![]() It has many different characteristics, depending on what we are doing with it – spending, saving, or lending it to others. Well, it is like opening a can of worms because money isn’t neutral and has many different aspects economic, political, social, cultural, moral, and more. So why is it like opening a can of worms? that cutting government spending is inevitable, that we can’t afford the things we need. It also goes against a lot of what we have been told over the last seven years since the crisis i.e. So the government can spend what it collects in taxes, can borrow from financial markets, and can spend money created through the Bank of England. These comments by Theresa May and Amber Rudd were another sign politicians are stepping further away from this conversation. Monetary policy has impacts which are of enormous political significance, and it is up to Parliament to scrutinise the wider effects of monetary policy on the economy and society. Through our work we have found a tendency for politicians to see monetary policy outside of their knowledge base, thinking it is just something to be left to the central bank. So there is a money tree, the question is whether it can be used more effectively? There is no reason why some of the money created through QE shouldn’t be invested through the government into things society really needs (find out more here ). While, very little is used to boost wages, create jobs, and invest in the things we need. The main problem with these money trees is the vast majority of new money goes into financial and property markets, boosting asset prices, stock prices, and making the rich richer. The Bank of England is currently running a programme where it creates £445 billion of new money, through a programme called Quantitative Easing (QE). The vast majority of money is created out of nothing, by banks when they make loans. Well as many Positive Money supporters know, there are two main money trees: commercial high street banks and the central bank, the Bank of England. (See the results of a poll) So what is the magic money tree? Only one out of ten politicians actually know how money is created. Not surprisingly, no one on the panel dared to pick up on it. ![]() Money can be created out of nothing, and her government has a lot of control over where it goes.īut sometimes when you start talking about how money is created, and how it works it can feel like opening a can of worms with no bottom. She said: “There isn’t a magic money tree that we can shake that suddenly provides for everything that people want.” ![]() The Prime Minister Theresa May then used the same phrase in response to a nurse who hasn’t had a pay rise for 8 years. Amber Rudd, who stood in for Theresa May on the BBC debate on 31st May had a new line of attack for Jeremy Corbyn, accusing him of believing in a ‘magic money tree.’ She told the audience, ‘there is no magic money tree’. ![]()
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