NEW research has suggested that the UK Government’s planned changes to immigration and settlement rules risk triggering an unprecedented migrant worker exodus.

I am, instead, much more interested in the fact that, during the course of yesterday, Trump cancelled JD Vance's visit to Islamabad, Pakistan, which would have permitted the resumption of peace talks with Iran.

Trump’s excuses appear to be weak. The suggestion was made that too much time is being expended on these talks with too little progress.

The implication that these talks are taking place far too close to Iran, because Pakistan is its neighbour, was apparent in what was said. It would seem that Trump thinks that is just too far to go for peace.

And Trump claimed these talks were unnecessary because the USA held all the cards in this negotiation, when, glaringly, nothing could be further from the truth. It is Iran that has everything to gain from the delay. The US can only look weak and compromised, and, meanwhile, the rest of the world looks on, confused and angry at the consequences of American inaction.

Trump has suggested that Iran can “call us any time they want”, hinting in the process that he thinks that it is Iran’s job to concede in this war, but the reality is very different indeed. Although Iran is undoubtedly suffering as a consequence of what is happening and will be suffering a high cost as a consequence of this, the reality is that the US cannot recommence hostilities without deeply prejudicing its own strategic military reserves.

Meanwhile, without success in delivering peace, the likelihood of the world turning both on the USA and, particularly, on Israel (as I note in this morning’s video), as the two states that are creating mayhem, economic pain, and real suffering for countries around the world as a direct, and totally avoidable, consequence of their gross folly can only grow.

What happens now?

As I predicted late last week, very little will happen now. Trump did exactly what I expected. He called off the talks, offering a lame excuse at best for his inaction and dithering, and all because this process of perpetuated stalemate is the only strategy he has left.

My fear and expectation are that this stalemate will continue for some time to come. That is precisely the reason why it falls to others to take action at this moment, and they have all the options available to them. A sanctions regime on Israel is the best available action. At a purely strategic level, with the goal of delivering world stability, this is now essential. At an ethical level, it is completely justified.

Such coincidences do not always occur. When they do, they must be acted upon.

If this does not happen, the cost of this war might grow considerably beyond even the worst current expectations.

Clear thinking, peaceful sanctions, and deliberate messaging on the unacceptability of the actions of both Israel and the USA are required now. Tolerance of what they are doing can only represent failure.

What a full boycott must include:

• End all defence agreements and halt armed supplies immediately
• Ban trade, block financial flows, restrict travel
• Break sporting, artistic, and academic links
• Begin war crimes investigations and prosecutions

Opposing these actions is not antisemitism. Allowing them to continue unchallenged would be a moral failure of historic proportions. Sanctions eventually ended apartheid in South Africa. Nothing less will do here — and the time is now.

This is the audio version:

This is the transcript:

There’s an issue that the world is not talking about right now, and it is that Israel is now a rogue state by any meaningful definition that anyone could create.

It’s waging illegal wars in Gaza, the West Bank, Lebanon, and Iran. None of those actions has any justification in international law. All have been widely condemned by the international community, and the driving force behind all of them is deliberate racial prejudice against Palestinians and Muslims.

This is no longer a borderline case. It is a clear and present reality that threatens us all, and that’s why we need to talk about it and what we can do about it.

What Israel is doing in Gaza meets the definition of genocide. The United Nations have said so via the International Criminal Court. We don’t need to wait for another decision to know that to be the case. It’s already happened. The scale, intent and indifference to human life shown there are unambiguous; civilians have died in considerable numbers: more than 70,000, at least to date, and we are now seeing the same thing happening in Lebanon.

The targeting of ambulances there, civilian ambulances manned by civilian crews, with deliberate targeting going on so that successive ambulances arriving at a scene are attacked one after the other, proves that Israel is targeting civilian infrastructure. These are not mistakes or collateral damage. They are policy, and they are contrary to international law that says such action is always and inevitably illegal. But so far the international community has not risen to the challenge that these actions do pose for us all, and it is not taking the urgent and collective action that is required in response to them.

Israeli policy in Gaza and the West Bank is apartheid in practice. It’s built on systematic discrimination by the Israeli state against Palestinians. Palestinians do have a right to live in these territories. That right is being denied to them. They are being expelled from the places where they live. That is ethnic cleansing. That is a war crime, and at the same time, the claim of Jewish superiority that underpins this action is by definition antisemitic.

Anything that treats Jewishness as a basis for discrimination is, by definition, antisemitic, and by this definition, Israel’s own actions are therefore antisemitic, whatever its supporters claim. You cannot use the status of a population and its ethnicity as the basis for discrimination, whoever you are, and that is what Israel is doing.

At the same time, we need to look at a broader level and note that the wars in Lebanon and Iran are now threatening global stability. Millions of people may die as a direct or indirect consequence if famine becomes commonplace, as it might during the course of 2026 because of an absence of fertiliser flows. Massive refugee crises are already forming and will grow. World economic disorder is a foreseeable consequence with serious outcomes for many all around the globe, and people in the UK are already facing higher costs and economic risks as a result.

Now, let’s just contextualise this. I understand the arguments made by Israelis about the events of October 7 2023. However wrong that attack on Israeli civilians was, it does not justify the response that has happened since then. The fact is that under the rules of war, a response has to be proportionate. The response that Israel has put in place, as a consequence of that attack by Hamas, has been totally disproportionate, unjustified and inappropriate in international law. So, no one can now say that October 7 2023 was justification for what has happened since. That is simply not true.

At the same time, we have to recognise that there was no recognised threat posed by Iran that justified the attacks on both Lebanon and Iran by Israel and the USA. Again, a just war must be proportionate, and none of the actions of the USA and Israel in those wars has been. That’s a simple, straightforward statement of fact, which it is impossible to challenge.

The response has been callously indifferent to civilian suffering. Civilian targets have been attacked. School children have died. Civilian hospitals and schools have been targeted. All of that shows precisely how indifferent Israel now is to the demands from the international community that it act appropriately. It isn’t going to do that, and this is why we need to think about a different type of response to the crisis that we now face as a consequence of Israel being, as I’ve previously said, a rogue state.

And remember, we have been here before. South Africa provides us with the precedent for this situation. The world faced this kind of state-sponsored racial hatred in the 1970s and thereafter in South Africa, and we faced it, and we acted. We imposed sanctions, sporting boycotts, travel restrictions and financial limitations on South Africa as a consequence. We pursued political isolation. We imposed trade embargoes, and we created a demand for public accountability. Those measures worked. They did, and it took a long time to bring apartheid to an end. If it was right to sanction South Africa back in the 1970s, 80s and 90s, it is right to sanction Israel now. That is my argument, and let me slightly differentiate the cases of Israel and the United States here.

In the United States we still have a chance that democracy might yet deliver change. Trump may be rejected at the ballot box. That’s my point. The fall of Viktor Orbán in Hungary shows that democratic correction is still possible in countries which are close to fascism, but Israel is a different case. Changing government in Israel has not changed policy in the past. Successive Israeli governments have maintained West Bank policy regardless. There is no sign now that removing Netanyahu would necessarily change policy on Gaza, Lebanon, or Iran.

The world cannot wait on Israeli democracy to solve a global problem this time. A full international boycott of Israel must now be put in place.

Defence agreements must be ended, and armed supplies halted.

Trade must be banned and financial flows must be blocked.

Travel must be restricted and tourism suspended.

Sporting, artistic and academic links must be broken.

Investigations into the abuses by Israeli politicians, officials and its military must begin now. We must be prepared to bring prosecutions when the right time comes. Plans for war crime trials are essential. Individual politicians, officials, and commanders must be named and profiled for this purpose.

The narrative around all this must be made absolutely clear, and the fact that none of it is antisemitic because racial intolerance is unacceptable from anyone must be made apparent.

But the fact is, these sanctions must also be general. Those who elect governments that commit these crimes must share the responsibility for them. That is why sanctions on South Africa were justified in the 1970s. The white population there that put in place the governments that imposed apartheid had to be sanctioned to ensure that change took place. Populations with democratic control of governments are not exempt from the consequences of their choices.

Let’s just stand back. As a young man, I supported sanctions on South Africa. I had no hesitation at the time. I was doing this as long as 50 years ago. As an older man, I’m now calling for sanctions on Israel. The crimes now are comparable. I cannot morally distinguish the racism that drove the policy of both countries from the way that is now apparent in the actions of Israel. If it was right to impose sanctions in the 1970s, it is right to do so now on Israel. The world cannot afford to tolerate one state’s feral behaviour at such a cost as the one that Israel is going to impose upon us all. In that case, nothing less than sanctions will do, and the time for them is now.

That’s my opinion. What’s yours? There’s a poll down below. Please let us have your comments. Please like this video if that’s what you do. Please share it if you want to, because we’d appreciate that. Please subscribe to this channel, and if you want to support our work, any donation that you’re able to make would be gratefully received.

Poll

Some of the Funding the Future team will be at a national model railway show today. If you happen to see us,  say hello.

This crash could be worse than 2008 because of overvalued stock markets, the AI bubble, an overexpanded and at-risk shadow banking system and the Iran energy shock, which the International Energy Agency is calling the biggest energy shock in history.

If any of these risks crystallise simultaneously, and Sarah Breeden thinks they might, then the result will not be a market correction. It will be a financial crisis that will result in falling confidence, rising interest rates, frozen lending, job losses, and a domino effect through the real economy.

Governments must act now to plan for this eventuality and not after any crash happens.  Contingency plans must exist, and nothing appears to be being done as yet.

If ever there was a moment to worry, even the Bank of England is saying this is it.

This is the audio version:

This is the transcript:

I’ve been warning about a stock market crash for some time now. The reason should have been obvious.

Stock markets have, over the last year, been at all-time highs and steadily rising while the real economy has deteriorated, and now we are in a wartime situation.

The risks have been clear and obvious for all to see, but they have been ignored.

In that context, the fact that the Bank of England has now recognised that the risk of a stock market crash is real and potentially imminent is something that is really important. The significance of this is that what I’m saying is no longer a fringe view. It is now the official position of the UK’s central bank.

The Bank of England’s Deputy Governor, Sarah Breeden, has told the BBC that stock markets look to be overvalued at present. The significance of this is that not only is she the deputy governor of the Bank of England, she is also head of financial stability there, and it’s highly unusual for a person like her to talk about markets in this way.

She’s pointed to multiple risks that markets appear to be complacent about at present, and that makes this a significant moment. Central banks do not make interventions like this lightly, and to quote her precisely, what she said is “There’s a lot of risk out there. And yet, asset prices are at all-time highs.”

And she’s right. Look at the chart on the screen right now. The UK FTSE 100 is near a record high at the moment, and reached it only a few weeks ago, and the same is true in the USA, where the S&P 500 is trading at around a record level. You would think that we are living in a world where milk and honey is flowing, and risks are minimal when the truth is the exact opposite is the case.

Sarah Breeden continued. She said, “We expect there will be an adjustment at some point. The thing that really keeps me awake at night”, she said, “is the likelihood of a number of risks crystallising at the same time.” And she went on to say that what she is worried about is “A major macroeconomic shock, confidence in private credit going, AI and other risky values adjusting.” “What happens in that environment, and are we prepared for it?’ was the question that she asked, and I exactly share her view. That is the right question to ask.

She is saying asset prices do not reflect the risks that the real economy is actually facing right now. And as a result, she expects a correction. I would call that a crash. She did not say when or how large that correction might be, but I believe that because of the multiple risks that are being identified, that risk could be very real indeed, and in this context, she even seemed to underplay the risk that the war in Iran could create. But she’s looking at that, plus a credit collapse, plus an AI bust. That is what she is fearing, and in plain language, she thinks a crash is coming, and when she’s saying that, she’s not just looking at the UK.

US markets have repeated all-time highs despite mounting economic warnings, and the International Energy Agency has called the Iran crisis the biggest energy shock in history. Markets are behaving as if none of that risk exists. Prices and reality have become dangerously disconnected.

At the same time, technology companies have had hundreds of billions of dollars poured into them to build AI infrastructure, which may not work if this war continues, because the raw material supplies to build the chips that all this infrastructure works upon may not be available.

Bill Gates has called this investment process a ‘frenzy’ resembling the dot-com bubble of the late 1990s, which I remember all too well, and in that bubble, investors threw money at unproven companies, and many of them lost everything. Valuations of this sort are one of the specific risks that Sarah Breeden named as likely to readjust in the future, and when that readjustment comes, it will not be gentle.

That’s the key point, and alongside this, there is the risk from shadow banking: the hidden risk within our economy. The shadow banking system is linked to what is now called the private credit market, and over the last 20 years, these structures have grown enormously. There is now more than $2 trillion invested through these organisations that mimic banks, they’re private equity companies, they’re major investment funds, and they lend privately to businesses in the way that banks might have done in the past, but which they do directly now instead.

Some of these funds are already sustaining losses and are restricting investor withdrawals because they are at risk of losing their credibility and financial liquidity as a consequence of the demands being made upon them, and the shadow banking system has never been stress-tested at this scale before now.

Breeden’s warning is explicit. This is what concerns her most. A war in Iran and the collapse of AI would be bad enough, but the risk from the private credit system connected to shadow banking is her greatest fear of all. As she put it, “Private credit has gone from nothing to two-and-a-half trillion dollars in the last 15 to 20 years”, and that is the problem. The risk is that we might have a credit crunch rather than a banking-driven credit crunch, and that’s what she’s worried about. This sector is where we are seeing deeply interconnected risk that is, however, largely hidden from view in the way that the mortgage crisis was largely hidden from view before the 2008 global financial crisis, and the scale of the risk is at least as big, if not bigger.

The point is that all of these issues could arise virtually simultaneously, and there might be a domino effect. The consequence would be a sharp fall in stock market prices, and that will make households feel poorer, and they will then cut spending.

That fall could in turn upset interest rates. They might rise. This might make it harder for businesses to raise funds as a result, and that will lead to falling business confidence, which in turn will lead to falling rates of employment and investment.

And if the private credit market freezes at the same time, lending across the economy might seize up. This then would not be a market correction. This would be a financial crisis.

The fact is, we are not safe from this. The problems that Sarah Breeden is talking about are global. Her control reaches the English Channel. The extent of the risk goes way beyond that. What she’s talking about is something that may be beyond anyone’s control, but which nonetheless the UK has to react to.

The question is: how might prices fall? Will there be a sharp adjustment downwards? She’s not saying it’s going to happen today. She’s not saying it’s going to happen tomorrow. She does not know. No one knows, including me, but what she is saying is that the system must be ready because it could happen at any time. That is not reassurance. That is a warning dressed in the sort of careful language that central bankers like to use. Read between the lines. We are heading for trouble.

This risk of a global crash sits on top of the global trade wars driven by Trump’s tariffs. It sits on top of the energy crisis created by the war in Iran. It sits on top of an already fragile UK economy. It sits on top of the AI risk, and these are the multiple shocks that we might get simultaneously. Those conditions are already forming.

So the Bank of England now agrees with the warnings that I’ve been giving for some time. Markets are overvalued, and a correction is coming. The effects will be severe and widespread, and this is not about being alarmist. This is a description of where we are. When the Bank of England’s head of financial stability says she’s losing sleep over this, so should we.

I’ve been making this case for a long time, and now the Bank of England is as well. The question is not then whether a correction is coming. It is when it is coming and how bad it will be. But my point now is something else. The government needs to be prepared for this. Regulators also need to bring shadow banking and private credit inside proper oversight now, and not after the crisis, and everyone in government and in the Bank of England needs contingency plans to help and not hinder the real economy when the City fails again, as it is going to do.

The time to act is before this crash and not when the bubble has burst. That bubble is going to burst in my opinion, but what do you think? There’s a poll down below. Let us have your comments. We do appreciate them. Share this video if you like it. Let other people know about the risks that we’re facing. Subscribe to this channel, and if you want to make a donation to keep this work flowing, I’d be very grateful.

Poll

Stock markets are too high, and are going to drop back at some point due to the many risks facing the global economy, one of Britain’s top central bankers has warned.

Bank of England deputy governor Sarah Breeden has issued the prediction to the BBC, at a time when the US stock market has risen to record levels despite the Middle East conflict.

She points out:

"There’s a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.”

For "adjustment" read "crash".

It can almost be argued that this is a statement so obvious that it hardly needs to be said, and yet the absurd, and near record high, valuations of stock markets, not just in the UK but also in the USA, suggest that what might be colloquially called the bleedin' obvious does, it seems, need to be pointed out.

Just as many politicians are deceiving themselves that the ongoing war between the USA, Israel and Iran will be resolved soon, and that the Strait of Hormuz will be reopened before an oil crisis really occurs, so too are stock markets persuading themselves that the impact of this conflict will have little consequence for the future profitability of the companies in which they supposedly invest funds.

The truth, however, is fundamentally different from these naive beliefs in both cases.

The reality is that, as I explained yesterday, there is little or no current prospect of any resolution to the conflict between these countries. Although the USA, and by extension Israel, no longer has the capacity to wage war on its own without prejudice to its stock of strategic military reserves, the Trump administration cannot admit this fact.

That means that a perpetual round of supposed peace talks, interrupted by occasional small-scale attacks on shipping, is the most likely outcome of this war for some time to come. These will be sufficient to ensure that no significant quantities of oil or other raw materials flow through the Strait of Hormuz for.

The result will be ongoing and significant economic disruption. The Iranian regime will, however, be quite content with this, because the longer these hostilities continue, the more likely it is that they will achieve the outcome they desire.

In that case, the Bank of England has come to its senses and recognised the risks posed by excessive stock market valuations, and the associated risks from high degrees of bank leverage secured on shares. It can now foresee that a crash is inevitable, and with it a possible banking crisis.

I keep saying that 2026 is going to be bad, but it has the potential to be very much worse than even I expect.

This will, of course, become apparent in the case of Keir Starmer within the next two weeks.

The Peter Mandelson fiasco will hasten his exit.

The fact that he is very obviously a straw man, put in place by others to achieve their objective of destroying the Labour Party from within, will, though, be inconsequential when most of those who must now get rid of him share that objective.

The reason why he will have to go is that he will have so obviously failed.

Look at these two opinion poll findings, published in the last day or so.

The first predicts the result of the forthcoming elections for the Holyrood Parliament in Scotland, where Labour’s presence will be reduced to a rump, when only two years ago, before Labour reached office in Westminster, it was thought by many that Labour had a real chance in Scotland.

The expectation in Wales is almost as bad:

The second represents Westminster voting intentions. Labour’s support now suggests that it is heading for oblivion in the way that the Conservative Party is already doing, and that it may have fewer seats in the next parliament than Plaid Cymru:

Those Labour MPs in Westminster, now facing their own futures in alternative careers once their fate is determined, whenever the next general election might be, have only one desperate option left available to them, which is to replace Starmer, however poor the alternative choice might be, as, given the available options, must surely be the case.

I am not going to speculate on who that new leader might be. No one thought Corbyn would win in 2015, and an outsider might achieve the same outcome now.

What I will note is something else, which is that since 2015, the UK has had five Prime Ministers (May, Johnson, Truss, Sunak and Starmer), and not one of them has been successful using any criteria that you might choose, and all but one (Sunak) have been removed from office by their own members rather than by the electorate.

Three questions then follow.

The first is whether the UK is now ungovernable. The answer would appear to be that it is. All our recent prime ministers have found this to be the case. Of course, it is also possible that this is because they were not competent to govern, but that then leads to the second question.

This second question asks whether the UK is ungovernable because it has an electoral system that is incapable of selecting appropriate MPs from amongst whom can be chosen a person suitable to be Prime Minister. The answer to this question would appear to be that this is very obviously true, but that then leads to the third question.

This third question asks whether this might be the case not just because the electoral system is no longer fit for purpose in the UK, but because the UK itself is no longer fit for purpose, and we are trying to find a person to govern a country that is no longer governable because it should no longer exist, since the people of Wales, Scotland and Northern Ireland no longer wish to partake in it. This will become very obvious after May 7, when those three countries are likely to be governed by parties whose ultimate goal is independence from the UK.

Starmer, incompetent as he is, might then be indicative of a greater decay, however hard that is to imagine given the scale of corruption, incapacity, ineptitude and straightforward deceit which have characterised all that he has done. That greater decay is of the UK itself and suggests that, however strong the need for electoral reform, improved governance and greater accountability in Westminster might be, that reform has to take place within a government that is responsible for England alone, with each of the other constituent members of the United Kingdom being allowed to progress in their own independent way.

Let me return to my opening statement in that case and suggest that it is a truth, universally acknowledged, that a country that has ceased to represent the collective identity and purpose of those living within it no longer has a purpose and should be transformed into new jurisdictions that can fulfil that basic requirement.

In other words, the malaise within the United Kingdom is caused by the fact that the United Kingdom is, itself, in existence beyond its sell-by date.

It is time to move on.

Trump and Netanyahu might have created conflict for personal gain, but its cost for everyone else is going to be considerable.

These adjacent headlines were in an FT newsletter this morning:

What they suggest is that this war is having an almost inevitable reaction on both consumer and business behaviour, with both moving downwards as a result, with the consequence being seen in the state sector through the automatic balancing process required by the sectoral balances (the linked glossary entry explains that these are, if you are unfamiliar with them).

If consumers spend less, as falling confidence suggests is likely, and businesses see a downturn in activity and, as a result, invest less, the unavoidable consequence is that the government will have to borrow more. This is what the sectoral balances suggest is inevitable, and they represent an unbreakable accounting identity that must always hold true, a fact seemingly unknown to almost any Chancellor in history.

This, then, is not something the government can avoid. As a matter of fact, it has to happen because the savings in question have to be located somewhere, and in this context, the government is the borrower of last resort or, in other words, the entity that must ultimately accept those saved funds via the commercial banking system and the central bank reserve accounts, with them then becoming a liability upon its balance sheet.

There will be much discussion in the media, almost all of it utterly uninformed, about what the government must do as a consequence of this increasing level of state borrowing.

Expect demands for austerity.

Anticipate attacks on social security.

Anti-migrant rhetoric will increase.

Presume that essential services will be described as unaffordable.

Accept the fact that there will be much gnashing of teeth around the rising cost of government interest payments, although nothing will be done to curtail them when there are options available for the government to do so.

But do not anticipate anyone quietly explaining in the mainstream media that if the economy beyond the government decides to save, as will inevitably now be the case giving the rising level of threats the people will feel to their financial security, it is both beholden upon the government to accept their deposits, which then become described as government borrowing, and to manage the resulting situation in the best interest of society at large.

This obvious statement of fact and requirement will be missing from public debate over the coming months. Understanding and explaining this is, then, the foremost task of those who read this blog, because by doing so, each and every one of us can create change in the economic understanding of how the government must face and manage the challenges that now exist.

In this video, I explain why MMT does not need to be “implemented” in Britain, because it already describes how government money works. The real task is to change policy. In that case, I set out six first-day reforms to:

• Replace false fiscal rules

• Launch a targeted public investment programme

• Create a policy that delivers secure, long-term jobs

• Reform the Treasury and Bank of England relationship

• Redesign tax to tackle inflation, inequality and rent extraction

• Redirect savings and pension subsidies into productive investment

This is not about fantasy economics. It is about ending neoliberal myths and managing the real economy in the public interest.

If you want to understand what an MMT-based economic strategy for the UK would actually look like, this video explains it.

This is the audio version:

This is the transcript:

I was asked recently on my blog what I would do if I were chancellor in a Labour-Green coalition government. In particular, I was asked what I would do on my first day in office to deliver modern monetary theory, or MMT for short.

The first point I made was that we do not need to implement modern monetary theory or MMT in the UK because, as a matter of fact, the government financial system that we already have in the UK is completely and accurately described by MMT as it stands.

The government does create money when it spends into the economy in fulfilment of its plans.

It does tax the money that it creates back in order to control inflation.

It does not borrow from financial markets. It does provide depositors with a safe place to put their money with the government.

All of these things are facts already, and as a consequence, we do not need to implement MMT.

What we need to do is something quite different. What we need to do is put in place the insights and policies that MMT enables. We need to change our policy direction from those which are neoliberal, which we use now, which act in direct contradiction to everything that MMT says, and put in place those steps that are required to ensure that we can run our economy in the UK to achieve its best potential. That is what MMT permits.

So, I came up with a series of recommendations, which I’m going to discuss in this video. None of them are radical. All of them are practically achievable, and together they would reshape how we manage the real economy in the UK.

But before I start, let’s be clear that MMT reveals that the monetary constraints, which are now imposed upon our economy by neoliberal thinking, are largely self-imposed and completely false. MMT makes clear that the real constraints on action in this country are based upon the availability of resources, labour, compliance with goals related to sustainability and inflation, but not by the availability of money itself, because the government can always create its own currency. It has the legal right to do so. There is no one who can stop it. It will if it wishes to, but inflation makes sure that it should not when it is unwise to do so.

In that case, current fiscal rules are based upon a false model of how government financially works. That is the change that is required to make sure we achieve our potential. That is the change that MMT enables changing. The framework changes what becomes politically and economically possible. So, implementing MMT is about ending the myths that are artificially constraining public action now. That would be my aim when I came into office as Chancellor, which, by the way, is never going to happen because I am never going to try to be an MP. So, what would I do if I was in this situation?

Step One

First of all, I would replace all the existing fiscal rules that are constraining people like Rachel Reeves and which have constrained all her predecessors since Gordon Brown first introduced these things way back in the 1990s. Those fiscal rules are fiction. They are based upon the idea that the government is dependent upon the money that it can raise from the private sector to fund its activity. That is not true. The money that the private sector has was created by the government in the first place and spent into the economy for the private sector to use as a consequence of the government fulfilling its own domestic agenda inside this country.

A new framework would be based on sustainable real resource use. I stress those words: sustainable to mean that they will be climate compliant, and real resource use. It would prioritise a policy of full employment and inflation management. It would remove artificial constraints on necessary public investment. The fiscal rules would be designed not to serve ideology, which they do at present, but to manage economic reality, and that is the foundation upon which everything else I say depends. We need to deal with that reality. We need to have it underpinning our economic logic. That will be my first step when coming into office. And of course, unlike Labour, in 2024, I would’ve prepared for this by preparing those rules in advance of arriving in office.

Step two

The second step that I would take would be to launch a programme of targeted public investment. We are massively under-investing in this country at present, and a programme of targeted public investment would seek to make good the deficit in public investment that we have suffered for decades in this country as a consequence of false economic thinking, which has constrained the role of government for the benefit of people in this country. The priority areas are obvious. We would need investment in sustainable energy and energy saving, which is a prerequisite of reducing consumption to ensure that we can meet our energy targets, and we would need to deliver truly sustainable transport for both private and public use and we are not there yet, or anywhere near there, as yet.

We’d also need to invest in housing, health and care, and the education that those systems require. That, again, is vital. Let’s not pretend that everything is about investment in hard infrastructure. It isn’t. Soft skills are required, and so too are all the support facilities to make sure that people can get to work to ensure that these programmes can be delivered. So there is a major programme around care and the delivery of education and support to families associated with all these objectives as well.

The goal is to mobilise underused capacity in the economy, and we have got that underused capacity in the economy. We are already tolerating around 5% unemployment in the UK economy, and 10% amongst young people. But if we look at the world of work, there are a very large number of people who are working on few hours or in self-employments which are deeply unproductive. If they could be transformed into adding value within the economy by undertaking jobs which are worthwhile at higher rates of pay, with security and the prospect of proper holiday pay, union rights, training, and advancement through a career structure, we could massively increase the capacity of the UK economy as a result.

The result would be that this programme would address the deep structural weaknesses that markets have failed to fix in this country. It would, in effect, be the proper version of the job guarantee that modern monetary theory always promises. You can call it a Green New Deal if you like, because that is what it is, and I was one of the authors of the original Green New Deal, so unsurprisingly, I’m still committed to the idea.

Step 3

Then I would create a job creation programme. This would be designed to tackle persistent unemployment. It would be designed to bring people into work because I do believe that a large number of the people who are now unemployed in the UK would like to work if only opportunities were provided to them, and I am incredibly aware that the world of work is at the moment deeply alien to many people because it is so hostile to the reality of human lived experience and the skills that people have and everything is getting worse about this, especially in the private sector.

Underemployment, as I’ve already noted, is also a problem. This problem would also be tackled by this programme of job creation. The intention would be that we would take people from where they are, which may be in a place of insecurity because they have not been at work and of limited skills because they have not long been in the workplace, and provide them with both skills now. We would provide them with a sense of security which employment can deliver. We would provide them with the skills to ensure that they can make advances. That’s why I said when we were talking about investment, we need to provide the education to support this programme. Real on-the-job education to provide real working skills that are necessary to ensure that we can solve the problem of unemployment in this country for the long term.

I’m not talking here about temporary jobs. I’m not talking about the sort of thing that some in MMT do talk about when they come to the job guarantee, which is a short-term fix between two periods of other employment. I’m talking here about creating things like the Carbon Army that I’ve talked about for more than 15 years now with regard to the Green New Deal: the people who are required to put solar panels on the roof of every property in the UK, and to insulate those properties, and to make sure that each and every one of them could be a power station to ensure that we are no longer vulnerable to the requirements of fossil fuels and the exposure that creates in a period of war, as we’re suffering now.

The point is I want to deliver full, secure, stable long-term employment with fair pay, union rights, and career progression for everyone in the UK. This would be an opportunity open to all, and it would transform the UK job market as a consequence. It would also transform the private sector job market in the UK because this would set a benchmark they would have to achieve, and at present, they don’t.

The economy should be run for the benefit of people. The Government should be ensuring that people get what they need, and that is proper work with proper pay, with a secure environment to ensure that they can manage their futures and the well-being of their families safely, forever, and that is what we would deliver. And at the same time, local economies would be supported and not be left to decline as they are at present.

Step 4

So, three points into my programme, what would the fourth step be? I would reform the relationship between the Treasury and the Bank of England. At the moment, we treat the Bank of England as if it is independent of the Treasury, and that is nonsensical. It is absurd. It is a neoliberal policy designed to undermine democratic control of government policy within the economy. We need government, fiscal and monetary policy to be coordinated.

Let’s be clear about what I mean. The term fiscal policy is used to describe the relationship between government spending and taxation, and the impact that has upon the economic stimulus or suppression that is injected into the economy: A stimulus when taxation is less than spending, and suppression when taxation is more than spending, which can be required to control inflation. Whilst monetary policy involves the setting of interest rates to coordinate with fiscal policy.

At the moment, they work at cross purposes. Fiscal policy can be trying to stimulate the economy whilst monetary policy is trying to actually deflate the economy. This is absurd. That has to end. We need to also end the over-reliance on interest rates as the primary tool to control inflation, quite simply because it doesn’t work. There’s plenty of evidence of that. It only controls inflation when inflation arises as a result of exuberance and over-enthusiasm within the UK domestic economy, which gives rise to excess consumption, and that has not happened for decades. Our inflation that we have suffered of late has all been imported via energy and other raw material prices, and interest rate policy has no control over this at all.

There are plenty of good things for the Bank of England to do within our economy, but control of inflation is not one of them and we now need to create coherent economic governance, not institutional turf wars between the Treasury and the Bank of England. So the gap will have to be removed. The Bank of England would come back under government control, and if the international system didn’t like that, we would be leading the way to the reform that everybody would need to follow.

Step 5

Fifth, on this first day of action in the Treasury, I would begin a redesign of our tax system in the UK. Our tax system is designed for all the wrong reasons. It is designed on the assumption that taxes are used to fund government spending. It isn’t. Tax manages inflation, it reduces inequality, and it discourages rent extraction within our economy, and it is not achieving those goals as well as it might because it is insufficiently progressive and it does not provide the stimulus that is required for the real actions that are necessary to achieve full employment, create sustainable investment, and deliver long-term prosperity in the UK.

It also does not tackle the problem of inequality we’ve got. Too many taxes are charged on those with low incomes. Too little is charged on those with high incomes. It is time for a rebalancing to take place. Redistribution of income and wealth must become an explicit policy objective with regard to our tax system, and I would ensure that was the case.

And the pretence that tax is simply a funding mechanism must end. This will be a major shift in understanding of what tax is all about, and it will facilitate the tax reform that I think is both possible and deliverable, and that would be why I would start this process on the first day in office.

Step 6

Finally, what would be my sixth reform? I would begin the reform of savings and pension tax relief in the UK because, at present, we are spending more than £80 billion a year subsidising the savings of those who are already largely wealthy in this country, and that is an £80 billion waste of money as a consequence. We do not need to provide higher benefits to many people who are wealthy in the UK than we do to those who are in need. But as a matter of fact, we do at present, on average, provide more pension tax relief to people who are in the top 1% of the income strata than we do provide universal credit to people who are in real need in our economy, struggling to make ends meet for their families.

So, this process of redesign of the tax reliefs on pensions and savings would have to happen with the goal of ensuring that not only is money appropriately directed to those who need it, but that these reliefs will ensure that money is not used to subsidise speculation within the City of London, but is instead redirected towards the productive investment that is needed in our economy, which, of course, ties in with my programme of investment already mentioned as my second objective.

We would therefore put in place a system whereby all ISA savings would be saved in government-based bonds designed for this purpose to ensure that the money invested in all new ISA accounts from the time that I went into office was put into these bonds, which would then become the capital to fund the investment that is required to transform the UK economy into being a highly productive, sustainable and well-paid economy. What could be more important than that?

£70 billion a year goes into ISAs in the UK. That’s more than enough to achieve this investment programme by itself. I do believe that is entirely sustainable. I do believe people would enjoy the opportunity to save in a way that delivers well-being in their own communities. And if we required that 25% of all new pension contributions were invested in the same fashion, in exchange for the tax subsidy that pensions receive as a consequence of savings being made in this way, we could boost that sum available for investment to more than £100 billion a year, so that all those cynics who say, “How are you going to pay for it?”  which is the standard response of all journalists at present to every spending proposal, could be well and truly answered. Everything I’m saying here could be addressed through this one issue, and every journalist could be satisfied. I would know what I was doing in a way that would meet their own neoliberal perceptions of how the economy works before they are reeducated in the thinking that would fundamentally underpin what I’m doing.

This reform would then directly change tax policy and directly connect it to the investment agenda, which is at the core of what I want to do to achieve the outcomes that I desire within the UK economy.

Conclusions

Let’s be clear. Let’s step back for a moment. All these six steps share a single purpose. They are about managing the real economy in the public interest. The enemy is not spending. The Treasury’s idea that it has to always cut is wrong. The enemy is the myth about money that constrains necessary action at present. The real constraints are, and I’ll say it again, resources and their availability; labour and its availability; compliance with sustainability standards; and the need to control inflation.

Those are the policy issues that we must address directly, and an MMT government, when looking at that issue, will ask, not ‘Can we afford it?’ but ‘Do we have the real capacity to deliver on our promises?’ That question, honestly answered, opens up a very different kind of politics, a very different kind of economics, and a very different future for the people of the UK.

That would be my agenda for my first day in office. There would be an exciting period to follow that up, but that was the question I was asked. Those are my answers. This is what I would do. I think these are really important, but what do you think?

There’s a poll down below. It can’t provide answers to everything, so you can leave your comments as well if you want to. We will try to read them. We do read a lot of them, and please also like this video if that’s what you do, and share it if you think it’s worthwhile others having a look at it. And if you would like to make a donation to support this work, if you like this agenda and what I’m talking about, then we’d be very grateful.

Poll

The basic texture of research consists of dreams into which the threads of reasoning, measurement, and calculation are woven.

Why does the attribution not matter, but the idea does?

That is because it makes clear that, when undertaking research, dreams come first.

The problem is that we now have a neoliberal education system designed to ensure that dreams are crushed in those at school, as compliance is demanded. What hope then is there for the advancement of ideas or research when the only supposed motive for it is what the Pope recently called "an idolatrous thirst for profit"?

The world desperately needs an education system designed for dreamers.

A top envoy to President Donald Trump has asked Fifa to replace Iran with Italy in the upcoming World Cup, setting up high-stakes US sports diplomacy involving a spurned ally and a sworn enemy.

US special envoy Paolo Zampolli suggested the swap to Fifa president Gianni Infantino and Trump, as leader of the country co-hosting the tournament. He argued that Italy’s four World Cup titles justify awarding it the slot, according to people familiar with the matter.

There is only one country that is, at present, barred from participation in the FIFA football World Cup, and that is Russia. The ban was imposed because of its illegal invasion of Ukraine in 2022, and it is still in force, and rightly so. A country that wages an illegal war should not be allowed to participate in international sport.

Nor should any country that organises or supports institutional racism be permitted to take part. For this reason, sanctions were imposed on South Africa for almost three decades as a consequence of its apartheid system, and again, entirely appropriately so.

There are now two leading states in the world that should face bans for this reason. They are the USA and Israel. Embarassingly, the USA is hosting the event. Israel has not qualified since 1970. The USA is pursuing an illegal war. Israel is pursuing apartheid, genocide and illegal war.

But, utterly bizarrely, instead of the US being banned and the event being cancelled, we are seeing a call for Iran, the abused country in this current war, to be banned. That is wholly inappropriate.

Will it happen? Who can tell in the corrupt world that FIFA has long inhabited, and which saw it present Trump with a bizarre award not long ago. The possibility that it might is real. This call could all be part of a coordinated stage management process.

If that happens, the required response is obvious. I would have to boycott the World Cup. That would be annoying. I enjoy football. But if FIFA punishes the victim of an illegal war, then its credibility will have disappeared for good. That does not mean I think Iran is a virtuous nation. It is not. But perspective is required here. And this call is profoundly inappropriate when the sanctions required are on the aggressors in this war.

The podcast I posted here yesterday, which, admittedly, very few people have watched, included an implicit challenge from economist Will Thomson, who repeated a suggestion he made when he interviewed me at the Scottish Festival of Economics in Edinburgh on March 21, that I might not be an MMT economist. The idea is an interesting one because, on the same day that he interviewed me, Warren Mosler, a founder of MMT, suggested that I was the most successful proponent of MMT in the world right now, and was also the first to stand and applaud what I had to say when my interview with Will that day came to a close.

Nonetheless, this idea that I am doctrinally impure does, I think, persist in MMT circles and is now something I need to challenge, because if MMT wishes to insist upon a set of what I think to be inappropriate policy proposals, as opposed to theories, that supposedly and illogically define what it is, to which you must subscribe if you are to be considered an MMT supporter or economist, then it is a movement that is, I think, in deep trouble and bound for irrelevance.

The long post that follows is, then, of significance because it explains why I think MMT academics are, at present, undermining the very ideas and cause they claim to represent. In that case, if you are interested in MMT, stay with this one and please give it a read.

Introduction

When I was 21, I made a decision that I have never regretted. Having spent three years at university studying economics, I decided to pursue career doing economics.

It is important to note the choice I made. I decided to stop focusing on studying economics and chose to do it instead.

There were good reasons for my decision to train as, and then become, a chartered accountant, followed by a career as both a practising accountant and a serial entrepreneur. I had enjoyed my study of economics, but felt that much of what I had been taught was profoundly wrong. I realised that I could maintain my interest in the subject whilst testing the issues in the real world, and simultaneously do something I felt was more important. This was to learn how to manage a business and deliver good governance, accountability, and transparency, whilst simultaneously learning to make real business decisions so that I could fulfil my ambition, which was always to create jobs.

Nothing has ever pleased me more throughout my career than creating gainful employment for other people. I am still doing that, and the rewards are as great as ever. They are not purely, or even ever, primarily financial. I have never, throughout my career, understood the claim that business people profit maximise, and I have never done so, partly because the claim is in itself both meaningless and unmeasurable. Instead, the reward comes from something much more important, and is based on the relationship between people and the satisfaction of realising that you have helped someone achieve their potential, which I think I can fairly claim to have done over time.

Why this matters now

Why do I say all this now? I do so in the context of my recent podcast discussion with Will Thomson, in which we discussed the role of the job guarantee in modern monetary theory (MMT). During that discussion, Will, who is, I think, well respected in academic MMT circles, said that:

The job guarantee is to MMT what collective ownership of the means of production is to Marxism; it is constitutive rather than optional.

I respect Will’s right to make that suggestion. At the same time, I note that what he said by implication was something he vocalised more clearly during our conversation in Leith, Edinburgh, on 21 March. He asked me then whether I really was an MMT economist, and I can only presume he did so because he had already established, in his own mind, and according to the criteria that it appears he and other MMT academics have created, that I am not.

Again, I respect Will’s right to say this. Of course, he is entitled to his opinion, but in the same way, I am entitled to say that he is both wrong and profoundly so.

I explained my objections to the job guarantee in the podcast. However, I will reiterate those arguments here before I go on to explain the implications of Will’s position and the fact, as I expressed in the podcast, that its dedication to the so-called job guarantee entirely discredits the whole MMT position, in my opinion.

The theoretical error

Dealing with my objections first of all, the first quite fundamental objection is that if  MMT is, in my opinion, and as we agreed, now a recognised school of economic thought, it is so on the basis of developing ideas previously expressed in Knapp’s 1905 theories on what came to be called chartalism; the development of that chartalist thought included in Keynes’s 1930 Treatise on Money, which is the foundation for most post-Keynesian thinking on this issue, and in Abba Lerner’s work on functional finance.

Will’s claim is that MMT has become a school of economic thinking in its own right on the basis of:

• Its promotion of the job guarantee,
• The promotion of state control of central banking (with which I agree),
• The consequent promotion of a zero rate of interest on central bank reserve accounts (with which, pragmatically, I can only partially agree), and
• The promotion of a Green New Deal, of which I can wholly fairly claim to be a major creator, but which I can also quite fairly state is a policy agenda which can, and I think often does, exist independently of MMT.

To put this another way, Will’s claims about what makes MMT an independent school of economic thought rest on decidedly shaky foundations.

In reality, MMT is an independent school of economic thought because it provides an explanation, based on evidence drawn from real-world observation, as to how government funding, taxation, government borrowing, and the role of government money creation impact the economy in ways ignored by all other schools of economic thought. As a consequence, I stress, MMT enables consideration of policy agendas that were previously considered impossible under neoliberalism. But to confuse policy opportunity with theory is a category error, and that category error is deeply implicit in the claims that Will makes, meaning that they are quite literally categorically wrong.

I could stop this post here. I could argue at this juncture that if MMT is properly defined, and I think I have just done that, then I am very obviously an MMT economist. But doing so would not let me cover my further objections to the job guarantee, so I will continue on that theme.

Practical impossibility

Secondly, pragmatically, the job guarantee cannot work. The idea that local authorities or civic community groups should spend their time ensuring that they have suitable jobs available for any person who might become unemployed in their community, so that the person in question might be offered an immediate chance of work, using the skills that they currently have or wish to develop, at a wage that is little above the current minimum wage, and possibly below a living wage, is not just flawed, but utterly impractical. In practical terms, it would require the most phenomenal waste of resources amongst those required to imagine and have available jobs when, with a very high degree of probability, those job opportunities will never be required, and the likelihood that the work will be undertaken is minimal. If anyone was setting out to create meaningless work, this might be its most perfect definition.

Such a proposal would divert large amounts of valuable labour resources away from tasks that need to be undertaken towards the management of remote possibilities that might never exist. And, as Will agreed during our discussion, if a major employer were to fail in a community, the prospects that a job guarantee could actually operate are remote in the extreme. As experience shows, no community can recover from a shock of that sort in the short term, and promoting such an idea would create a political nightmare and a credibility crisis for any politician who tried to claim it was possible.

The wage floor claim

Thirdly, I think the claim that the job guarantee provides a benchmark for the price of labour is not credible in a country like the UK. This might be true in the USA, where the minimum wage is ludicrously low and effectively inoperative, but in a country like the UK, where the minimum wage already provides a floor for pay at which many people are employed, this claim simply does not stand up. The job guarantee claim on this issue ignores the fact that other policy options with greater overall effectiveness are available to achieve this objective.

The risk of compulsion

Fourthly, I fear the risk of compulsion if a job guarantee were introduced, and that risk is sufficient to object to it.

The human reality

Fifthly, I resent the idea that the job guarantee should be provided as a mechanism to deliver continuous employment for those between jobs in the private sector. There are many reasons for this, but in principle, there appears to be an implicit belief throughout the job guarantee that private-sector jobs are valued, and that nothing the state sector can do is worth as much. That belief I think to be profoundly mistaken. It is certainly implicit in this suggestion.

Simultaneously, I think this idea does not sufficiently respect the agency and autonomy of those who are made unemployed, or who need to leave employment for any reason, such as employer abuse in the private sector, and the resulting time that they will require to appraise their circumstances, rethink what they require from employment, and go through the necessary, and time-consuming, process of securing new employment. The reality of all of this is something that the job guarantee trivialises.

We should not expect those who have been made or forced into unemployment to return to immediate employment. We should, instead, be providing a social security system that reflects their circumstances, their need for a continuing and appropriate level of income, and their right to continue living in the home they have. We did once have such a system. The scandal is that we do not have one now.

Let me also be clear: having a job at £15 an hour will not, in a great many cases, meet these needs, whilst the time spent undertaking that job-guarantee based employment might well undermine the prospect of a person returning to gainful employment when the opportunity arises, because it will prevent a person from having the time to search for appropriate work. At a human level, this might be my biggest objection to the job guarantee.

To summarise, then, the job guarantee is not an existential part of MMT, however much some might like to claim otherwise. It is pragmatically undeliverable and exceptionally wasteful of resources that might be better used elsewhere. The economy's potential is reduced by wasting resources in this way. It does not provide the inflation floor claimed for it by some within MMT, both because alternative policies can deliver that outcome and because that claim shows a profound misunderstanding of most modern inflation, which is almost never wage-driven. And the job guarantee does not reflect the lived experience of those who are unemployed. All of these are, in my opinion, profound and fundamental failures.

The consequences for MMT

What is the consequence of this? There are several.

The first is that the claim made for the job guarantee and its constitutive nature suggests that far too many MMT academics have fallen into the age-old trap of both arguing about economic niceties for the sake of arguing, and of also offering neat, supposedly theoretically justifiable, solutions to economic problems that are totally unrelated to the real economy that an astute observer can see that such suggestions conflict with.

By falling into this trap, much of economics has become what has been called a dismal science, proposing theories with no evidential base whilst making prescriptions and dictating policy that have no real-world use. The sad fact that MMT academics now appear engaged in these fruitless and even useless activities is something to be deeply regretted. They are, as I suggested in the podcast, discrediting the whole idea of MMT by doing so and at the same time, are putting at risk the chance that it might deliver on its promise of potentially vastly better outcomes in the real world. That, I think, would be disastrous.

Secondly, by being dogmatic in the way that Will and others within MMT have been on various issues, they greatly increase the chance of MMT being described as a cult, as has happened far too often already. Other forms of left-of-centre thinking, and in particular the various strands of Marxism, have already been consigned to real-world irrelevance as a consequence of their dogmatic infighting, which leaves most people indifferent to the benefit of any claims that they might make. By being dogmatic, MMT academics take the risk of consigning MMT to the same fate. If so, perhaps I am best out of it.

Thirdly, and most importantly, this exercise in theoretical time-wasting totally misses the point of what MMT is about, which is the empowerment of the potential to deliver optimal outcomes within the real-world economy. MMT makes it possible for us to imagine policies of full employment, sustainable resource usage, environments of controlled inflation, the creation of resilience, and lives worth living to the full. Arguing about policy details, such as theoretically optimal interest rates and unworkable schemes to deliver full employment, undermines and even destroys that potential, and that, in my opinion, is unforgivable.

Conclusions

So, what do I conclude from this? The first, most interesting thing to say is that, according to some MMT academics, I am not a proponent of MMT. As a reader, you should be aware of this.

Secondly, you should also be aware that what these academics now appear to want is that MMT be turned into an arena for inconsequential academic dispute, with little or no real-world relevance, which would be a contest seemingly pursued by those who have lost sight of the purpose of economics, which is to effect change in the real world for the benefit of the people who live within it.

Third, there is no chance that I will be endorsing the idea of a job guarantee so that I might be endorsed as an MMT economist. This matters.  MMT creator, Warren Mosler, suggested when he also spoke in Leith on 21 March, that I might be the best-read and most social media-noted commentator on MMT in the world, but if I am required to endorse ideas that I consider irrelevant, unworkable, and even straightforwardly harmful to be afforded that status, I would rather not have it. I will, instead, think and speak for myself, as I am here.

So, let me go back to basics to conclude. The foundations for what I think is MMT, to be found in the work of Knapp, Keynes and Lerner on theories related to money, are, I think, broadly right, although as yet the actual nature of money has not, in my opinion, ever been properly formulated, even in the works of people like Christine Desan. There is, then, still academic work to do on this issue, but much more importantly, in many ways, there is a great deal more work to do on a pragmatic basis to deliver the potential that the thinking of those four people, when combined with that of Hyman Minsky and Wynne Godley, can deliver. In the grand scheme of things, they are the people whose work matters, and if a new name is required to explain that school of thought, which would, as a result, leave the term MMT behind, maybe that is a necessary development. I am open to that.

What I will not do is compromise to support those unworkable ideas that Will has claimed, I think correctly, most academic proponents of MMT now think are core to it as a school of economic thought. These ideas, as far as I can see, risk,  as a result of their promotion, the chance that MMT will be consigned to being a footnote in history , and that is something I would regret.

To gauge how close the world is to energy catastrophe, The Economist has gathered a dashboard of indicators. It suggests that grave damage has already been done. Worse, without a reopening costs could soar, triggering events that cause the fuel system to seize up. A reopening of the strait now would—just—avoid a complete disaster. But some additional pain is already inevitable.

Three factors are pushing the world towards the cliff edge. Oil cargoes available to buy are drying up. Refineries are slashing output of fuel. And demand remains artificially high, especially in Europe. Something big must give somewhere large for energy markets to balance.

They added:

[M]odelling ... for The Economist shows that European stocks will fall precipitously if Hormuz flows do not normalise by June.

So, what is this all about?

First, as The Economist notes,  the global energy system is not adjusting smoothly through price signals, as orthodox economic models suggest it should.  Instead, market demand is being propped up by policy intervention, most especially through short-term inventory depletion. Politicians are maintaining the pretence that all is "normal".

This creates the risk of a sudden and disorderly adjustment when physical shortages can no longer be masked. When that happens, there might be what The Economist calls a systemic “seizing up” of energy markets.

And as they already note, the burden of adjustment is already falling unevenly, with poorer countries and sectors facing rationing and shutdowns first, while wealthier regions in the world and wealthier groups are seeing delays in the impact of this change because of the impact current fuel supply policies in many countries, including, to some degree, in the UK, most of which are avoiding the rationing we need.

The reality is we need fuel rationing, and we need it now. Our politicians are failing us very badly, February 2020 style, by pretending otherwise, and when reality hits, as it will, as there is no end to this war in sight, as I note this morning, things are going to get very uncomfortable indeed.

Trump has said he wants new talks, but his team is not in Pakistan to take part. Why? Because Iran says it will not turn up until the US stops the blockade on its shipping, which is just about the only military action the US can now undertake, given the crisis it has created in its own military stocks due to the depletion they had already suffered in this war, about which I spoke some time ago. The consequence is that there are no peace talks at present, whatever is being said, and the Strait of Hormuz remains closed, with all the dire consequences I have discussed on this blog for some time, and again this morning.

So, the question is, will meaningful negotiations really happen? As I have also discussed here recently, that depends entirely on the willingness of those participating to seek to reach an agreement.

So, is there any likelihood of that in this case? It seems very unlikely.

The fact is that the United States and, most especially, Israel are seeking to weaken or destroy Iran as a regional power in the Middle East.

Iran, meanwhile, is seeking to survive, with time appearing to be entirely on its side right now since it has de facto control over all traffic through the Strait. At the same time, it seeks to reduce or remove US influence, and expand its own power base.

Compare these goals, and the best that can be said is that they are mutually exclusive. In that case, is it likely that there is a real willingness between these parties to reach an agreement? That would seem to be exceptionally unlikely.

So why might talks even take place? There is only one reason, and that I think is that they are performative. That is clear from what has already been said. For example, when J D Vance left Islamabad last time, he said the final and best US offer was already on the table and would not change. Can the US really be seen to change that position in that case?

In the same way, can Iran give much away? It too has a domestic audience to appease and win over. The Strait of Hormuz has to stay shut in that case for that audience's sake.

The US, then, cannot re-escalate this conflict because it lacks the means to do so, and Iran has no incentive to de-escalate it because it has no incentive to do so given its reading of the US position, which will, I think, be similar to mine.

Is a deal likely then, even if the two parties do get to meet? That seems immensely unlikely. There is nothing approaching enough common ground to let that happen that I can see. We have a stalemate.

What is going to happen then? I suspect that "talks" will happen, and Vance will make a similar statement to the one he made last time on their conclusion.

There will, however, be no recommencement of hostilities: the US cannot afford the strategic risk of doing that.

So what will happen instead? Nitpicking hostilities of the sort now being seen will persist. Both parties have much to gain, and, as far as they are concerned, little to lose from doing that, although the rest of the world will pay an enormous price as a result, and that is what all the rest of us need to worry about.

The fact is that the USA, at the behest and almost certainly on the demand of Israel, has begun a war for which there is no obvious resolution in sight, most especially for these two countries in the role of aggressors.

Iran, meanwhile, has all the cards in this scenario, which few Western powers will feel comfortable with.

But what can they do? Iran will not bow to their pressure. It has no incentive to do so, and all these countries will face a crisis if they do not act.

These supposed Western powers are then left with one choice, given that right now there is little chance of the parties, by themselves, will seek to find one, meaning they must bring pressure to bear on the USA and Israel to compromise.

How? That is an issue I will return to.

Since 1997, the Bank of England has been given a single tool, control of the base interest rate, to chase a single target of a 2% inflation rate that no economist can convincingly justify. There are no targets for growth, employment, living standards or climate change. There is just a number pulled from thin air, enforced at enormous cost to people in this county.

The result is near 5% unemployment, 10% youth unemployment, soaring mortgage costs, and excessive rents. We have a Treasury with its foot on the accelerator while the Bank of England slams the brake, both pulling the economic steering wheel in opposite directions. No wonder the country is not performing. The rot starts in this dysfunctional relationship

This video explains why Bank of England independence was always a neoliberal political experiment that was designed to undermine democracy and the people of this country.

Now, the neoliberal era is over. The Bank of England's independence has delivered incoherence, crisis, and a democratic deficit that the UK can no longer afford. It is time to bring interest rate policy back to the Treasury, where elected politicians should be accountable for their decisions.

This is the audio version:

This is the transcript:

In this video, I’m going to challenge one of the core neoliberal economic ideas. I’m going to suggest that we do not need an independent central bank in the UK. In other words, what I’m going to say is that the Bank of England should be brought back under state control in this country, and it should cease to have any role in setting economic policy.

As I will explain, central bank independence was never a neutral economic choice. It was a deliberate political project designed to remove democratic control over our economic policy, and the project has failed, and the time to end it has arrived. This video sets out why and what needs to change as a result.

Let’s be clear. Central banks like the Bank of England perform functions that are essential to any modern economy. They are the government’s own bank. They help it manage the state finances. They organise all payments flowing from the government into the economy, and that can run to trillions of pounds a year. They create the government’s own currency as a result, and they issue the notes and coins that represent it.

They also act as banker to all other banks, clearing transactions between them in a way that makes the entire banking system work, and they regulate those banks and other major financial institutions, such as pension and insurance companies.

These are vital functions. They need to be done, but central banks do not need to run government economic policy. That is my point. I’m not against central banks; I’m against central banks running economic policy.

The fact is that central banks cannot exist outside the state sector. That is true, and it’s not a statement of preference. Our central bank, the Bank of England, has been owned by the UK government since 1946. If anybody tells you otherwise, they’re lying to you, and however they are constituted, central banks are always effectively a government department. That means that any claim for independence from central government control now made for them is a pure political act of writing fiction designed to deceive and to undermine your democratic rights. That fiction has been deliberately constructed, and at enormous cost. To pretend otherwise is to misrepresent the nature of the institution entirely.

Central bank independence grew directly out of something called Public Choice Theory. Public Choice Theory was created by somebody called Professor James Buchanan, working from the mid-1970s to create this idea, which has been promoted through a global network of far-right think-tanks. It is fundamentally anti-democratic. Buchanan did not believe in democracy, a point that has been highlighted by somebody called Nancy MacLean in her highly readable book, Democracy in Chains, which I would recommend to anyone who is watching this video.

In the UK, the think-tanks who are promoting the idea of Public Choice Theory have operated from Tufton Street in Westminster, where many of the notorious right-wing think-tanks which have tried to influence government policy in this country have been located, and in this case, that influence has been far too great.

Public Choice Theory is not about the public, and it’s not about choice. This makes the claim inherent in the title typical of everything to do with Public Choice Theory. Everything that Public Choice Theory says is the opposite of what it means. The real purpose of Public Choice Theory is to remove democratic control over economic decisions from the public. In other words, it is to deny the public the choice that they are entitled to have.

The point is that Public Choice Theory is about controlling the choices that ordinary people might be able to make because it doesn’t trust the public to vote in ways that might allocate resources in the way that the wealthy in society want. In fact, its specific claim is that voters will always choose to tax wealth and high incomes more heavily than they will charge tax on themselves, and that, they claim, represents an economic injustice inflicted upon the wealthy who become the victims in this narrative. And they say as a consequence that democracy cannot be trusted.

The entire logic of Public Choice Theory is designed to protect the interests of those with money and power, and one of the mechanisms that they chose to do this was to argue that central banks and monetary policy should be removed from the control of democratically elected governments by the creation of independent central banks. Elected politicians, it was argued, could not be trusted with interest rate decisions. Central banks did therefore have to become independent of them because only in that way, it was said, could we get reliable interest rate policy; reliable in the sense that this would deliver what bankers and the wealthy desire and not what people need.

Fiscal policy, about spending and taxation, was left nominally within the control of government, but tightly constrained by this decision to outsource control of monetary policy to the banks. The entire economic management of the economy by the government was, in effect, therefore disabled. The object was very clear. It was to undermine democratic control of economic management.

The proponents of Public Choice Theory won the argument on central banks. Let’s be clear about it. In the 1990s, they got their way. This became the core idea within neoliberal economic thinking at that point in time. It was promoted by the International Monetary Fund. It was promoted by the World Bank. It was promoted by the European Union. And a Labour government here in the UK, Tony Blair’s government in 1997, followed along and created independence for the Bank of England; so-called independence for the Bank of England in 1997, and it was operational from 1998.

The Bank of England was given just one instrument: control of the interest rate to control just one target, the 2% inflation target that someone created, although no one knows why, and no one can explain why 2% is better than 3% or is better than 4%, or is indeed better than 0% when it comes to inflation. This target is entirely irrational and without academic or economic support. But nonetheless, this is what happened, and no goals were set for growth, employment, or living standards. People were ignored inside this equation. There was an extraordinary surrender of democratic economic governance as a consequence, to the Bank of England, at direct cost to people.

We know that this was the case because the Bank of England was permitted to set interest rates which would result in the creation of unemployment within the UK economy, whatever the government thought. We can see the outcome. We now have nearly 5% unemployment in the UK and 10% amongst young people.

Why do we have that? Because the Bank of England has set interest rates too high. That is because it says it needs to do so to control inflation, although there is no indication that the current inflation we might be suffering is in any way influenced by the interest rate that the Bank of England sets. And as a consequence, this unemployment, this cost to society, and this cost to the people involved is all imposed as a result of the economic dogma behind Public Choice Theory and the neoliberal thinking that informs it, and we are suffering as a consequence.

The result is a totally incoherent economic policy. The Treasury has one foot on the accelerator in this economy, managing fiscal policy. The Bank of England has one foot on the brake, managing monetary policy. There’s no coordination between the two, and you can imagine the outcome. Yes, it is chaos, and add to this, the problem that both these institutions have a hand on the steering wheel in the car that is the UK economy, but each of them are following a different map and trying to yank that wheel in different directions. That’s what happened as a consequence of making the Bank of England independent, and the result was predictable. It was the 2008 financial crisis, which arose as a result of the failure of regulation in this country, the failure of regulation at the core of which was the Bank of England’s independence.

We have economic policy that is officially beyond democratic government control in this country. Rachel Reeves always bows down and says, ‘I will follow whatever the Governor of the Bank of England says.’ This is absurd, and this situation was created by deliberate political choice and not by economic necessity.

It means politicians can claim credit for good outcomes while refusing accountability for bad ones, and this is a situation that neoliberal politicians particularly like. Outsourcing of responsibility is something that they’re very good at, as the whole of neoliberal thinking suggests to be right, because it accepts responsibility for nothing by outsourcing everything, wherever that is possible.

The point is, we’re ending up with a permanent excuse for incompetence dressed up as institutional design. That is wholly unacceptable within any functioning democracy, and the point is, as I’ve already explained, this policy does not work.

We have had two incidents of major inflation since 2008, when we had the global financial crisis in the UK, and both of them, in 2022 and now, have been driven by external sources: in 2022 as a result of the war in Ukraine; now, as a result of the illegal war by the USA and Israel on Iran. And in both cases, we are getting inflation, but not because of overexuberance inside the UK economy. We have a situation where interest rates have been held too high as a consequence, and we saw the outcome after 2022. It was terrible economic performance.

We as a country are underperforming compared to most of the world. Why? Because we are suffering the consequences in the form of high interest rates. They come in the form of excessive rents and excessive mortgage interest payments imposed on ordinary people, and we’re seeing the cost in the form of unemployment, which is imposing costs on government in turn, which is in turn inspiring ideas around austerity, also reinforced by the idea that the government has to pay too much interest as a direct consequence of what the Bank of England is doing and the cost it is imposing. All of this is a catastrophe, and all of it is unnecessary.

My point is this: the Bank already has a full and legitimate role without setting interest rates in the UK economy. It is the government’s bank. It is the bank’s bank. It is the currency creator, and it is the regulator of banking within our economy. That is more than enough for any institution to do well. It does not need to be the location to which the Treasury outsources its own accountability. The Bank should do its job, and the Treasury should do its job, and that is managing the economy. Both should be answerable to elected government and through it to the public. The fact is, that is not what is happening now.

So, what do I demand? This: I want interest rate policy to be returned to the Treasury where it belongs. The Treasury is the only body that can integrate monetary and fiscal policy coherently for the benefit of the UK. Joined-up economic policy requires a single strategic authority to manage it, and we do not have that now. No wonder we are doing badly.

So, the idea that politicians cannot be trusted with big decisions must be eliminated from our politics. We need competence, accountability, coherence, and democratic control of economic policy within the UK. We need that to be with elected politicians so that we can boot them out, and bringing the bank under central government authority would deliver that to meet our needs.

Central bank independence was a centrepiece of a 30-year neoliberal project. That project was designed to dismantle democratic control over the economy. That project has failed. We need to end Bank of England independence to indicate the fact that the government is moving on from this situation.

I know that many international institutions will be horrified by what I’m saying. The EU, the IMF and the World Bank will all throw their hands up and say, ‘You can’t do this.’ The requirement to be a member of these organisations is that you must have an independent central bank. Well, so what? The UK is an independent country. The system has failed us. If that’s the requirement, we need to tell them one very simple thing: “You change, you follow our example. The neoliberal era is genuinely over, and we are going to give up on the rhetoric. We are going to give up on the form of it. We are going to make our politicians accountable for the economic decisions they actually make. We’re going to create a Treasury that is responsible for both fiscal and monetary policy, whatever the world’s institutions think, because that is what is necessary to deliver what the people of the UK require.”

The Bank of England’s independence has delivered incoherence, crisis and democratic deficit. The courage to end it is what the UK economy now needs. It is time to bring economic governance back inside democracy, where it was always meant to be.

That’s what I think. What do you think? There is, as ever, a poll down below. Please also leave us your comments, and if you like this video, please indicate that down below and share it with your friends or whoever else it might be who looks at your videos when you do that. And if you support this idea and the work that we are undertaking and want to leave us a donation, there is a link for that down below as well. Please do so because we’d be very grateful.

Poll

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.