Member-only story
While reading Simmon Hannah’s “A party with socialists in it”, I made a note to talk about Corbynism and Modern Monetary Theory. I will write an omnibus, review of that book, but think that a further note on MMT and its role as part of Corbyn’s programme, and the insights and weaknesses it brings to today’s crisis might be appropriate. In 2015, Corbyn flirted with MMT but by 2017, McDonnel, Meadway and Wren Lewis had won control of the Party’s economic agenda.
One of the things over the last few days or weeks is that we have just re-discovered the power of the bond markets and the extent to which they are driven by confidence, rather than current economic realities, although the realities are petty grim.
The Balance of Trade has been negative for decades but confidence in the UK economy’s ability to service the foreign debt is lower now we are out of the EU. The BoT is also worse now we are out of the EU and thus the pound is falling against the dollar [and the euro]. Sanjay Raja, chief UK economist of Deutsche Bank, testified at a Commons committee that these threats to the British economy are unique.
Foreign holders of sterling have decided to sell which further impacts the FX rate; the fire-sale of assets has led to a fall in UK Gilt prices which is a problem because the economy has been reconfigured since 1979. One additional factor is that the…
