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Ultimately, whether or not our society can 'afford' state pensions and an ageing population is a real productive capacity and distribution question. It has nothing at all to do with financing such arrangements. That's the easy part.

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Economy wide changes such as a Job Guarantee (JG), Zero Interest Rate Policies (ZIRP), Bank Asset Regulation and Credit policies (BARC), socialised housing options, and Universal Basic Services (UBS) all act to reduce structural inequality, and allow for sustainable provision.

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In doing so, the appropriate policy options to take become clearer. Primarily, pre- and re-distribution policies that curtail consumption from wealthier pensioners while improving the security of those at the bottom are central.

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Longer read: I've written about how we should frame the challenge of provisioning retirement. A crucial shift is adopting a real resource lens through which to understand the level, composition, and distribution of production that is needed. open.substack.com/pub/jgs952/p...

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Please explain how a buffer stock mechanism where JG absorbs slack in downturns and shed workers back to private firms in upturns is not counter-cyclical?

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in the labour market dynamics a UBI of any considerable size would introduce.

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How do you propose to stabilise the labour market and inflation dynamics originating from incompatible claims over national income? I presume the consumption to UBI recipients is redistributed via progressive taxes on the top half? Possible to be demand neutral as I argue but fundamental weakness

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Jamie Smith @jgs952.bsky.social · 08/01/2026

Incomes policies such as UBI are a favourite of many. But here I argue you can achieve most of the social goals these policies seek to meet while also providing macroeconomic stabilisation via the labour market with a Job Guarantee. open.substack.com/pub/jgs952/p...

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Your car insurance company probably quites like holding your car insurance debt as its asset of deferred payment until they come to settle. You're really not correct here. Each time you try to refute something you seem to misunderstand and talk about a different aspect. If IOU, you have an asset.

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You're still not understanding that an asset to you is a liability to the government. Your phone bill debt is your phone company's asset. So they probably quite like holding that, yes.

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I'd gladly accept them because I know I can use them to redeem my 8 RM debt to you later on and net save 2 RM for future use. Would you agree that in "RM token" terms you're in neg. equity and I'm in +ve equity? And that after I pay my 8 RM debt by handing 8 back, you'll be in 2 RM of debt to me?

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Sigh. I hope you're not trolling me and just genuinely don't understand. Let me try again. Let initial conditions be that I owe you 8 "Real Macro" pieces of paper. Then, if you want some sugar from me, do you agree that you can write "IOU 1 RM" on 10 pieces of paper and buy my sugar with them?

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Right. So change the rules and you accept what I've given you is perfectly consistent accounting. And in nations where those rules don't apply, you're even wrong on that point. Do you agree?

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So not "accounting 101" like you said then haha just a human made law which only applies in the US. Like I said, the UK's Consolidated Fund runs negative every day as the state spends (representing that negative fin. equity) before taxes get redeemed or net saving is adjusted to bond form.

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Hahah what do you even mean it violates accounting 101? Can you genuinely not understand how someone can write "IOU 100" on a piece of paper and give it to someone?

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I've stripped everything back to the simplest it can be. The state sector can spend because someone in the non-gov sector agrees to hold their liability. The gov goes into neg equity which is matched by the +ve equity of the non-gov. Everything financial sums to zero at all times.

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This again 😅 What do you mean "spend a liability"? And by "cannot" do you mean "choose not to by dint of laws and rules in the US saying that the TGA has to be positive"? You know the US isn't the only nation and UK's "TGA" is always negative intraday when spending occurs?

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Household saving is defined as disposable income less consumption (S = Y - T - C = Yd - C). Aggregate net non-gov saving is defined as total saving less investment (S-I). By accounting definition, net non-gov saving must be the same as the sum of gov deficits and net exports (S-I = G-T - M-X)

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Jamie Smith @jgs952.bsky.social · 06/01/2026

Difference between saving and net saving ;)

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I've written here about the nature of money and why understanding money properly has far-reaching implications for modern policy making, how we all think of the economy, and what we believe is possible. open.substack.com/pub/jgs952/p...

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... the US gov can spend $20tn tomorrow if it wanted to via Congressional and Presidential approval. The Fed would have no choice to facilitate the payments via getting around the arbitrary "+ve TGA rule" and new USD state IOUs would be issued (in the form of bonds).

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.. enough TGA balance then the Fed and Tsy will coordinate to ensure the Fed conducts temporary OMOs to create the reserves in the system for Banks to purchase gilts from the Tsy to top up the TGA so the Tsy can spend. But this is *not* what you think it means...

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Unless you can tell me who in the private sector issues sterling or dollar credits, you've got this confused. You think Mosler is is making a point that he is not. The Tsy-Fed consolidated gov system issues USD credits when it spends. No other way to create dollars. If the Tsy doesn't have a large..

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None of those acts mean the UK doesn't issue sterling. Private sector can't create and issue sterling. You've got it the wrong way round for some reason

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It literally can't be counterfeiting for the nation state government to create and issue currency.. And I've told you how it works.The state sector (Tsy and BoE) coordinate to issue new state IOUs every time it spends.Taxes reverse this process by redeeming those IOUs.The excess is put in bond form

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You're confused again. You must realise if a private actor issues currency, it's counterfeiting, right?

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You believe the private sector creates and issues the state currency into existence do you? Interesting

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You're nearly there. So where to the currency credits used to pay taxes or buy bonds come from originally?

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You're again confused. We're not talking about bonds. Forget them for now. When I say the state spends by issuing an IOU, I'm referring to state currency. The USD or GBP, etc. This is how it works I promise you. It's a credit-based state monetary system driven by coercive tax liabilities.

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I've never claimed any of that? What are you talking about? Bonds are a longer duration state liability earning some fixed rate. They aren't currency but they are highly liquid money-like assets as people's savings, readily converted into currency for spending if people want to.

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The only promise the state makes to you holding its liabilities is to accept them back in redemption and payment of your own tax debts to them. That's it. It's all perfectly consistent with the accounting processes laid on top that you confuse for something they're not.

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Of course it is. If you accept my IOU, my liabilities have increased and your assets have increased. Net across the system is always zero. Obvs the IOU itself doesn't create the sugar! It's not claiming to. Likewise, currency never produced the gold either. But today, a state IOU is a tax credit.

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What do you mean?The relevant question is where did I get the "IOU sugar" written in the paper from?The answer is that I created it when I wrote it and issued it to you.The moment you accept it in payment is the moment it becomes a monetary instrument and a financial asset claim on me in your hands.

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The UK system is specifically designed such that its version of the TGA (the Consolidated Fund (CF)) is debited negative every time gov spends, and only returned to zero balance when taxes are redeemed or they choose to issue gilt IOUs instead of overnight sterling IOUs.

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The state works the same way. If you accept payment in currency, the state is issuing an IOU to u. It's liability is not to convert to anything (although it did on the gold standard), but it does owe you the opportunity to extinguish your own tax debts to it. That's how the state money system works

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Do you understand what an IOU is? If I want some of your sugar, I can write "IOU sugar" on a piece of paper and give it you in payment. If you accept to hold it, I've just created and issued a new money instrument. It's my liability as I specifically promise to convert it into sugar upon request.

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You missed the last part: "none of these effect the underlying logic". Money *is* debt. The liabilities side of the banking system constitues broad money, and the liabilities side of the gov sector constitutes base money or longer duration versions (saved gov bonds). All IOUs

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All you're doing is confusing accounting conventions and rules/procedures for conducting fiscal-monetary coordination with actual constraints. You've misunderstood how the system works, I'd show a hit of humility and try to understand why you might be wrong.

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But you must realise your perspective falls apart when someone explains that yes, there are a range of convoluted laws, rules, and processes to prevent the TGA from going -ve or the Fed directly purchasing longer duration IOUs (bonds) from the Tsy, but that none of these effect the underlying logic

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Jamie Smith @jgs952.bsky.social · 21/12/2025

You do know what an IOU means right? The gov owes you something if you hold it. State currency is an IOU of the state that we are owed - the opportunity to pay our taxes. How does it spend then and where does it get the money if it doesn't create it? Who issues the credit and holds the liability?

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The gov spends by issuing a new IOU from the state. It's a credit based state monetary system.

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Jamie Smith @jgs952.bsky.social · 21/12/2025

What's that got to do with anything? Do you disagree that money constitutes *nominal financial wealth* to its holders?

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Jamie Smith @jgs952.bsky.social · 21/12/2025

Do you think MMT economists disagree with this fairly obvious fact? Genuinely curious. What makes you think an MMT framework treats currency as a direct source of real wealth? Within our monetary prod. economy and tax-driven state credit money system, currency clearly represents nominal fin. wealth

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You might be right. It really is a slow but steady paradigm shift and the hubris shown by the likes of Jonathan here will eventually fade away. I have no personal animosity but they can either update their understanding of economics or, as you say, become largely irrelevant.

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But the analytical frame a correct logical view provides **does** matter to economic policy. Functional finance vs sound finance is not unique to MMT but it's validity is grounded on a proper understanding of state credit money - something current orthodoxy doesn't have, including you apparently 🤷‍♂️

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You really don't get it? You cant see how an accurate ontology for the logical sequence of state money creation and destruction in a credit system doesn't have different implications for political economy than a false belief in tax then spend? Yes, these flows occur separately and asynchronously 1/2

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They **literally** operate this way by consistently signalling that the state has "no money" or "can't afford" something. The fiscal rule framework and full funding rule is explicitly adopted within a world that believes the state must borrow from markets in a lender-imposed way. But this is wrong

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