Category Archives: Economics

Nuclear Energy a solution or a problem?


This week on Facebook: Following last week’s post on Hinkley C, prompted me to ask if nuclear energy was a solution or a problem? What is nuclear energy? Is the energy sources of a State separated from its political system? The supply of nuclear energy has led to contentions between the State and its energy suppliers, particularly those involving the cost of nuclear energy. The State relies on electricity for much of its commercial energy and even more so for its supply of domestic energy. Electricity is now a source of global energy for any developed and developing State, both domestically and commercially. Nuclear energy supply¹ and the storage of nuclear waste², already electoral issues in the western world, are increasingly global political issues. Read more of this post

Influenced? Moi!


Next week on Facebook: I am going to add articles on the UK and nuclear energy as a response to my post in 2016 with title Points about Hinkley. UK Government policy is to have a wide mix of energy supplies, so we use nuclear alongside other energy sources, such as gas and solar. Today, nuclear energy generates around one fifth of the country’s electricity, and under current government proposals that include Hinkley Point C, some of our power will come from nuclear sources in the future. Read more of this post

HS2 & ‘The Case’


This Week on Facebook: In last week’s post I included a comment by John Redwood with the title, Would you invest your money in HS2 that was (in general terms) opposed to its development. This week I am including  some alternative responses to the HS2. Although in general terms the cost of HS2 generates more article against the scheme than for it. The article associated with the image below gives the impression that the responses of the disgruntled, are not just those of the nimby. The case for or against HS2, is given in the included articles below and the references¹⋅²⋅³.

ICT solutions such as video and teleconferencing solutions have become an integral way to conduct business, but as we can see from the increasing demand for passenger journey, travel is still very important. Developing efficient transport links is important for economic growth, but of course HS2 is not the only solution to support this. (3)

Stop HS2 — click image

Kipper-Williams-on-HS2-009


1. HS2 — 12 arguments for and against: The first phase between London and Birmingham will open in 2026. A V-shaped second section will be added in 2033, going to Manchester and Leeds. The government says it expects 70% of jobs created to be outside London. A government-commissioned report by accountants KPMG suggests that the Midlands and north will benefit more than the capital.

2. HS2 to boost UK economy ‘by £15bn a year’ says report: The Public Accounts Committee (PAC) criticised the scheme, saying: “So far, the Department [of Transport] has made decisions based on fragile numbers, out-of-date data and assumptions which do not reflect real life.” The committee also said there was no evidence the line would help the growth of regional cities and would instead draw even more business to London. KPMG’s report to the department was commissioned by HS2 Ltd, which is a non-departmental public body wholly owned by the Department for Transport.

3. HS2 — can the technology meet expectations? The UK’s railway system is the oldest in the world and was established about 180 years ago. It is a mixed usage system, which means the track needs to serve three major purposes; long haul intercity journeys, short haul commuting journeys and freight. Intercity connections are very important, which is one reason the government chose to prioritise the service, but that squeezed the capacity around larger cities like London and Manchester.

4. Transport experts call for independent review of HS2 options: Alternatives to HS2 should be reconsidered, a group of travel experts have warned in a report saying the high-speed rail line could be five times as expensive as an equivalent railway in France.

5. Unlocking the benefits of HS2: Government policy is to build HS2, both phases one and two, and to improve regional rail connectivity through schemes like Northern Powerhouse Rail and Midlands Connect. To do one without the other is a foolhardy choice and does a great disservice to the country. Nowhere would feel the full benefits of HS2 if we see it as a binary choice between HS2 and other programmes to better connect our regions. The great towns and cities across the North and Midlands, from Bradford to Birmingham, need both.


Referenced Articles Books & Definitions:

  • A bold text subscript above and preceding a title below (¹·²·³), refers to a book, pdf, podcast, video, slide show and a download url that is usually free.
  • Brackets containing a number e.g. (1) reference a particular included article (1-5).
  • A link (url), which usually includes the title, are to an included source.
  • The intended context of words, idioms, phrases, have their links in italics.
  • A long read url* (when used below) is followed by a superscript asterisk.
  • Occasionally Open University (OU) free courses are cited.
  • JSTOR lets you set up a free account allowing you to have 6 (interchangeable) books stored that you can read online. 

¹HS2 Phase Two—Economic case advice for the Department for Transport (pdf): Risk analysis shows that the case for the Phase 2a increment is robust to a variety of potential changes to both scheme and cost assumptions. The majority of the sensitivities tested — including variations in construction costs, fares and GDP — provide over a two-thirds chance of the scheme providing medium, or higher, value for money.

²The Economics of High Speed 2 (pdf): Before spending more taxpayers’ money on this project, we believe that Government should answer the questions raised in this report. It needs to demonstrate that HS2 is the most effective way of achieving the declared objectives of the project and, if it is not, then the plan needs to change. The lengthy passage of the enabling legislation for the first phase of the construction provides an opportunity to examine the case for HS2. There should be no embarrassment in being prepared to revise the project: the objectives and cost are too important.

³Economic evaluation of the High Speed Rail (pdf): All over the world, governments of different political orientation are investing in high speed rail (HSR) infrastructure. In some countries the enthusiasm is more intense than in others. There is no a single pattern. UK and the US are now closer to building HSR infrastructure but until now they have been reluctant to give the definitive approval, and the money allocated to HSR has not gone beyond financing the cost of the evaluation of its economic and financial viability. Other countries, like France and Spain, have been keener on HSR than other European countries like Norway or Sweden, for example, whose governments are still studying whether this type of investment is socially worthy. Spain is a unique case because with much less traffic density than other countries (and much less congestion) in the conventional rail network, it is going to very soon be one of the first countries in the world measured in HSR kilometers.

Money Creation (reprise)


In 2013 I came across The New Economics Foundation (nef) publication guide to the UK monetary and banking system with the title ‘Where Does Money Come From?’ contending that there is widespread misunderstanding of how new money is created. The original can be read here, implying that the only widespread understanding of ‘money’ lying in its purchasing power seems a reasonable conclusion and may compliment the monetarist viewpoint. Read more of this post

The Quantity Theory of Money


This week on Facebook: I have to think very hard about whether I am a monetarist or not, the answer seems to depend on how strongly I believe that the State guides its political economy by changes to the monetary supply and other forms of fiat money creation. It was an article or remark of Mervyn King in which he displayed misconceptions about money velocity, particularly with regard to quantitative easing, that first brought the Irving Fisher equation of exchange (MV=PT) to my attention. Economist vacillate over measuring Instruments in economics¹ and while I would hardly call myself an economist — I share in their vacillations. Read more of this post

Plastic Cards & Money


This week on Facebook: As I remarked in my post last week, It is interesting that there appears to be different views on when credit cards become money!

Where does “plastic money” like debit cards, credit cards, and smart money fit into this picture? A debit card, like a check, is an instruction to the user’s bank to transfer money directly and immediately from your bank account to the seller. It is important to note that in our definition of money, it is checkable deposits that are money, not the paper check or the debit card. Although you can make a purchase with a credit card, it is not considered money but rather a short term loan from the credit card company to you. When you make a purchase with a credit card, the credit card company immediately transfers money from its checking account to the seller, and at the end of the month, the credit card company sends you a bill for what you have charged that month. Until you pay the credit card bill, you have effectively borrowed money from the credit card company. Measuring Money — M1 and M2

Read more of this post

But what is Money?


This week on Facebook: I have posted a lot on the subject of money, often referring to Investopedia, the International Monetary Fund, European Central Bank (which is not a ‘central‘ bank at all) and the Encyclopaedia Britannica¹.

  • Investopedia: Everyone uses money.
  • IMF: Money may make the world go around, as the song says.
  • ECB: The nature of money has evolved over time.

Holding the views I do about money and especially ‘the double coincidence of wants‘ problem, I now find myself torn between the notions of commodity money and fiat money. Of course whether or not either money has value ultimately comes back to the double coincidence of wants, this time being set by the Foreign Exchange Market².

The value of a country’s currency depends on whether it is a “free float” or “fixed float”. Free floating currencies are those whose relative value is determined by free market forces, such as supply / demand relationships. A fixed float is where a country’s governing body sets its currency’s relative value to other currencies, often by pegging it to some standard. Free floating currencies include the U.S. Dollar, Japanese Yen and British Pound, while examples of fixed floating currencies include the Chinese Yuan and the Indian Rupee. Foreign Exchange Market

The reasons for a State investing in another State’s money may be quite complex, which raises the question of if China’s wealth is in the free floating USA dollars debt that it owns, or the fixed floating currency of the Yuan. Read more of this post

What does inflation mean!


This week on Facebook: I am still being asked, “Who is it that this debt is owed to. The examples of  public debt that I referred to last Sunday appear’s to be of little concern to an electorate who assume that economic growth can continue unabated. The electorate’s assumption appears to be that the distribution of this perceived economic growth will be used to support the State’s spending on a social welfare programme. It ignores the history of their public administration’s attitude to debt and particularly to austerity. It was Germany that adopted the earliest modern social welfare programme under the aegis of Otto von Bismarck in 1889 (3).

Read more of this post

Sunday 4/8/2019


This Sunday on Facebook: It’s impossible to separate money from inflation in a fiat money world, then it is also impossible to separate money from the gold standard if the rate of exchange is determined by the State.

Money, it’s a crime
Share it fairly, but don’t take a slice of my pie
Money, so they say
Is the root of all evil today
But if you ask for a rise, it’s no surprise
That they’re giving none away

Pink Floyd’s lyrics, “Share it fairly but don’t take a slice of my pie“, hold as true today as nearly 50 years ago when the song was written. A ‘slice of my pie’ is always the issue. In my post of 2011, I wrote that the war reparations of WWI that were imposed on Germany 100 years ago caused the resignation of John Maynard Keynes from the British delegation. In Keynes’ book The Economic Consequences of the Peace Keynes pointed out that the principle of accumulated wealth based on inequality was a vital part of the pre-First World War order of Society and ‘progress’ as it was understood then. Echoing a principle common in todays world that it is unnatural for a population minority to accumulate such huge wealth when so few enjoyed the comforts of life.

The hyperinflation brought about by The Weimar Republic, compounded by the Treaty of Versailles a 100 years ago, being tempered by the thought that it couldn’t happen to money in the UK. Of course I didn’t count on the Bretton Woods Agreement introducing fiat money to the world in 1971.  In my naivety (I was very young at the time), I assumed that politicians acted as the representative of their electorate. Instead the State’s public debt is a common function of all working economies. There has been an increase in the debt to GDP ratios throughout the world in past decades and yet The U.S. Dollar Still Dominates Global Reserves.

Perhaps it is time that the eccentric heroine of Christopher Isherwood’s novella Sally Bowles is resurrected — thought I doubt very much that any new terms will be invented for the inflation created by the State in a fiat money world.

Part of the fascination of Weimar Berlin lies in the mirror it holds up to our own time. In Cabaret, fictional Nazis beat up the gay hero and kill cabaret owners who dare to criticise, or simply to make people laugh at, pomp and stupidity. If the musical is at last being staged in a Berlin that never made much of Isherwood, then it may be because the producers want to emphasise alarming parallels. A newly vibrant German and European capital, Berlin today has record unemployment and recession is a returning threat. Some of the young have embraced the violent right, with its hatred of foreigners and permissiveness, and parade menacingly through the streets. Wicked joys (2004)

 

Inflation!


This week on Facebook: Last Sunday I tried to show the inflationary effect of fiat money that was introduced at Bretton Woods in 1971. While I think it was something that I failed to do successfully, I may have indicated how difficult it is to arrive at a figure for inflation that is not subject to government fiscal policy. Read more of this post

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Martin Widlake's Yet Another Oracle Blog

Oracle performance, Oracle statistics and VLDBs

The Land Is Ours

a Landrights campaign for Britain

The Bulletin

This site was created for members and friends of My Telegraph blog site, but anyone is welcome to comment, and thereafter apply to become an author.

TCWG Short Stories

Join our monthly competition and share story ideas...

The Real Economy

Blogs and stuff from Ed Conway

Public Law for Everyone

Professor Mark Elliott

Bleda

Am I my Brothers keeper?

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