Critisticuffs on Inflation
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Once again thanks for the replies.
I agree with YMS, it should always be a return to class struggle.
The politicians and media too often control and steer the public conversation, overlooking why unions take action and receive their members support. Budget policies do determine bread and butter issues.
I’ll let you continue the discourse without any more interruptions from myself.
From our/my experience I can recommend starting a reading group on finance capital.
I don’t think Alan will like that and the rest of us know it all already !
Anyway, there are more urgent things to do. I will have to miss Michael Roberts’ exposition of his value theory of inflation because we need to leaflet an anti-climate change demonstration fixed for the same time outside the Shell Centre on the other side of the Thames.
“I agree with YMS, it should always be a return to class struggle.”
Despite their apparent esoteric appeal discussions about how finance, money creation and inflation work are of importance to the class struggle. They form part of the answer to the question “Why not reformism?”
> You want me to save you the trouble of re-reading Hilferding by quoting what he wrote? Ok, here goes.
Thanks for those excerpts. Agreed, Hilferding is Team SPGB in this matter. More narrowly on the subject we were discussing:
> So why are we talking about loans of £100 to Alice and not tens of not millions of pounds of loans to big capitalist enterprises? Long term loans which won’t enter into the daily clearing process. These couldn’t be covered on the interbank lending market or by loans from the central bank. In fact many of such loans will be made by investment banks, which are not clearing banks.
Indeed, the ability to use promises to pay as means of purchase is premised on the creditworthiness of the issuer not narrowly on its immediate access to central bank money:
> The key point here is that Barclays does not need to have £100 in its vaults when it grants Eve an entitlement to £100. However, Barclays must be able to get its hands on £100 when payment in actual money is demanded, i.e. when satisfying payment demands with promises to pay does not suffice. Barclays’ ability to grant credits and collect interest on them is premised on its success in managing its income streams and financial assets.
>
> That is, banks do not simply take possession of cash and then hand it out for a fee, but they create ability to pay. A bank cannot create ability to pay “out of thin air” but it creates it out of its and other financial institutions’ power and success in turning credit advances into financial assets and out of the thus produced creditworthiness.https://critisticuffs.org/texts/inflation.pdf page 11 (see also page 13, already quoted above and thus not repeating here)
But we’re running in circles.
We are agreed on this:
The key point here is that Barclays does not need to have £100 in its vaults when it grants Eve an entitlement to £100. However, Barclays must be able to get its hands on £100 when payment in actual money is demanded, i.e. when satisfying payment demands with promises to pay does not suffice. Barclays’ ability to grant credits and collect interest on them is premised on its success in managing its income streams and financial assets.
That is, banks do not simply take possession of cash and then hand it out for a fee (emphasis added).But not on this:
they create ability to pay. A bank cannot create ability to pay “out of thin air” but it creates it out of its and other financial institutions’ power and success in turning credit advances into financial assets and out of the thus produced creditworthiness.
We might even be able to accept the first half of this with some amendment to make it clear that the central bank can “create ability to pay” and pass this on to the clearing banks. But it would need to be specified that, as with Hilferfing’s Austrian guilder, if this resulted in more being created than the prices of what was for sale this would result in a depreciation of the currency and so not be an effective new “creation”. If it happened to be more or less what the economy required then there would be no depreciation and no rise in the general price level (everybody would be happy except the G7 and the states that follow its leads who want their currencies to depreciate by 2 percent a year).
What is beyond the pale is the claim that, even without the intervention of the central bank, banks can “create” even an ineffective “ability to pay” by “turning credit advances into financial assets”. That would be double counting.
Christ, you people are mind-crushingly tedious. No wonder your Party has such an infinitesimally small membership.
If you hang around long enough Ken might lend you the £100 Alice borrowed from the bank and then you can lend it to Mike. It’s one of the other games in town.
“Christ, you people are mind-crushingly tedious. No wonder your Party has such an infinitesimally small membership.”
_________________________________________________________________Lizzie, why do you say that? You do the SPGB and its members a great disservice by imagining some abstruse topic like finance capital or “money creationism” is all that interests them. Like many other members, I have a wide range of interests, many of which go way beyond the field of economics…
At the same time, it’s silly denigrating attempts to get to grip with these topics as “mind-crushingly tedious”. Well-meaning reformists like yourself are forever trying to rush in to solve this or that problem capitalism throws up without really bothering to understand how these problems arise. And then you wonder why all your reformist efforts come to nothing. Impatience is not a virtue
“And then you wonder why all your reformist efforts come to nothing.”
Oh, the irony. Remind me, how long has your little band of ‘brothers’ been pushing your “well-meaning” pipe dream? 🙂
“Pretty much for exactly as long as the reformists have been pushing theirs!”
Except that “reformists” have at least had limited successes e.g. abolition of the Poll Tax.
“..limited successes e.g. abolition of the Poll Tax…”
I am jumping with joy for that the next time I see my Council Tax bill!
“I am jumping with joy for that the next time I see my Council Tax bill!”
Well, I certainly am, with each monthly instalment costing me a mere 32 quid!
And that’s on the back of the £150 Council Tax Energy Rebate received a couple of weeks ago. Yippee!
RITOGIT 🙂
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