Presentation by Ann Pettifor for 2011 Australian speaking tour with SEARCH Foundation http://www.search.org.au/projects/ann-pettifor-speaking-tour

1. The case for the Green New Deal Green New Deal Group

4. A Green New World?

5. A Green New World? “ Together, we face two crises: climate change and the global economy. But these crises present us with a great opportunity - an opportunity to address both challenges simultaneously. Managing the global financial crisis requires massive global stimulus. A big part of that spending should be an investment- an investment in a green future. An investment that fights climate change, creates millions of green jobs and spurs green growth. We need a Green New Deal .” – Ban Ki-moon, UN Secretary General, December 2008 “ We hereby propose the Green New Deal to help create more jobs, while at the same time realizing an eco-friendly economic growth ” – Han Seung-soo, Prime Minister, South Korea, January 2009 “ I received orders from the Prime Minister to draft a Green New Deal plan. The orders were to create something that would create jobs by the millions and will fundamentally change Japanese society.” – Tetsuo Saito, Environment Minister, Japan, January 2009

6. A Green New World? “ We need to accelerate towards a green economy. We are talking about nothing less than the transformation of our economies in effect a global Green New Deal ” – Achim Steiner, Executive Director, UNEP, October 2008 “ We need a Green New Deal to meet our carbon emissions targets and create jobs in renewable energy and green technology. We need an ambitious and coherent strategy for the future, which is matched by investment by Government to kick-start key projects.” – Lord Chris Smith, Chairman, Environment Agency, November 2008 “ The current volatility in global energy markets and the broader economic slowdown must not push us off-track from our efforts to address climate change. We must put in place the framework that will guide investment during the recovery and we must start the green infrastructure that will enable the sustainable economy going forward. We think there is an enormous opportunity to develop a ‘ Clean Energy New Deal ’ to achieve energy security, economic and environmental goals.” - Nobuo Tanaka, Energy Director, International Energy Association, December 2008

10. First Risk: Misunderstanding of money/credit = Policy errors

11. The deep flaw in classical theory of economics: That money (deposits/ savings /credit/gold) exists only as the result of economic activity.....

12. Economic activity generates saving, it is not constrained by saving . JM Keynes (and Adam Smith/John Law/Benjamin Franklin/Joseph Schumpeter/President Roosevelt/ JK Galbraith): “ Credit creates savings / deposits ”

13. Keynes: Credit creates economic activity Economic activity generates income Income generates deposits/savings/tax revenues With which to repay debt ….

16. In a monetary economy, the relevant consideration is the availability of finance not of saving, and there is no necessary constraint on finance . (Geoff Tily, Keynes and the financing of public works’ August, 2009.) http://www.heterodoxnews.com/htnf/htn87/Tily%20Keynes.pdf No constraint on finance

17. Orthodox mistake no 1: Money understood as a commodity ….subject to ‘supply & demand’ ‘marginal utility’ etc…. ‘stock’ ‘velocity’… ‘circulate ’

18. Bank money is not a commodity. There is no limit to the availability of bank money. It is not visible/tangible Unlike like oil Or gold Or tulips

19. Governor Bernanke’s ‘magic’

20. Ben Bernanke, Fed Reserve Governor, interviewed on CBS. 60 Minutes Show 15 March 2009, soon after Fed had made $160 billion available to AIG. Was it tax money? Bernanke: "It's not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank.”

21. Bernanke: “So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.”

23. Bank Money/ QE issued by BoE – since Bank founded in 1694 . “ Quantitative Easing” “Money Market Operations”

24. Credit/finance created by central banks: funding provided by the banks

26. One week after Tsunami of March 11th the Bank of Japan made more than €2.6 trillion (30 trillion yen) available for Japanese ‘reconstruction’. Governor Misaaki Shirakawa of the Bank of Japan

27. Keynes: Credit creates economic activity Economic activity generates income Income generates deposits/savings/tax revenues With which to repay debt ….

28. Major constraint o n credit creation: Credit creation must equal economic potential of the economy Too much credit creation – too much money chasing too few assets, goods and services – creates inflation. We are living through a period of the greatest asset price inflation in history – and orthodox economists do not bat an eyelid!

29. Too little credit = deflation Falling prices leads to loss of income, leads to falls in profits, job losses, leads to more loss of income, tax revenues…a downward spiral of deflating economic activity.

30. Deposits/savings (or vaults of gold) are needed to create economic activity. Flawed orthodoxy ignores credit , argues that

31. “ We can only afford what is already in the bank in the form of savings/deposits/gold.” Orthodoxy:

32. “ What we can create, we can afford.” JM Keynes “ National Self-Sufficiency” The Yale Review, Vol 22, no4 (June 1933), pp.755-769

33. Second Risk: Ignoring the multiplier

34. “ Eventually, the debt has to be repaid, either by having higher taxes than would otherwise have been the case or curbing public spending.” “ Budgetary policy tools for economic Recovery.” Iain Begg European Institute, London School of Economics London United Kingdom

35. “ Markets provide the money states need to finance their debts.” “ Europe at the crossroads. Institutional Choices for Sound European Public Finance ” Prof. Mark Hallerberg, PhD Hertie School of Governance Berlin, Germany

36. Government investment in public works generates income, pays for itself

38. Just as work – paid employment – makes things affordable for the individual, so full employment makes things affordable for government.

39. “ Take care of employment, and the budget will take care of itself.” John Maynard Keynes.

44. What is the Green New Deal? its low, low rates of interest – short and long, safe and risky Based on Keynes’ monetary policies (‘liquidity preference’) for maintaining low rates of interest rates. This implies low mobility of capital and an end to the privatisation of interest rates.

45. What is the Green New Deal? It’s about jobs, more jobs and secure jobs. And it’s about the skills and training to create and sustain them In a time of recession, with unemployment already rocketing in the US, and growing here, shifting to green energy will produce countless new jobs, and create many more pound-for-pound of investment, than propping up the current system.

46. The case for the Green New Deal Green New Deal Group

47. http://www.greennewdealgroup.org/ http://www.debtonation.org http://www.primeeconomics.org