Muddled Thinking Watch # 3: Hugh Pym of the BBC with his coloured sweets

I do tend to bang on from time to time on just how hopeless the BBC is on economics issues.  It can explain very well what a Quasar is to the general public,  but on matters slightly closer to home,  it comes up with this nonsense from Hugh Pym, their chief economics correspondent -no less, on government debt!

This might be just about acceptable as a kindergarten lesson on how Mummy and Daddy have to borrow occasionally to manage their finances but as a lesson for adults on how  government finance works? I don’t think so.

The number of sweets the government has at its disposal is unlimited. That’s because its an issuer of its own currency -sorry  sweets. It can never run out.  It doesn’t need red, or debt, sweets. Only the government can create the sweets so there is no real need to borrow sweets from anyone else except if the owners of the sweets ask the government to look after them. Which they will of course. Afterwards, they’ll even give them back one or two extra!

The government needs to be like a responsible parent and not issue too many sweets. In that case they could end up unappreciated and the sweets would lose their value.

They do impose a continual sweet levy on the population though. That is to make sure the sweets are valued in the way sweets should be!  The government don’t need them for themselves. Why on earth would  they? They can make as many as they like!

I wouldn’t give Hugh Pym any sweets on the strength of this showing. He needs to ask himself if economics is really his forte !

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Edit: Alex Little and Neil Wilson suggested, via Twitter, the idea of complaining to the BBC. The BBC do make it very easy and its a step by step online process.

I received a reply too. It is a pity is was unsigned but at least it was a reply.

“Thank you for your email about Hugh Pym’s report on debt and deficit.
 
 This piece was not meant to be a detailed explanation of government finance. It was intended to be a  to the different meaning of the terms debt and deficit (which are often misunderstood or confused) for a general audience.

The Bank of England is independent and has made it clear that its role is not to buy up and cancel Government debt. It has purchased Government bonds as part of its policy to transmit newly-created money into the economy.”

My reply to the BBC:

“Thank you for your reply. Is the BoE independent? It is owned by the Treasury solicitor. Did it decide, independently, to buy some £350 billion or so of Government gilts from financial institutions as part of the QE program? Of course not.

Once it is seen that the BoE and the Treasury act solely as departments of government, the whole idea of government borrowing becomes questionable. You might want to read this 
and  watch this video and read this article produced by the BoE

The word “borrowing” suggests to the average person that a loan needs to be repaid. The  ND never gets repaid! Some individuals are so concerned by the National Debt they leave their entire estates to offset it! Its not really borrowing. It is more the process of issuing money, in just the right amounts, into the economy which is necessary to allow people and companies to save and allow the country to run its trade deficit.I understand that the average person may find this difficult and counter intuitive.  Your “quick and easy” would be fair enough if it were “quick, easy and right”. The BBC has a good record of explaining difficult scientific concepts to the public. Why does it shy away when it comes to economics?”
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Edit 2: Neil Wilson has suggested how the video should be corrected on 3spoken. Incidentally I would recommend Neil as the MMT’s “go to’ person on UK issues and 3spoken.co.uk as a good source of sector analysis data.
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3 responses to “Muddled Thinking Watch # 3: Hugh Pym of the BBC with his coloured sweets

  1. Indeed! Learning any MMT is very dangerous for ones sanity when listening to the BBC. It causes me frequently to “No” at the radio.

  2. Just seen your edit. That is word for word the reply I got!

  3. Late reply, but just had to comment having read not only the funniest putdown but also one of the most illuminating lines in economics: “Did it decide, independently, to buy some £350 billion or so of Government gilts from financial institutions as part of the QE program?”

    I’ll be using that line from now on.

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