A chara, – David McWilliams has followed up his exultation of modern monetary theory (MMT) ("It's not money we lack, it's vision", Opinion, October 2nd, 2021) with a piece promoting his vision on how we should put MMT to work by essentially borrowing to fund increased current expenditures on public transport by making it "free" ("Make buses, trains and trams free – and revolutionise Irish transport ", Opinion, January 29th).
I say free in inverted comments because nothing is ever free; somebody somewhere is always suffering a loss of purchasing power when resources are provided to somebody – either current taxpayers, future taxpayers or everybody (when inflation, or MMT, is used).
The unparalleled MMT employed by central banks around the world (to David McWilliams’s obvious approval) has fuelled rampant asset price growth and is now spilling over to accelerating consumer price index inflation across the EU and particularly in Ireland.
Your columnist promotes abolishing fares, and funding the ongoing daily expenditures on staff, repairs, maintenance, etc, via borrowing.
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The only reason the yields on EU government bonds are artificially depressed to the level David McWilliams cites is merely because the European Central Bank (ECB) is buying the government bonds issued and inflating the money supply with freshly created euros, magically created out of thin air to do so.
The financial repression he advocates destroys savings and discourages real and financial capital formation and steadily makes us poorer and less productive while driving prices of everything higher.
David McWilliams mentions a congestion tax to fund the “measly” annual interest on debt but proposes no plan to finance the repayment of the principal of the bond issuances after the proceeds of issuance are dissipated on annual running expenses other than to roll over the debt, assuming either that new investors will happily step up to the plate to lose more wealth to negative real interest rates, or else that the European Central Bank will keep on merrily buying government debt so governments can continue to spend profligately and inflation be damned. – Yours, etc,
JAMES
MURPHY,
Dublin 2.