Funding the Future Rachel Reeves is panicking
Nov 4, 2025
Rachel Reeves creates a stir with her Downing Street speech, revealing fears of austerity while pandering to the City. Richard Murphy dissects her panic, suggesting she misunderstands monetary mechanics. He argues against her claims about taxpayer money and sovereign debt, emphasizing that the government essentially creates money. By proposing alternatives like halting quantitative tightening and managing public savings, he paints a picture of a budget that could lead to growth, rather than stagnation. The stakes are high for both the economy and the average citizen.
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Panicked Pre-Budget Performance
- Richard Murphy argues Rachel Reeves looked panicked and pre-emptively framed a harsh budget to reassure markets and the City of London.
- He offers four possible reasons for her behaviour, concluding city pressure is the dominant cause.
Government Creates The Currency
- Murphy contends Reeves misunderstands money and believes in 'taxpayers' money' as if others create money.
- He stresses the government creates the currency and that the City cannot create money the state alone issues.
Bonds As Government Savings Accounts
- Murphy says because government issues money, it provides a safe deposit for excess bank-created money via bonds.
- He argues a sovereign debt crisis is technically impossible since the state can always create money to pay debts.