MoneyWeek, which claims to be “the UK’s best-selling financial magazine” has been predicting “The End of Britain” in a slick and heavily funded advertising campaign, with the main objective of getting new readers and encouraging them to put some of their money in overseas “bolt-holes” (arguably to encourage tax avoidance as well as to guard against loss of investors’ money due to the “inevitable economic and social chaos” they predict in the UK). I wrote a critique of that video/letter on this blog in October 2013 at Is MoneyWeek’s “End of Britain” just fearmongering? What about US debt default? Is socialist revolution on the cards? Their main argument is that government debt is increasing rapidly, despite the “austerity” agenda, even when the interest rates they pay for government bonds (gilts) are around 2%, and that Britain would be “broke” and unable to pay them back if they reached a more normal level of about 5%.
[Incidentally, although “End of Britain” does not refer to the potential break-up of the country if the Scottish people vote “Yes” in the referendum later this year, Scottish National Party (SNP) leader Alex Salmond has recently remade an argument he put in May 2013 that if an independent Scotland was not allowed to share the pound that it would not pay a share of the national debt. This situation itself could exacerbate the crisis of capitalism and is in my view a major reason why virtually the entire political establishment (apart from the SNP of course) is opposed to Scottish independence. Apart from lack of control over interest rates etc., with Scotland not being truly independent if the Bank of England has power over the currency, this is another reason for the Radical Independence Campaign (which is arguing for a “Yes” vote on a much more left-wing basis to strongly argue for an independent currency.]
This blog entry is about a new web page (letter) by MoneyWeek called What Osborne didn’t tell Parliament (its web address looks temporary so do a web search for those words if that link doesn’t work). “The End of Britain” has been widely criticised because it was produced by MoneyWeek’s advertising department, and has biased graphs not adjusted for inflation or GDP, but this new letter is professional, written by financial experts and designed for serious investors. Its points are less controversial and difficult to argue against (with the propaganda against the welfare state omitted for example) although for those who believe in gradual reforms to capitalism to end up with some sort of “socialist” society, with such people often arguing that we are “the seventh richest country in the world” and that austerity is unnecessary, it is a massive wake-up call!
My last two blog items (on MoneyWeek’s “End of Britain” video/letter, discussing a US debt default and consequences for socialist revolution in Britain and it never being necessary to reduce the level of the national debt covered some arguments I’ve been having with a blogger called Martin Odoni (hstorm), who agrees with the analysis of Warren Mosler in his book “The 7 Deadly Innocent Frauds of Economic Policy“. The following is a short review, drawing on some of my economic knowledge as an ex-Marxist, posing some important questions for British economic perspectives and consequences for socialist revolution.
The above graph shows the UK national debt is now much lower than it has been in the 1940s relative to GDP, but the analysis of an “unorthodox post-Keynesian” economist, Warren Mosler in his book “Seven Deadly Innocent Frauds of Economic Policy”, who once stood to be US President shows that a central bank (such as the Bank of England or US Federal Reserve) doesn’t need to pay back the national debt to anybody who has lent money to it even when gilts/bonds mature, because the money remains at the bank in a different account!
I first publish an article by Martin Odoni (hstorm) that I largely agreed with, after having big disagreements in comments of my post on MoneyWeek’s “The End of Britain” video/letter, and then added my own analysis, correcting the odd mistake…
UPDATE (31/10/13): This article is misleading, mainly because Warren Mosler’s analysis does not take inflation seriously (see these 1-star reviews at Amazon). I have now written a review of that book and published it on this blog at https://thatcheroftheleft.wordpress.com/2013/10/31/review-of-warren-moslers-the-7-deadly-innocent-frauds-of-economic-policy-and-prospects-for-socialist-revolution/.
[EDIT 24/3/14: This blog entry’s comments now include a short debate with financial expert and ex-banker Frances Coppola and myself, and information about a new blog entry of mine containing my critique of a new, much more serious, argument by MoneyWeek entitled “What Osborne didn’t tell Parliament“, which was actually written by financial experts and aimed at serious investors. In contrast, “The End of Britain” was written by MoneyWeek’s advertising department, leading to it being widely criticised by economists and others who have not been fooled by biased graphs and a huge dose of propaganda. I strongly recommend reading #Budget2014 What Osborne didn’t tell Parliament: critique of new MoneyWeek End of Britain argument – need revolution! which is currently being censored by Google due to the importance of the arguments.]
The financial magazine MoneyWeek is continuing its slick advertising campaign, with its prediction of “The End Of Britain” (inevitable social and economic chaos in the UK), with a video (viewed preferably on YouTube since the video on their website doesn’t allow rewinding or fast-forwarding, a sign of untrustworthiness) or in text form (with graphs) as a “letter” at http://moneyweek.com/endofbritain/. I argue below that, while some of their arguments are false or biased, socialists should recognise the validity of some of their other arguments and be prepared for the opportunities that will open up.