Classical vs Modern Monetary Theory

Classical vs Modern Monetary Theory

I am intrigued that both Classical Monetary Theory (CMT) and Modern Monetary Theory (MMT) have a way of explaining how macroeconomics works, yet both think the other theory is wrong, while their own theory is right.  

I think it is generally agreed that it is bad to let a sovereign currency inflate, i.e. devalue. It is tantamount to stealing from anyone who holds cash in that currency. It is embarrassing and to be avoided. But deflation is also to be avoided. It seems there is an international consensus that a currency should inflate, but only by a steady 2% per annum. 

CMT believes that a thrifty, well run country should not run a deficit but should raise in taxation as much money as its government spends.  If there is a deficit, CMT believes that printing money, or simply writing it into existence, causes inflation –– at least, in the absence of growth in the economy.  For it believes that the value of a currency is a simple but inexorable function of the total quantity of 'Money' divided by the total quantity of 'Goods'.  The preferred CMT response to a deficit is to borrow on the international bond market. But the CMT economists warn that too much borrowing will 'spook' the markets and interest rates will go up. The country will find itself stretched over a barrel as more and more of our tax goes straight off to pay interest on our National Debt. Should inflation occur, the Bank of England will raise interest rates, which inhibits the economy. It will curb spending by the indebted while cushioning (or even rewarding) the lenders.

MMT believes that deficits are vital if the economy is to grow, as it is the only way that money (currency) can enter the private sector. MMT holds that taxes are not required to "pay for government", for there is no reason why the money cannot be created (by a sovereign government; provided that it does not cause inflation). If there is idle capacity in the economy, printing money should stimulate the economy. If the economy is at full employment and surplus money is still chasing goods and services there will be inflation. The MMT answer to inflation is to raise taxes (rather than interest rates). This takes money off those that have it (rather than those that do not have it). Taxes can have other beneficial effects besides reducing demand for goods; it can reduce inequality, and it can reduce e.g. smoking or carbon dioxide emission.

Where CMT thinks that the value of a currency is set by the ratio of the total quantity of 'Money' (defined narrowly, or broadly?) to the total quantity of 'Goods', it could be argued that prices are set much more locally, by people who know neither the total quantity of 'Money', nor of 'Goods'; prices even respond to 'expectations'. Look at the way BP's profits soared when the Iranians closed the Strait of Hormuz. Perhaps the biggest difference between the two theories is in the different ways in which they propose to handle inflation. Though both schools aim to reduce the local availability of money, the CMT school would raise interest rates, inhibit business and penalise the indebted (CMT), while the MMT school would raise taxes. 

Employment Bank

Employment Bank    

     I am encouraged to hear that Lord Milburn is looking into ways to get teenagers into work [1]. It certainly sounds ridiculous to spend 25 times more money on keeping teenagers at home and idle, than on schemes to educate and employ them [2]. But such schemes, though laudable, would themselves be a waste of money if there were, ultimately, no suitable jobs. 

     I do hope that Lord Milburn and the government will consider the ideas of 

a "Job Bank" and "Employment Guarantee".  These ideas are straight out of the Modern Monetary Theory (MMT) course-work manual, and may be peremptorily and prematurely dismissed as heterodoxy by conventional economists, or dismissed as too socialistic, by politicians (who will know their electorates but may not understand economics). 

     As I understand it, the idea is that the government should shoulder the ultimate responsibility of finding worthwhile employment for its citizens, and not leave it entirely to Adam Smith's 'invisible hand', or the ingenuity of the citizen. And we (society as a whole) should shoulder the duty for our own benefit, as we similarly provide a modicum of education, and healthcare; simply because we do not want to live amongst un-employed, un-educated and un-healthy people.

     (Higher education, and some medical interventions are another matter; they might have to remain the privilege of 'the few' that can afford and justify the expense.)

     I was impressed, as a teenager, at some Victorian building work in (I think) Oban (Argyll & Bute); some local landlord paid for the building of a wall, which has enhanced the town in a small way for more than a century. The scheme worked even without the involvement of government and civil-service. 

     The jobs offered by the "Job bank" need not be competitive, nor even 'value for money', because money, according to the MMT, is not a limiting factor; but the work should be worthwhile, involve a useful skill, and should confer worth on the worker, and thence self-worth. 

     Why the government? Well, if the government cannot think up such jobs, how can we expect sixteen-year-olds to think of such. 

     Furthermore, if it works in the Netherlands [3] why not here? We do not need to 'Reform The Benefit System', as that would take a generation, and another 1,000 civil servants. We just need to set up a "Job bank"; and re-route the dole-queue to their door.

References

[1] https://www.theguardian.com/society/2026/may/23/uk-young-people-workplace-anxiety-alan-milburn

[2] https://www.bbc.co.uk/news/articles/crrpx4p1z71o;

[3] https://www.thesun.co.uk/news/39210798/taxpayers-spend-more-on-benefits-than-jobs/

Guns or Benefits

 Warfare versus Welfare

        We are a disparate bunch, the British. Never mind that some people were born abroad. Even the 14th Lord Home, and the 14th Mr. Wilson had very different childhoods and expectations; though one succeeded the other as Prime Minister in 1964. 

    It is clear that many different priorities must co-exist in the country, even in the house of commons, even on one side of the house.  Thus, George Islay MacNeill Robertson, Baron Robertson of Port Ellen (who served as secretary general of NATO (1999 to 2003)), though a member of the Labour party, believes that our present government should spend more on re-arming the country and less on unemployment benefits. Other members of the same Labour party may feel that the two-child benefit-cap is cruel and inhumane; though our stance on 'benefits' as a whole is about average for OEDC [1].

    An idea came to me, thinking back nostalgically to my very early youth, to the days of National Saving Stamps (1916 - 1978) and War Loans (1914, & 1917). Perhaps we could be encouraged (or told) to pay 10% (or 20%) of our tax bill in the form of buying stamps, and offered the choice of either Welfare Stamps or Defence Stamps. Or even Arts Council stamps, or Public Library stamps. 

    And then, as I prepared to share this idea with you, I found that Sir Ed. Davy had already floated the idea of Defence Bonds on 25 Jan 2026 [2]. And the chancellor Rachel Reeves joined in on 19th April.[3] Excellent. I shall give the idea my little boost to help it on its way. 

References

[1]  Christopher Adam, İrem Güçeri, (2025) "The state of welfare and the future of the welfare state in Britain", Oxford Review of Economic Policy, Volume 41, Issue 1, Spring 2025, Pages 2–11, https://doi.org/10.1093/oxrep/graf015

[2] https://www.bbc.co.uk/news/articles/cq5y7edg169o

[3] https://britbrief.co.uk/politics/westminster/reeves-eyes-war-bonds-to-fund-defence-avoid-benefit-cuts.html

Recycling Film

 On the Recycling of Transparent Film

    The thin, crackly film on the top of some food packages which might be clear (as on top of a punnet of grapes), or opaque (as on a pot of cream), is often carefully labelled "do not recycle". What material is it? And what is the problem about recycling it at home? 

    There are many types of 'plastic' involved in food packaging but this field is dominated by four main types of material: PE = poly-ethylene, which comes in several high and low densities; PET = poly-ethylene-terephthalate; PP = poly-propylene; PVDC = poly-(vinyl-dichloride). There is considerable confusion on the 'web' as to what is used where, for the exact chemical determination is beyond the reach of most of us. I have tried to unravel the conflicting views. Thus [1] thinks the crackly, rustle-ly, film that 'lids' a grape punnet is PP, while [2] thinks it is PET. Reference [2] thinks PET stands for poly-ester while [3] thinks PET stands for poly-ethylene-terephthalate. Sainsbury's thinks that the 'lidding' film cannot be recycled with the plastic punnet and the plastic milk bottles, but OPRL [3] thinks it can go in the blue bin with glass, tin, aluminium and other plastic. Webprofab [4], comparing  PP with PET, says PP is translucent while PET is as clear as glass. Cling film (Saran Wrap in the USA) was originally a polymer of -( CH2 - CCl2)- called vinylidene chloride, though vinyl di-chloride would seem more logical. (Wikipedia is confusing about Saran Wrap and cling film; it is not made of PVC.)

    The PlasticPractical website [1] compares two materials, and suggests: 

"To tell polypropylene (PP) from polyethylene (PE), start by noting their texture and firmness. PP is stiffer and less flexible, while PE is softer and more pliable. Conduct a burn test; PP produces a blue flame with a sweet smell, whereas PE gives a yellow flame with a waxy odor. PP will sink in water due to its density, while PE often floats. Look for recycling symbols: PP has a #5, while PE features #1 or #2." [1]

 

    According to [2] there are three material to consider.

"Polypropylene (PP): The "Display King." Known for its crystal-clear transparency and high gloss. It is stiff, has excellent moisture resistance, and is widely used for snack wrappers and clear over-wraps where visual appeal is paramount.

"Polyethylene (PE): The "Workhorse." Available in Low-Density (LDPE) and High-Density (HDPE) variants. It is soft, stretchable, and has superior impact resistance. It is the go-to material for shopping bags, shrink wraps, and heavy-duty industrial sacks.

"Polyester (PET): The "Barrier Shield." PET offers high tensile strength and thermal stability. It provides excellent barriers against oxygen and scents, making it ideal for food packaging that requires a long shelf life or high-temperature resistance (like lidding films).

   

(Wikipedia clarifies. Poly-(ethylene-terephthalate) (PET), where the polymerising unit is -(C₁₀H₈O₄)- , is a poly-ester, but only one of many. It is the same material a terylene™  and dacron™ . )

    Some of the issue are [A] melting temperature, [B] permeability to (a) oxygen, (b) water, or (c) food odours, [C], transparency, [D] flexibility. I think it is the first three issuse that affect the choice for lidding films, as they often show off the product and are glued in place using Hot Melt Pressure-Sensitive Adhesives (HMPSA). Some packaging tells us not to recycle the lidding film; some tells not to recycle it as home, but take it with PE "bags to a large supermarket". I think both are now out of date, as I found a seminar put on by Bostik [5] that offers to: 

• Illustrate how resealable films containing Hot Melt Pressure-Sensitive Adhesives (HMPSA) are fully recycling compatible with existing polyolefin recycling streams and comply with recyclability guidelines of thermoformed PET trays.
• Show that resealable films based on two distinct HMPSA technologies are rated similarly with regards to recycling in existing/future streams.

Conclusion  

    I have not learned what, in the view of some authorities, prevents lidding film from being recycled domestically. The materials used are very varied and are often multilayered. There is a confusing plethora of advice on this issue, coming not from the government but from the food and packaging industry, trying to be good ecologists. But I have concluded that with present-day (2026) technology, there is no longer a need to separate the lidding film from the tub or tray.   

References

[1] https://plasticpractical.com/plastic-identification-how-to-tell-polypropylene-from-polyethylene/

[2] https://www.newtopmachine.com/blog/industry-insights/pp-pe-pet-film-packaging-guide/

[3] https://oprl.org.uk/simpler-recycling/

[4] https://www.weprofab.com/pp-vs-pet/

[5] https://packagingeurope.com/rethink-resealable-lidding-film-recyclability/9621.article

Prime Minister 2

    I want to continue my theme of 29th April [1] titled 'Prime Minister'; so I have titled this post 'Prime Minister 2'. Twelve days ago Sir Keir Starmer was being badgered by the media over his handling of the Epstein/Mandelson affair; now it is the aftermath of the revolutionary, but inconclusive, election that is exciting the media (radio, TV, press). 

    On of my issues is a side swipe at the media; and in my case that means the BBC radio. It seems to me that, in an attempt to whip up interest, they over step the mark and instead of reporting on the news they become part of the news.

    Another issue was the loss of the idea of corporate responsibility. Why, I wonder, would it help the country if Wes Streeting replaced Keir Starmer? They should both be deep in the same quagmire; both putting their shoulders to the wheel to get the vehicle moving. 

    No one doubts that there is a great deal of frustration in the country about the way things are going. My own list of grumbles might include: our failure to curb Russia, USA, Israel, unemployment of school- and college-leavers, a rising benefits-budget, continued illegal immigration (albeit at a slower rate), collapsing health (and dental) services, cost of housing, cost of living, potholes. Sure! There is much that appears to be going wrong.

    But the idea that either Reform or the dispirited Conservative party could do better seems to me ludicrous. Admittedly, there is not much that the average citizen can do other than to cast a vote. As some of our comedians have said: the votes cast for Reform and the Greens are really anti-votes, against Conservative and Labour.

    There is a faint trace of rationality in the idea of lowering taxes in the hope of 'kick-starting the economy'. Equally rational, however, is to raise taxes to invest in infrastructure. We dither. We try both. We clearly need more than that level of leadership.

    I wish there were a coffee-house somewhere in London where one could go to see and eavesdrop on real grown-up experts talking about politics. Or go to Frankfurt, Paris, Milan; or Stockholm, Oslo and Copenhagen. I mean –– how are our continental colleagues coping with their own economies?

    Perhaps that 'coffee-house' is Twitter, or Bluesky.

Hanta Virus

 Hanta Virus

    Hanta Virus came to me as a new disease, a new problem, a new phenomenon when I heard (on Sunday 3rd May 2026) of the outbreak on the Dutch cruise ship MV Hondius. It appear that the first death on board occurred on 11th April in mid Atlantic 11 days after leaving Argentina. The body was evacuated to St. Helena on 24th April and repatriated to Holland with the wife of the dead man; by today (5th May) the wife had also died. 

    But Hanta Virus is not all that new. Several people knew already that the Hollywood actor Gene Hackman and his wife probably both died of the virus in February 2025 [2]. And the US Department of Health has been tracking known cases of the pulmonary form of the disease (Hantavirus pulmonary syndrome, HPS) since 1993 when there was a cluster of cases in the 'Four-Corners' area of the United States (Arizona, Colorado, New Mexico, and Utah). In the 30 years between 1993, when monitoring in the States began, and 2023, there were 890 cases of hantavirus disease reported. The fatality rate was the alarming 35% [3]. 

    But the Hanta Virus family of viruses seems to be a great deal older than that. They have been known to science since 1978 [4], and seem to have co-evolved with their rodent hosts over a period of many millions of years [5]. While showing considerable specificity for their host rodent, be it the deer mouse in the the mid-west United States, which carries a virus that focuses on the lungs, or the bank vole and the common rat both of which carry viruses that attack the kidney (causing Hemorrhagic Fever with Renal Syndrome, HFRS), we see from the outbreak on the cruise ship MV Hondius that the virus can occasionally jump host, to another rodent, or to humans [5].

    Structurally, viruses of the Hanta Virus family are small spheres with a single membrane coat covered in glycoprotein spikes through which the virion attaches to a target protein in host cell membranes, usually integrins, but not always. (Integrins are integral membrane proteins, present on the surface of all animal cells, always present as hetero-dimers, each typically having a small C-terminal domain inside the cell and a larger, glycosylated, outer N-terminal domain. They typically function both as physical attachment points and signal-transduction molecules.)

    The viral genome comprises three small pieces of single stranded RNA in negative orientation [6]. (In COVID the single-stranded RNA is in positive orientation.)

(Added 7th May 2026)

    The three pieces of ssRNA that constitute the genome are called large, medium and small or L, M, S.

Large, containing 6.8 – 12 kilobases (kb), codes for the RNA-dependent RNA polymerase. A recent paper in Nature [7] describes its structure in considerable detail and proposes a possible mode of action. 

Medium, containing between 3.6 and 3.7 kb, codes for the two glycoproteins, Gc and Gn, which, as hetero-dimers, form the coat, the spikes and the docking mechanism.

Small, 1.7 - 2.1 kb, when copied, produces a positive stranded messenger RNA that codes for the Nucleocapsid protein whose role is to coat the single negative strands of these three genomic segments [6].

    The symptomless 'incubation' period seems to be longish and variable; 1-2 week but exceptionally up to 8 weeks. This may be a feature of negative-single-stranded RNA viruses, and the complex process of activating the polymerase described by Durieux Trouilleton et al. [7]. 

I shall add to this article as I acquire more information. 

References:

[1] Guardian: Ashifa Kassam and agencies, Tue 5 May 2026 02.52 BST

[2] Ewan Somerville, BBC News, Published, 15 April 2025

[3] https://www.cdc.gov/hantavirus/about/index.html

[4] Edward C Holmes, Yong-Zhen Zhang, "The evolution and emergence of hantaviruses" https://doi.org/10.1016/j.coviro.2014.12.007

[5] CDC – https://www.cdc.gov/hantavirus/about/index.html

[6] Hanta Virus – An Overview. March 23, 2022 by Sagar Aryal, PhD. https://microbenotes.com/hanta-virus/

[7] Durieux Trouilleton, Q., Barata-García, S., Arragain, B. et al. "Structures of active Hantaan virus polymerase uncover the mechanisms of Hantaviridae genome replication". Nat Commun 14, 2954 (2023). https://doi.org/10.1038/s41467-023-38555-w

(Comments are welcome to Cawstein@gmail.com)

Prime Minister

UK Prime Minister: An impossible job

I write this on 29th April 2026, at the end of two weeks of stressful chatter in our news media. The UK parliament was asked if it wanted to accuse the Prime Minister of 'lying to parliament'; a fatal accusation if they decided to make it? In the end they did not. I felt that we heard too much of this unfortunate kerfuffle; surely (I believed) there was more important news! 

It has been borne in on me, over the last few months, that the job of being Prime Minister in the UK has become well-nigh impossible. It is a case of job-inflation, which started (perhaps) with Margaret Thatcher, and was pushed forward by Tony Blair. Our prime minister was traditionally regarded as Primus inter pares (first among equals), not as the solitary decision-maker, which he has become. I think we do not want a President, a chief executive. Our prime minister should be merely the convenor and chairperson of the Cabinet. 

I do not think the BBC helped. Indeed, I think the BBC exacerbated the problem. Their interviewers puggled away, and worried the ministers; they stoked the blaze. (I expect some newspapers were as bad, but my only exposure to 'the media' has been the BBC, our quasi-independent-dependent broadcasting company!) I think the 'U-turn'-jeering could even be said to have caused errors, such as Sir Keir Starmer's peremptory sacking of Sir Oliver Robbins ('Ollie' Robbins to the media).

I do not think Keir Starmer should have sacked Oliver Robbins, though I understand his momentary anger. I understand that there were two errors involved: I doubt Keir Starmer was aware that Sir Oliver was, himself, not privy to the text of the vetting; but the latter could have explained, if not the content of the vetting, at least the process. 

In any case, I do not think Keir Starmer can have sacked Oliver Robbins, for I do not think he could sack him. I believe that Keir Starmer did not employ the civil servant; so it was not in his power to un-employ him. (See my point above, about job-inflation.) Many other people have made mistakes on the route to here. 

I think Sir Oliver Robbins should be re-instated.