Review of Warren Mosler’s “The 7 Deadly Innocent Frauds of Economic Policy” and prospects for socialist revolution

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.

It will never be necessary to reduce the level of the national debt!

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/.