Thinkers from the USA, including leading author Stephanie Kelton and former chief economist on the US Senate Budget Committee and Economics professor Randel Wray, were in no doubt that Scotland had to be “financially independent” before it could start introducing the policies necessary to transform its economy.
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Academics delivered papers from Argentina and the USA explaining the role of interest rates in increasing inflation, directly countering the mainstream story that rising interest rates slow down the economy.
Other papers included a look at the Japanese economy, which has a 250% debt-to-GDP ratio (well over twice the level of the UK), and how it maintains a low level of unemployment, inflation and a stable currency. This contradicts the concerns we repeatedly hear about public debt.
Thibault Laurentjoye with William Thomson (Image: Scotonomics)
After delivering a paper that discussed sovereign debt defaults, a situation when countries are unable to pay their debts, Associate Professor of Economics Thibault Laurentjoye from Aalborg University Business School in Denmark responded directly to a question about the current Scottish Government policy on sterlingisation, which will see Scotland continue using the currency issued by the Bank of England once the country is independent.
He said: “I can hardly understate how terrible an idea it is to borrow in a foreign currency. Over 97% of outstanding defaults happen when countries borrow in a currency that they do not issue.”
John Ryan-Collins, a professor at University College London, explained that the Lis Truss “mini-budget” was more about a lack of co-ordination between No 10 and the Bank of England than any power display by bond traders.
He expressed concern that Labour’s misrepresentation of the episode may damage their political space and prevent them from implementing the changes the UK needs.
Cameron Archibald, a newly appointed public policy and economics analyst for Scotonomics, asked a panel of economists which one policy they would suggest to an independent Scotland.
The panel, which included Hungarian economist Pavelina Tcherneva and Yan Liang, an expert on the Chinese economy, confirmed the importance of a job guarantee for an independent Scotland.
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The panel said that such a policy would support lower inflation in an economy where everyone who wants a job has one.
Cameron, and Scotonomics co-founder Kairin Van Sweeden, had their proposal for a job guarantee taken up as the official SNP policy at the 2021 SNP conference.
Cameron said: “It was fantastic to receive clarification from such an established panel of economists that a government job guarantee scheme must support a wellbeing economy. We hope this clarification encourages the current administration to learn more about this policy.”
All the presentations provided evidence that many of the constraints that governments use to justify low investment and public spending, as well as arguments that Scotland could not afford to be independent, are, as Stephanie Kelton said, “nothing but fiction”.
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