation of essential public services,
  • stronger policies in support of innovation,
  • land-use planning and land taxation,
  • more housing,
  • reform of the finance of local government,
  • reform of taxation of inheritance
  • and of the structure of taxation.

He argues, as well, for “a focus on the huge risks to the economy of its dependence on soaring private debt”.

jc 5So far so good, the radical Labour Party leadership candidate would agree with this. But is Wolf a Corbynaire?

Though he states that “something deeper is happening” he pulls back after all this positive thinking, dismissing nationalisation as nonsensical and scouting “the idea that £120bn a year in lost tax revenues can be readily found”.

He moves on to say: “It is depressing to accept that a complacent government and an unelectable opposition are what the country must now expect”.

Wolf concludes that in practice an opposition arguing for such rational and radical reform appears inconceivable – and we add that it will certainly seem so as presented in the columns of a press owned by and financially dependent on corporates.

Is he right? Hundreds of thousands in this country are now seeing a third option. Will they stay the course and become a force for good – whatever the election results?



Significant move from the Bank of England’s governor as UN climate meeting opens in Lima

Yesterday, Pilita Clark, Environment Correspondent of the Financial Times, reported that the Bank of England is to examine the risks fossil fuel companies pose to the financial stability of the insurance industry which underwrites all others:

mark carney

“Mark Carney, its governor, has written to the  which has been investigating the issue, informing them that his officials have discussed the idea that most of the world’s proven coal, oil and gas reserves may be “unburnable” if global warming is to be kept within safe limits”.

Mr Carney expects that the Financial Policy Committee, which is responsible for identifying and reducing systemic financial risks, “will also consider this issue as part of its regular horizon-scanning work on financial stability risks.”

Joan Walley, chairwoman of the Environmental Audit Committee, said, “Policy makers and now central banks are waking up to the fact that much of the world’s oil, coal and gas reserves will have to remain in the ground unless carbon capture and storage technologies can be developed more rapidly. It’s time investors recognised this as well and factored political action on climate change into their decisions on fossil fuel investments.”

The Bank of England has asked insurers if they knew when changing temperatures or more frequent extreme weather disasters might start affecting the viability of their business model.


The FT article – free registration:

The Lima meeting:

Long term insurance anxieties: Worldwatch: – from our database:

“Vital Signs 1997 issued by the World-Watch Institute in Washington, lists and gives the total cost of last years’ droughts, hurricanes and flooding at $60bn, almost twice as high as the 1995 record.

“Its vice-president is reported as being ‘inclined to blame global warming’ as being the underlying cause of this record damage – the report noting that emissions of carbon dioxide, the primary cause of global warming, reached a new record last year.

“Figures collected by the Munich Reinsurance Company show that losses from weather-related disasters had totalled more than $200bn in the last six years – four times as much as in the whole of the 1980s. (Geoffrey Lean, Independent on Sunday: 1.6.97)”.


Will governments firmly encourage corporates to ‘divest fossil assets’?

Carbon dioxide intensifying climate changeCarbon dioxide intensifying climate change

The FT reports that Green bond issuance is estimated to have increased more than fivefold last year.

green bond graphAlready this year 11 bonds have been issued, worth a total of $3.78bn. Zurich Insurance Group recently said it aims to become the largest global green bonds investor, with an initial target of $1bn.Green bonds fit Zurich’s overall investment strategy, targeted to support sustainable development and resilient communities. Cecilia Reyes, chief investment officer with the insurer, says: “It is an opportunity to invest with impact and at a return fully compensating for the risk.”

This news will be appreciated by the Balsall Heath correspondent who sent a link to a  Guardian article by Fiona Harvey about the findings of Green Finance, a report by the Environmental Audit Committee. Though this post has been delayed by technical problems the findings are well worth repeating:

  • stock markets are overvaluing companies that produce fossil fuels and greenhouse gases, posing a threat to the economy, because the true costs of carbon dioxide in intensifying climate change are not taken into account in a company’s stock market valuation;
  • the Bank of England’s financial policy experts should take advice from the Committee on Climate Change to monitor the risks to financial stability.
  • current investments in “green finance” are less than a half of the amount needed to meet emissions reduction targets;
  • the government should support binding national renewable energy targets for European Union member states.

green finance cover3This approach contrasts favourably with the bland approach of Rajendra Pachauri, chairman of the UN’s Intergovernmental Panel on Climate Change, in a recent FT interview.

If we wait until nature forces us, the cost will be astronomical

Joan Walley, chair of the committee, said: “The record-breaking extreme weather events causing chaos across the globe should be a wake-up call. The transition to a low-carbon economy will be much more painful if we wait until there is a climate crisis before recognising that more than half of the world’s fossil fuel reserves will have to remain in the ground.”

Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC), said companies had a “fiduciary duty” to their shareholders to move to a low-carbon economy: “If corporations continue to invest in new fossil fuels, they are really in blatant breach of their fiduciary duty, as the science [of climate change] is abundantly clear . . . If we wait until nature forces us, the cost will be astronomical.”

Green Finance was presented at a conference in the City of London on Thursday, 6th March a few days after the Norwegian government launched an independent review of whether the country’s $840bn sovereign wealth fund should divest from fossil assets to protect itself to help the shift to a low carbon economy.

Another relevant article:

Mervyn King, what recovery?

The Conversation,  founded by the following universities: Aberdeen, Birmingham, Bristol, Cardiff, City, Glasgow Caledonian, Liverpool, Open, Salford, Sheffield, Surrey, UCL and Warwick , offers independent expert commentary

Recently, Prem Sikka, Professor of Accounting, Essex Business School at University of Essex, contributed an article to the site, opening:

The outgoing Bank of England governor Mervyn King has presided over a huge economic crisis. His parting gift is the claim“a recovery is in sight” that the UK might achieve economic growth of even 1% this year. Despite this, the GDP will still be less than the 2007 figure.

Don’t be in a hurry to pop any champagne corks, because the assumed economic recovery is not what it seems and is unlikely to be sustained. It has been achieved through quantitative easing, printing money as old-fashioned economists used to call it, to the tune of £375 billion. That is equivalent to about £16,000 per household.

Quantitative easing has not been used to restructure the UK economy or start new industries

This money has been added to national debt – the only thing that citizens seem to own these days – but has not been used to restructure the UK economy or start new industries. Instead, it has been mainly given to the banks and they have used it to bolster their balance sheets and pay high executive salaries. . . Wealth has been sucked upwards with the aid of state policies. Corporation tax rate has been reduced from 52% in 1982 to 21% for 2014. The top marginal rate of income tax has declined from 83%, in 1979, to 45%. Despite the recession, the rich are getting richer. In 2012, the richest 1000 people, representing just 0.003% of the adult population, increased their wealth by £35 billion to £450 billion, enabling them to fund political parties and shape public choices”.

Professor Sikka lists the ways in which the plight of ‘ordinary’ people has been getting worse:

  • UK unemployment is rising and the official count now stands at 2.52 million.
  • Nearly a million young people aged 16-24 are unemployed, taking the rate to a depressing 21.2%.
  • The number of young people on zero hour contracts has doubled from 35,000 in 2008 to 76,000 in 2012. They provide no guarantee of regular work or pay and have become the preferred mode of employment for some 23% of UK employers. Many miss out on rights such as sick pay, pension and paid holidays. Many firms and even charities and public sector organisations are adopting zero hour contracts.
  • Thousands have become victims of the payday loans industry which does not shy away from charging interest at the rate of 4000%.
  • Some 13.5 million people, including 1.8 million pensioners and 2.5 million children were estimated to be living below the poverty line and with a deep austerity programme these numbers will increase.
  • In 1976, wages and salaries paid to employees, expressed as percentage of GDP, stood at 65.1% of GDP. Now it stands at barely 53%.
  • The number of people relying on emergency food handouts, simply to survive, has trebled to 350,000.
  • People are facing massive hikes in the price of electricity, gas, water, transport and other essentials and simply do not have the financial capacity to take any further hits.
  • One survey has suggested that an increase in monthly bills of just £99 will prove to be disastrous for a large number of families.

Large sections of the UK population are wracked with insecurity. Since the 1980s, the governments have sought to weaken and destroy trade unions and in the absence of countervailing power structures, workers’ pay has been ruthlessly assaulted . . . The plight of ordinary people is made even worse because the above statistics include the rewards lapped up by executives. The rates of corporate profitability are at historically high.

The above sketch of the social landscape is a million miles away from the rosy picture painted by the Bank of England. Equitable distribution of income and wealth is a key requirement for any sustained economic recovery, but it is not on the agenda of any major political party. Some may be happy to gather the crumbs of economic recovery; but most of us will simply be asking, “what recovery?”

Disclosure Statement

Prem Sikka does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.


FOR THE COMMON GOOD: architect and environmentalist, James Bruges


We now turn from the three described in the last post by Max Hastings, as being without ‘a scintilla  of decency’ to another working, like Professor Bailey, for the common good. 

A brief summary of James Brugesthinking on monetary reform

You may find it hard to believe but that’s how money is created – out of thin air – not for the needs of the country, but for the benefit of banks.

It’s so cynical, when I first heard it I could scarcely believe my ears. However, the governor of the Bank of England has confirmed it.

Martin Wolf, chief economics commentator of the Financial Times, put it like this in 2010. “The essence of the modern banking system is the creation of money, out of nothing, by private banks’ often foolish lending.”

OK, it’s a bad system, but it’s what we have and to change it would be difficult. Or would it?

The campaign for monetary reform has set out in detail how the change would take place.

A Money Creation Committee would increase or reduce the money supply on a monthly basis to keep inflation at 2%, making sterling the most stable currency in the world.

 How would it affect you and me?
  • Household debt – yours and mine – stands at a staggering £1,500 billion, equivalent to ten-years’ worth of income tax revenue. It is the nation’s money, which the banks have been allowed to create out of nothing, so it belongs to the nation.
  • Premiums would return to the government, which would use this revenue for welfare, schools and hospitals.
  • Half of it would be distributed as a citizen’s dividend with the requirement that you must first eliminate your remaining debts.
  • Household debt would drop dramatically, austerity measures would no longer be necessary and your mortgage would diminish.
Banks would, once again, provide us with a useful service and my fury would evaporate.


The New Economics Foundation has published “Where Does Money Come From?” which is now a university textbook.
James Robertson has written “Future Money”.
Positive Money has an engaging website with videos and has published “Modernising Money”.
The full, updated text may now be seen here:


Bad decisions by government – 33: defended in 1993 & reversed but misdirected in 2013

On Wednesday the FT reported that the governor of the Bank of England wanted to inject more money into the economy and that the BoE has so far bought £375bn-worth of ‘gilts’ – gilt-edged securities – mainly held by insurance companies, banks and pension funds.

The Treasury spent many years abruptly dismissing any increase in government issued money as inflationary – sending its juniors to monitor the seminal parliamentary meetings sponsored by MP Austin Mitchell and organised by Sabine McNeill (Forum for Stable Currencies).  At one of these the writer sat with a very sceptical young investment banker who afterwards admitted he was won over by a presentation by James Robertson.

QE?  Sterling would collapse!

Below can be seen the now-sidelined argument that this would create inflation and sterling would collapse, committed to paper by Anthony Nelson, then Economic Secretary to the Treasury in John Major’s Government, who became Minister of State at the Treasury, Minister for Trade and Industry, before passing through the revolving door to become Vice Chairman of Citigroup.



Earlier this month, the voice of sanity, MP Caroline Lucas, wrote:

caroline lucasThis week, the Bank of England is expected to announce a new batch of quantitative easing to the tune of £50bn or more. A new report from the Green New Deal Group and Southampton University economics professor Richard Werner, who coined the term quantitative easing, is calling for such cash to be injected into green investment to support badly needed renewable energy and energy efficiency projects. Rather than handing the money over to the banks, who then sit on it, green QE would put money into the wider economy – creating thousands of new jobs, improving energy security and tackling climate change at the same time.

In other words, as MP Austin Mitchell’s 2008 EDM also advocated, use this money to create real work in the real economy – the unproductive financial institutions can do without it!