Economics is often described as the dismal science, but it’s more apt to call it the mystical science. For generations, the field has been ruled by aphorisms that sound profound but crumble under scrutiny. These sayings, like “tighten your belt in tough times” or “the market knows best,” are not neutral observations. They are myths crafted to justify particular views of how society should be run—views that often prioritise the interests of the few over the many.
Take monetarists, for example, with their obsession with controlling inflation through tight monetary policies. Their aphorisms reinforce the “sound money” myth, which ultimately serves financiers by ensuring that debt repayments hold more value than wages. Similarly, New Keynesians push the myth of the impartial, unelected central bank—a supposedly noble institution that must remain insulated from democratic accountability to protect us from our worst instincts. But making “correct decisions” for whom? These systems, by design, elevate the interests of those who already hold power and wealth.
A New Compass for a Modern Economy
In contrast, a more honest approach to economics would start from the premise that democracy can be trusted—that the people of a nation have the agency to shape its future via the ballot box. This is the bedrock of what I see as modern economic thought, encapsulated by a simple aphorism:
It is better to give poor people a job than rich people a bung
This phrase cuts through decades of economic dogma to reveal a fundamental truth: prosperity grows from the ground up. By ensuring everyone who wants a job has one, we can stop funnelling unearned income to the wealthy and instead build a society where the labour market—not financial markets—stabilises the economy.
Three Pillars of Reform: Interest Rates, Bonds, and Bank Deposits
How does this work in practice? It starts by addressing three entrenched pillars of the status quo: interest rates, bond markets, and bank deposits. These are often seen as immutable forces of nature, but they’re merely policy choices—choices we can change.
First, eliminate the Bank Rate and drop interest rates to zero permanently. This would end the cycle of “bungs” to the wealthy through interest payments on government debt. Central banks would stop tinkering with rates and return to their proper role, ensuring the payment system runs smoothly and affordably while keeping the banks on a short leash via the judicious raising of the Governor’s eyebrow. With interest rates at zero forever, the cost of borrowing would fall for everyone, reducing mortgage and rent burdens—a tangible benefit for millions of households.
Second, dismantle the bond market. Without government bonds, the so-called “bond vigilantes” lose their leverage. They cannot hold governments hostage over fiscal policy if there are no bonds to speculate on. Instead, savings can be safely stored as real money, backed by the state, without the destabilising effects of financial engineering and rehypothecation. Removing this layer of complexity simplifies the economy and shifts power away from financial elites.
Third, ensure that all bank deposits are money. There should be no more insured limits; instead, they should have the same guarantee as a £20 note. This would make the financial system safer and eliminate the need for elaborate safety nets to prop up fragile banking practices. By cutting out the middlemen and the money changers, we would create a system where savings and payments are secure, simple, and accessible to all.
Stabilising the Labour Market
Together, these reforms shift economic stabilisation from the market for money to the market for labour. Instead of relying on unemployment to control inflation, we offer a straightforward, standard hours job to anyone who wants one—a genuine opportunity to contribute to society while ensuring a baseline level of income and dignity. Businesses concerned about this government expenditure can always hire people away—a clear indicator that the system is functioning as intended. For those who claim the standard job pays too much or is “too easy,” the solution is simple: take the job. It’s open to everyone.
The Economic and Political Payoff
The economic benefits are clear. Unemployment disappears, boosting GDP and eliminating the social costs of joblessness. But the political benefits are just as significant. The standard job is the lynchpin of this transformation, providing the stability that allows for a zero Bank Rate policy. By guaranteeing a job to anyone who wants one, the government can confidently eliminate interest rates, directly leading to a reduction in mortgage and rent costs for everyone—including those earning above the minimum wage. Knowing that a job is always available in the local area provides not just a safety net but also the conditions for a fairer, more accessible housing market.
Anticipating the Criticisms
Of course, these changes would provoke resistance. The battleground would inevitably shift to the currency exchange rate, as critics claim these policies would weaken the pound. But that’s a debate for another day. What matters now is recognising that the myths of sound money and independent central banks have failed to deliver prosperity for the majority. It’s time to chart a new course, one rooted in the simple yet transformative idea that national economic policy should serve the people of that nation, not the jet-set globe-trotting elite.
Chat about this and any other MMT topics on Discord with the growing New Wayland community . New members can click this invite link which will add the server to your Discord account