UK Infrastructure Financing · Rebel Economist (Free)

UK Infrastructure Financing

For those of you that do not know me, I write about the inner workings of modern money mechanics.

I recently discovered something in preparation for my new book on the Pound coming out soon, and I dedicated a chapter of my book on it but wrote a lighter version in a substack post explaining how the UK can match Germany’s 500b off-balance-sheet infrastructure investment with one of their own that requires:

No increase in debt.
No increase in taxes.
No cuts to spending.
No net increase in the money supply.

Who would oppose that?

Sound too good to be true? The secret is by temporarily stoping Fiat money or reserves from being de-issued, then issuing a new Digital Pound to pay for infrastructure, backed by those reserves. After they have been cycled through infrastructure, the BoE de-issues those reserves instead of sending profits to Treasury. It’s model 1 (MMT) v current model 2 (tax or borrow to spend). I think it works really well, here’s why…

During COVID, the BoE purchased a tremendous number of Treasury bonds to save the financial economy and give Parliament money to help prop up the real economy, but many complained it didn’t do enough. As those bonds mature, Tressury sells new bonds and uses the money to pay off the old bonds, which de-issues that Fiat and takes it out of circulation forever. My proposal is to delay that de-issuance until we finance new infrastructure to make the economy more competitive. Steve has shown energy prices track closely with GDP, so Green energy and grid modernization investment is high on the list. In short, we get infrastructure investment today in exchange for no BoE profits in the future:

https://substack.com/@jonunderwood/note/p-205262691?r=emteb&utm_medium=ios&utm_source=notes-share-action

I’d love to hear your thoughts and feedback for anyone who has the time to read it!

@Alwyn Lewis

hoping you can review.

Thanks to all.

Best regards,

Jon

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UK Infrastructure Financing