The Magic Money tree

We are told that there is no such thing as a “magic money tree” to pay for public services. But over periodic bumps we find out that there is most definitely something there, in the misty uplands of our green and pleasant land. Need support from one of the most backwards looking parties in the union? Money to bribe the DUP to support the Tories in Parliament? Here you go, one billion pounds! Money to bomb Libya? Maybe £1.25bn plus. Money to support the economy, in the form of quantitative easing? This snugly nudged upwards of £435bn as of 2016.  

So the maybot was right, there wasn’t a solitary magic money tree. There's a huge forest of the bloody things. Which can only be harvested for things that the Tories like. For a country with a sovereign currency, i.e. one that the country alone controls there is an infinite amount of money that can be printed. The limits are simply how much can you get away with before investors and markets get skittish and the value of the currency plummets.

Before we go further, let me introduce another phrase that will help set up the argument. Fiat currency. Fiat from Latin meaning made up, or manufactured. This applies to currencies that are not tied to a base, which was formerly the gold standard. This means anyone who has the keys to this magic process can create money. And in Western economies this means banks. Every time they approve a loan the money is created by magic. Yes, if you get a loan or mortgage the bank does not descend into the basement to gather dollar bills or pound notes. They enter a number into a spreadsheet and bingo! The money now exists. Transferred straight into your account to buy the house of your dreams, or the car that your worst narcissistic self wishes for. The Bank of England found that the process was so misunderstood by MPs that they had to produce a guide.

But as Upton Sinclair once remarked “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" MPs will persist in wilfully mis understanding this concept and return to the magic money tree concept. It suits the purpose of the Tory MP to publicly state that the magic money tree will not allow spending on housing, health, education or any socially useful purposes. The press gleefully follow in this misunderstanding as their career progress depends on the patronage of politicians. A living demonstration of Chomsky’s “Manufacturing Consent”. Basically a consensus is formed between politicians and the press to accept a common world concept. No secret cabals are needed. People learn that they need to express belief in the current view, in this case “there is no magic money tree” allied to “we need austerity so we don't become a broke country, like Greece”, or “we don’t want to be like socialist Venezuela!” It suits Tories and their sycophants to stick to this story, even though it is patently false. Corbyn and Labour are terrifying because they don't subscribe to this myth.

Let's hope we can reach a state of modernity where the UK can be part of a modern EU and hopefully aspire to the quality of life of the Nordic states.