@Oliver Williams Great video, thx! I earned a ‘Green’ MBA, and we took inventory of the oceans. On the positive, we studied how the fisheries would have already been wiped out except countries came together voluntarily to cooperate to save them. On the negative we studied the literature of edification if the oceans, which was stunning because they hold 100x more carbon dioxide than anywhere else, and this gets released as the oceans warmed, game over. It was really depressing. We didn’t really understand that in so many systems, Al Gore was saying the decisions that determine the future are right now. That was 20 years ago, and sadly we have long passed the point of no return on many biological ecosystems. The data I have reviewed yes, the ocean currents are going to stop, and life on earth will be fundamentally changed forever because of it.

“Most borrowing takes place through government bonds called gilts . When investors buy a gilt, they lend money to the government for a fixed period." @Alwyn Lewis That’s how every deficit has been financed since 2008. Not sure what accounting you are referring to, but if we look at the UCL article ‘the self financing state,’ they claim EVERY Treasury expenditure is new money creation. That’s an accounting error, which I have covered in my paper. They say when the BoE credits the bank’s reserve account on the BoE order, that’s new money creation. They leave off the second half of the sandwich, which is the BoE then debits Treasury, so it’s a BoE Lisbility Seap: +Ressrves Bank -Reserves Tressury. There is no net increase in the fiat money supply, no new reserve account credits, no increase in Reserves account liabilities for the above. Treasury spends 1.3T pounds, so if UCl was True, reserve account credits would increase by 1.3T, at least temporarily. But when Treasuru spends, we do not see any net increase in reserves. Increasing reserves is an increase in BoE Liabilities. L= A -E. If you increase reserves +L, then EITHER: Asssts must increase Equalky +A. So +L = +A. OR +L eats Equity -E. +L =-E. The BoE would be spending their Equity.to pay Treasury’s bills. There is no data that shows this happens, but lots if data that shows when BoE creates new Reserves they use that $ to buy Assets from banks, +A, so increase Assets +A = +L new reserves. Since there are 3 variable, mathematically if you increase reserves +L, it has to result in EITHER an increase in bOE Assets OR a decrease in bOE equity. There is no third option. The UCL paper says the Treasury can borrow from the BoE and that us new reserve creation, as the BoE acquires a new loan asset so expands their balance sheet equity neutral: BoE +A/+Treasury Loan +L/+Reserves +A - (+L) = 0 no change in BoE equity. The Treasury expands their BS to borrow: +A/+Reserves

Thank you! I think most people will enjoy reading it, if they yake the time to start it. Have you read the UCL paper the 'self financing state by Berkely et al? https://www.ucl.ac.uk/bartlett/publications/2022/may/self-financing-state-institutional-analysis It's the paper MMT quotes as 'proof' they follow double entry bookkeeping (DEBK), and yet the authors mistaken a Central Bank Liabiltiy Swap with new money issuance by only tracking the reserve account crediting, and not the Treasury debiting. They state that EVERY expenditure is new money creation, not just deficit spending (which is alo not true unless Treasury borrows from the BoE). Richard Murphy follows the same belief, and even though he was a chartered accountant and teaches/taught accounting, he somehow does not track the accounting! He will not listen to anyone else, stuck in his own mind, so I wanted to check the data. Under model 1, all Treasury spending results in new Fiat, so we only need to check the BoE data to see if Treasury spending increases total reserve account liabilities. The data says nah... Also, under model 1gilt sales de-issues fiat and reduces the supply of reserve account credits, so we only need to check the supply of reserves to see if that's true. The data says nah... The last time HM Treasury borrowed from the BoE, and thus through balance sheet expansion both the Treasury and the BoE, new reserves were created to finance the defict, was in 2008 (20b pounds). Therefore, neither Treasury spending nor deficit spending have been financed by new money creation since 2008, meaning 100% of defict spending is, and has been, financed by borrowing exisitng money from the public. MMT is not tracking the DEBK or accounting nor the actual numbers in the BoE online database. . The data don't lie!

@Gerard Borg Let’s see where we agree or disagree… Model 1, Treasury can spend by issuing new Liabilities to pay their bills, but that creates negative Equity, agreed? Or Model 1, the BoE can just pay Treasury’s bills, creating new Liabilities, but that creates negative BoE Equity, agreed? Midel 2, We have to separate Treasury spending v BoE Ressrves creation. Model 2, the BoE creates new reserves via BS expansion, new Ressrves are used to buy new assets +A - (+L) = 0. Model 2, Treasury receives reserves from banks via tax payments or bond sales, the BoE transfers via Liability Swap, -L +L = 0. Model 2, Treasury pays banks Ressrves, BoE facilitates via Liability Swap -L +L = 0. I am not asking you which model we use, I am just making sure we are clear on how each model works, b/c I explained Treasury as issuer if Treasury Coin I think that’s most likely, but BoE could be model 1 as well, or model 2. This is the entirety of the universe of what we are discussing. Model 1 Treasury issuing to spend, model 1 BoE issuing to spend, model 2 BoE issuing and Treasury taxing or borrowing to spend. “>>Under model 2 when Treasury spends we will see no net increase in total issuer/BoE liabilities because new issuer/BoE Liabilities +L (+Reserves) are offset by a reduction in issuer/BoE Liabilities -L (-Reserves) to Treasury. Treasury itself sees this as a reduction in Assets -A ( -Reserves) and a reduction in Equity (-E). This us an asset payment for Treasury (-A = -E) but a Liability Swap for the BoE (-L+L = 0).<< “You are now saying that Model 2 shows a Treasury spending money into existence by decreasing its assets. No. Remember, Treasury cannot create assets, right? Your Model 2 is exactly Figure 7 of K-K. In other words it is MMT. Again, no, not sure how my words are not reaching you. 1. Treasury can only spend assets or Ressrves it has on deposit. It cannot create new asssts to spend. No exceptions. Understood? 2. If Treasury has Assets, only then can it spends its assets -A = -E. 3. If Treasury has no Assets, it is not possible to spend Assets unless it borrows assets. 4. When Treasury borrows, it expands its balance sheet, which causes no change in Equity. 5. When treasury borrows from the BoE, they both expand their BS, Equity neutral for both, BUT, BoE does create new Ressrves which Treasury borrows and spends. This is still model 2 b/c the issuer BoE uses new money to acquire new Assets, Treasury loan, which prevents a loss of issuer Equity., 6. The Treasury could issue their own Liabilities like Treasury coin, which creates negative Equity.

@Gerard Borg Q1 “>>Model 1, Treasury can spend by issuing new Liabilities to pay their bills, but that creates negative Equity, agreed?” Yes, but whether Treasury spends their assets (reserves they received from banks), or issues new Liabilities, Treasury spending creates negative Equity. 0 = A - L - E L= A - E Therefore: +L = *A OR -E +L = +A OR +L = - E Model 1: +L = -E Model 2 +L = +A None of that should be controversial, it’s simple accounting. There can be no other models if money is issued as a Liability, which modern money is under DEBK. Note: for Asset money like Gold or Treasury reserve account credits at the CB: -A = -E Treasury Spending reduces Equity whether the currency is an existing asset (issued by CB) or if it is a new Treasury Liability. Q2: “Or Model 1, the BoE can just pay Treasury’s bills, creating new Liabilities, but that creates negative BoE Equity, agreed?<< It depends. +L to spend = -E +L to acquire Assets does not change BoE Equity: +L = +A Therefore, when Treasury spends, it always creates negative Equity, but what the data will show helps us understand if we are in Model 1 or model 2. If Treasury spending causes an increase in Ressrves and creates negative BoE Equity, model 1. If Treasury spending causes no increase in Ressrves and no negative Equity, but instead shows an increase in Assets, model 2. There are no other models under DEBK as currency is issued as a new liability, so + L MUST RESULT IN EITHER +A or -E. The data will show you which. It’s pretty simple really, when the Treasury spends, either Treasury Assets and Equity decrease -A = -E. Or when Treasury spends are they issuing new currency +L = -E? Do BoE reserve account Liabilities increase (+Reserves)? And if they do, (+L) do BoE Assets increase (+A)? Conversely, for Treasury receiving tax payments; Model 1: -Liabilities = +Equity Model 2: +Assets = + Equity Receiving taxes increases Treasury Assets in both models.

@Richard Corin “Obviously we have a fundamental disagreement about what constitutes fiat money.” I think we are in intellectually trying to better understand each other,m, and work through any differences that be bridged… “We agree about the mechanics of government payments. The government credits the payee's bank's reserve account and the bank obeys the instruction to credit the payee's deposit account.” Fantastic! Payment complete! We agree! What more is there to say understand? “Then everything dissolves into nonsense, because I say the fiat money is in the payee's bank account, “ Ahh…yes. This is vexing…but you do agree the public does not hold ressve account credits ur Ressrves in their deposit account, right? And you do agree that the bank receives assets from other banks for payment, not public or bank liabilities, not deposits, agreed? And then creates the new deposit or new bank liability, a new bank IOU to their customer? And the deposit is an IOU from the bank? So is our disagreement the ressrves received by the bank is legally the asset of the public? Or where do we go wrong? “but you say the fiat money is in the bank's reserve account at the CB.” Where else can it be? It’s a bookkeeping entry, nothing more, a digital credit on the central bank’s servers, which is a bank asset but a central bank liability. “We see the pea go under different shells.” There is no pea! That’s the fundamental problem, ressrves are settlement balances that live their r tire existence in the central bank’s ledger. They are created when banks swap their assets for Reserves account credits, and if the CB sell their assets there are no more reserves. In fact, the Fed has $3T in reserve account liabilities and $3T in Treasury bonds. If treasury simply pays off those bonds at maturity, the Fed de-issues those reserve liabilities and Ressrves are no more. “To my way of thinking, your definition is equivalent to saying bank credit money does not exist in deposit accounts either, “

@Richard Corin “Settlement accounts do not hold money! You cannot buy dinner with reserves! Reserves are a behind the scenes accounting mechanism and cannot be part of the money supply.” Agree! But those are reserves,, reserve account credits, and Ressrves are nothing more than this. “The money, whether it be government originated fiat money” Reserves + bills that are purchased by banks from the CB by swapping for Reserves, which banks purchased swapping their assets with the CB. All fist is Central bank Ledger credits, nothing more. “ultimately backed by treasury liabilities, “ No! Reserves are not necessarily backed by Treasury bonds, but they can be. The CB only accepts High Quality Liquid Assets HQLA to swap for reserves. “or bank credit money ultimately backed by private liabilities, “ Backed by bank Assets. Deposits are bank liabilities, ledger credits fir customers, backed by the bank’s asset portfolio. “it is only money if it can be used for transactions in the real economy, as opposed to moving assets around the back office accounting mechanism.” If you want to say only bank liabilities are money, fine, they are 97% of the public money supply, with paper bills making up the rest. Therefore, when a government taxes, money is destroyed, -deposits, reserve account credits are moved from one account to another, not de-issued and not destroyed. The only way they can be destroyed is if they are used to pay an CB. and when a government spends, money is created. The money they received from banks, reserve account credits, are spent, meaning returned to banks. The banks then create new IOUs for their customers, new deposits, which they owe but the gov does not. It is wrong to say, "no new money is created", Wrong? Let’s be specific, ‘net’ new money, a net increase in the money supply. Gov spending always results in new deposits, but if those deposits were taxes, then is -Deposits +Deposits = 0 new money? An increase in the money supply?