Jamie Smith

30, Physicist, Engineer, amateur economist.

Constantly in a superposition of disappointment and pride with the world.

[Jamie Smith @JGS952]

@JamesRobichaux @SamHLevey I'd say so. It's adopting a general price rule principle for all gov spending. Right now, the state establishes its chosen quantity and budget and bids up prices until it gets it. But that may be far more inflationary than if it, afarp, fixes the price it pays and floats q

[Jamie Smith @JGS952]

@itvpeston @MartinSLewis Graduates currently sacrifice enough consumption annually (via SL repayment tax) to free up ~25% of required HE resources. The other 75% is already fully socialised.

£5bn of tax cuts is all it would take to eliminate the whole system and go tuition free.

https://t.co/MPLnEZAJ9d

[Jamie Smith @JGS952]

@wesstreeting This *might*, just might, have something to do with this

[Jamie Smith @JGS952]

Maybe we should keep the triple lock for a while longer after all..

[Artur Nadolny @ArturNadol7566]

RETIREMENT POVERTY WARNING

@BBC has reported a pensions warning that should alarm millions of workers.
Pensions UK says more than three quarters of workers are not on track for a moderate retirement income.

The figures are brutal.

A moderate retirement lifestyle is now estimated at £32,700 a year for one person, and £45,400 for a couple. Only 23% of working people are on course to reach that level.

A comfortable retirement is now estimated at £45,400 for one person, and £62,700 for a couple. Only 9% of workers are on track for that.

Even the minimum retirement lifestyle now costs around £13,900 for one person and £22,500 for a couple. And even these figures exclude housing costs.

So what does this really mean?

Millions of people are working now, paying bills now, struggling with food, energy, rent, mortgages, childcare, debt, and still being told they must somehow save more for retirement.

If wages stay under pressure, living costs keep rising, and pension saving remains too low, many people will reach retirement and face a cliff edge drop in income.

The pension crisis is already here. Most people just have not reached the edge yet.

https://t.co/7dIg4bOUeL

[Jamie Smith @JGS952]

@Giulio2000 @PatriciaNPino @ChrisPacia @AusMMT If nobody's hiring around me due to low demand for labour but I'm stuck unemployed, it'll be pretty useful if the gov pays me a fixed wage to help support a local care home, or improve local flood defences in my village. Or would you prefer I do nothing and get free money for it?

[Jamie Smith @JGS952]

@Ye_Olde_Holborn @MMTUK_PRG I'm curious, why? What do you disagree with?

[Jamie Smith @JGS952]

@melan1612cholia @AaronRegunberg https://t.co/h33LcJ0kGz

[Jamie Smith @JGS952]

@JaroslavH @SebMilbank What's dumb about a return to a system of gilt issuance that worked for decades prior to the modern adoption of a full funding rule and supply-led auction model?

Fixed price, floating quantity. Adjust the price over time if they want but no longer will 10 bp changes induce panic

[Jamie Smith @JGS952]

@RealMacroEcon @chrisp_intheory I'm humouring you but throughout all of this you've shown incredibly low capacity to understand simple logic. Don't want to be rude though but the fact you *keep* banging on about 0-1=0 (when actually it's -1 lol) is just annoying.

Gov -1, non-gov +1. Net = 0. Not hard.

[Jamie Smith @JGS952]

This analysis maintains the core underlying assumption that the DMO's full funding rule is necessary and mandatory.

Neither is true.

Issue gilts or don't issue gilts. Either is fine. But if you do, you can always offer them on a fixed price, floating quantity 'tap' model.

[Josh Hunt @iAmJoshHunt]

The framing of the bond markets we get from politicians is totally mad. And shows how little they understand about the mechanics of how the nation finances its deficits.

They seem to think that the bond markets are essentially a small group of evil billionaires sat in a room scheming to influence public policy.

This is bullshit.

In reality, they’re made up of people and institutions the government are asking to lend them money… pension funds, insurers, your gran’s retirement pot, the Bank of England, overseas central banks holding sterling, and so on. A lot of people are involved in these markets.

When politicians say they’re “in hock” to the bond markets. What they’re referring to is the fact that they borrow money from the market and have to pay bond holders back with interest. The participants in the market will buy bonds when the yield on the bonds adequately covers the perceived risk of holding the bonds, and provides a modest expected return to make it worthwhile.

They’re not scheming, they’re just pricing inflation and interest rate risk. Our debt carries a higher risk premium than other core economies like Germany, because of specific structural problems and a credibility deficit on spending.

And a lot of that demand isn’t even a choice. Pension funds and insurers are required to hold gilts to match their liabilities. So your gran’s retirement pot is quietly propping up the very market these politicians claim to be fighting.

The supposed alternative is to balance the budget so you don’t need to borrow. If you don’t want to be “in hock” to the bond markets, don’t borrow money from them. Except even that wouldn’t free us, because we still have to roll over the existing debt as it matures. Escaping the market entirely would mean running surpluses for decades, which would take spending cuts or growth we haven’t got. So the government borrows.

And here’s the tell... a lot of politicians half admit it. They’ll say, as Polanski does here, the markets “just want to know there’s a plan.” Yeah, absolutely. So the problem was never the market. It’s that our politicians haven’t got a credible plan.

So when you hear politicians complaining about the bond markets, what they’re really complaining about is the fact that they can’t borrow endlessly to fund all the mad shit they want to do.

[Jamie Smith @JGS952]

@RealMacroEcon @chrisp_intheory Lol, so little understanding. Council tax, VAT, CGT, fuel duty, stamp duty and a bunch of other taxes are all unavoidable even if you don't work. It's perfectly efficient to drive demand for sterling. And income tax clearly helps maintain the inertia once established.

[Jamie Smith @JGS952]

@RealMacroEcon @chrisp_intheory "You have to pay me tax, l will buy your output with my tax credit and be liable for accepting it back in payment of said tax". You're honestly never going to move forward in your understanding if you can't at least follow that logic.

[Jamie Smith @JGS952]

@brokebyclose @robert19pearson @aedmans The mistake you're making here is assuming the market for gilts plays any role at all in delivering responsible public purpose-aligned fiscal policy. They don't. Traders buy or sell gilts for a multitude of reasons, primarily what they think the BoE policy rate is going to do.

[Jamie Smith @JGS952]

@brokebyclose @robert19pearson @aedmans 2008 was an example of excessive private leverage and excess risk. Much stronger bank asset regs and credit guidance sorts that as well as a dynamic gov fiscal framework that accommodates private net saving desires to prevent this private debt build up in the first place

[Jamie Smith @JGS952]

@caton_duane @DomainHg @AyoCaesar @cenkuygur @grok I didn't do any of those things. Arrest, prosecute and convict those who did. But I want the freedom to support the goals of the group, even if I don't like all their methods.

[Jamie Smith @JGS952]

@caton_duane @DomainHg @AyoCaesar @cenkuygur @grok Not really. They specifically chose to criminalise people expressing solidarity or support for their group goals and wider non-criminal actions. Not what I want in a free country.

[Jamie Smith @JGS952]

@caton_duane @DomainHg @AyoCaesar @cenkuygur @grok Yeah, they were criminal property damage and politically motivated to enact a change in gov policy. But nobody else did those things, but expressing support for the goals and objectives of PA was criminalised which is insane. But in any case, a court ruled it unlawful

[Jamie Smith @JGS952]

@robert19pearson @brokebyclose @aedmans Absolutely! And without risk free state provided duration, private financial markets will always conduct their own maturity transformations in private debt markets to satisfy this desire. Some may even seek foreign currency duration. But benefits from rejecting bond markets r big

[Jamie Smith @JGS952]

@caton_duane @DomainHg @AyoCaesar @cenkuygur @grok They are, but as with the proscription of Palestine Action but not the proscription of the IDF, the UK legislative process is demonstrably compromised by bias. It's meaningless to invoke in any argument for whether someone *should* be barred, etc.

[Jamie Smith @JGS952]

@brokebyclose @robert19pearson @aedmans It comes down to how much overall benefit adding sterling duration to private balance sheets brings compared all the real costs associated with higher rates required to always guarantee that duration is adopted.

[Jamie Smith @JGS952]

@DomainHg @AyoCaesar @cenkuygur @grok Oh I see, well to me, morally, supporting the Israeli actions in the region is even more agregious than adopting an anti-colonialist "resistance fighter" framing of Hamas but such support is extremely mainstream.

But of course, noone believes our laws align with what is right.