Reeves begs Banksters to identify government cuts

Published in the December 12th edition of The Herald and in the 20th December edition of The National.

Rachel Reeves is flailing. Her latest brainwave is to set up ‘Challenge Panels’ staffed with banksters and others private sector geniuses to find 5% ‘efficiency savings’ across all government departments. She’s even channeling her inner Margaret Thatcher, vowing to wield “an iron fist against waste.”

This from a Chancellor who doesn’t appear to understand that the government can order the Bank of England - which it owns - to costlessly and effortlessly create as much money as it needs to fund the economy which, after all, is its job.

Nor does she comprehend that taxes don’t fund government spending - money creation does that. Instead, taxes are levied to 1) control inflation, 2) reprice goods and services to change buying behaviours such as taxing cigarettes or a giving a tax rebate for home insulation, and 3) redistribute income and wealth to reduce inequality.

Yet try doing an internet search on why governments tax, and you’ll be inundated with entries that falsely claim taxes fund government spending. Here are just three: from the UK Parliament; from the World Bank; and from the Council on Foreign Relations.

Taxes can’t possibly fund government expenditure because unless the government creates money in the first place and spends it into existence, then the money needed to pay tax wouldn’t exist. And if the government creates all the money, along with commercial banks to whom the government grants a license to create money, it can’t owe money to itself. So Reeves’ claim of a £22 billion ‘black hole’ in government finances is ludicrous. And it’s funny how those ‘black holes’ seem to vanish once the banksters need a bailout.

But Reeves’ ignorance is even more dangerous. In her November Mansion House speech she called the parasitic City of London the UK’s ‘Crown Jewel.’ This means she thinks the City of London is in the business of generating wealth. Wrong. The City does two things, neither of which creates wealth for the economy: it manages other people’s money and it speculates (gambles) with other people’s money.

The City claims it adds £97 billion to UK GDP, but that’s just 3.81% out of £2.54 trillion. Chump change. Suppose those 678,000 highly skilled and paid City workers (half of whom are from outside the UK) were employed in actual productive sectors of the economy such as healthcare, education, construction, engineering, social care, farming, the arts? Would society as a whole be better off? Of course it would.

But let’s not kid ourselves. Reeves prizes the parasitic City of London over the real productive economy because that’s where she and Sir Keir get their money and their marching orders.

This single fact, more than any other, is the reason the UK is doomed.