Economic myths and fallacies.

 

"The first method of estimating the intelligence of a ruler is to look at the men he has around him." (Niccolo Machiavelli). David Lammy (Foreign Secretary); Jonathan Reynolds (Business and Trade); Andrew Gwynne (Health & Social Care); Ed Miliband (Energy Security & Net Zero); Wes Streeting (Health).

Labour's Chancellor, Rachel 'Freeze' Reeves says the Labour government doesn't have the money to pay the winter fuel allowance to10m pensioners. Lucy Powell said the winter fuel allowance had to be slashed to stop a run on the pound. Keir Starmer said that he had to cut the pensioners winter fuel allowance to help save the NHS. It's likely that more British pensioners will finish up in hospital because they can't afford to keep their homes warm.

Foreign Secretary, David Lammy, gave the Ukraine £600m to support the country's "humanitarian, energy and stabilisation needs." Ed Miliband, then gave overseas developing countries £11.6bn in foreign aid to help them cope with climate change and they've got the audacity, to claim that they've got no money. Reeves said "If we cannot afford it, we cannot do it." So, where did the money come from for all this foreign aid? Where did the £22bn come from for the government’s “carbon capture” project?

What did the economist John Maynard Keynes say: "Anything we can actually do, we can afford." The American economist Milton Friedman, talked of the "Fixed Pie Fallacy", a belief that income and wealth are like a fixed pie and that one party can only gain at the expense of another. Margaret Thatcher subscribed to the "Household Fallacy", that led to austerity and cuts to welfare and public services. She compared the government to a household saying: “The Government should do what any good housewife would do if money were short...Look at the accounts and see what was wrong "

While a family or household can run out of money the British government can't ever run out of money because it creates all the money that it spends with the Bank of England being required to make all payments approved by Parliament. The pound is no longer linked to precious metals like the Gold Standard and neither is it part of a currency regime like the Euro. The British government has sovereign control over the issuing of money.

When British politicians tell you that the country has run out of money, as Labour's former chief secretary to the Treasury, Lyam Byrne, did in May 2010, economists fall about laughing. Byrne had scribbled on a piece of paper, "there's no money left." The incoming Clegg-Cameron coalition government, weaponized this letter and used it to justify imposing austerity measures much later. Byrne later claimed that the note had been left as a private joke.

Claims that the British government could ever run out of money are completely false but people still believe it, and politicians, still peddle this economically illiterate nonsense to pursue their own agendas.