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Top accountants keep on screwing the world for all they can get

Published by Anonymous (not verified) on Fri, 30/09/2022 - 6:05pm in



I posted this Tweet this morning:

To pretend that anything like this level of reward can be justified by the people who run these firms is impossible. This is what oligopoly power looks like, and it is screwing us all.

I apologise that the language has to be so forthright, but for a failing profession, as audit and accountancy is, this is unacceptable.

Philosophy’s Happiness Literature: More of It, More Empirical (guest post)

Published by Anonymous (not verified) on Thu, 22/09/2022 - 10:43pm in

In the following guest post, Michael Prinzing (Yale) discusses trends in philosophical discussions of happiness and well-being.

Philosophy’s Happiness Literature: More of It, More Empirical
by Michael Prinzing

Something seems to be happening in the philosophy of happiness and well-being. Philosophers seem increasingly interested in what’s going on in the social and health sciences. Some philosophers are even conducting empirical research of their own. But is this a widespread phenomenon, or just a small subset of a sub-discipline? 

To investigate this question, I conducted a bibliometric analysis of articles published in the 50 most-cited philosophy journals on the topics of happiness, well-being, and the good life. (For those interested, I describe my methods at the bottom. The data and R code are available here.) 

Obviously, in the past 50 years or so, there has been a general trend of increasing publication volume—and not just in philosophy. That trend is illustrated by the blue line in the figure below. The blue line (scale on the right) represents the total number of papers published in the top 50 philosophy journals since the mid-20th century. Although growth leveled off a little between 1980 and 2000, there appears to have been fairly steady growth since the 1950’s. 

Things look very different when we turn to papers on happiness, well-being, and the good life. That trend is illustrated by the black line (scale on the left). There we see no growth at all until the turn of the millennium. At that point, the number of publications skyrocketed. Hence, this sub-discipline does seem to stand out from the general trend in philosophy. Moreover, whatever is going on in the philosophy of happiness and well-being, it seems to have started around the turn of the millennium. It’s possible that this has something to do with the rise of “Positive Psychology,” which also emerged at that time. That field of psychological research may have provided fertile ground for philosophers interested in similar topics. Or, perhaps some broader societal trend led to increased interest in happiness and well-being among both philosophers and psychologists.

The second figure, below, illustrates the proportion of papers on happiness and well-being that cited scientific sources. Since there were so few publications per year during the 20th century, I grouped the papers by decade. Prior to the 1980’s, not a single paper cited any scientific sources. In the 1980’s and 90’s, about 10-15% of papers did so. In the 2000’s the proportion jumped to about 35%, and since 2010 papers citing scientific sources constitute the majority.

Overall, then, it seems that not only have happiness, well-being, and the good life become much more popular topics of philosophical discussion, that discussion is increasingly intertwined with empirical research. Indeed, papers in the philosophy of happiness and well-being that don’t engage with scientific research are now in the minority.


Journal Citation Reports, a database of academic journals, includes 320 journals classified as philosophy journals. I selected the 50 most-cited of these and queried Web of Science for all the articles from those journals that included the terms happiness, well-being (or wellbeing), or “the good life” in the title, abstract, or keywords. This yielded 673 records, dating as early as 1947. After removing a duplicate record and non-articles (some records were book reviews, editor’s notes, etc.) there were 521 papers. Collectively, these 521 articles cited 7,389 sources. However, many of these were cited very few times. Only 318 received at least 5 citations. I categorized each of these 318 sources as either scientific or non-scientific, depending on whether the source is dedicated to reporting or reviewing empirical findings. Thus, this definition does not include journals that occasionally publish empirical findings—e.g., Noûs or Synthese. But it does include sources like the Journal of Personality and Social Psychology (this was the most-cited scientific source, with 78 citations.) It also includes sources like the American Economic Review, which, though it does not publish novel empirical results, is dedicated to reviewing empirical research. Of the 318 sources, 111 were scientific. 5 could not be categorized because it was impossible to determine the exact source from the abbreviated title given by Web of Science, or whether the source was scientific. These were: P BRIT ACAD, CRITICAL NE IN PRESS, DROP, VALUE ETHICS EC, WELL BEING. I then used this categorization to determine how many scientific sources each of the 521 philosophy papers cited.

Consider the Chickens

Published by Anonymous (not verified) on Sat, 17/09/2022 - 2:40am in

Are humans stupid when it comes to understanding animals and nature?

It’s time to radically reform the Bank of England Monetary Policy Committee

Published by Anonymous (not verified) on Fri, 16/09/2022 - 4:25pm in

Prof Danny Blanchflower and I issued this press release late yesterday:

The Mile End Road Economists

Time to reform the Bank of England Monetary Policy Committee

 The Bank of England Monetary Policy Committee has had the power to set the Bank of England’s base interest rate and to manage quantitative easing since 1998.  These enormous powers are managed by nine people.  The governor is a bank insider, all four deputy governors have worked at HM Treasury, whilst of the so-called ‘external’ members, three are professors of economics and the other is a former banker. Without exception they are London-based, banking orientated, have a focus on economics and finance and know little or nothing of the real world beyond the walls of the City of London.

Unsurprisingly, this group of people with similar backgrounds, life experiences and comfortable incomes suffer from ‘groupthink’.  Dissent on the Monetary Policy Committee is rare. The policies pursued by this committee are also hard to differentiate from those of the US Federal Reserve, the European Central Bank and other similar organisations.  In these extremely uncertain times, it is hard to think that there are no dissenting voices arguing alternative scenarios and yet none are heard.  As a result, the British people are worse off.  Organisations fail because of groupthink.

Professors Danny Blanchflower and Richard Murphy, who describe themselves as the Mile End Road Economists because they deliberately look at the world from the perspective of the person living just outside London’s City Walls[1], believe that this lack of diversity of experience and thinking on the Monetary Policy Committee is dangerous at this moment.

As we face an economic crisis of potentially epic proportions Blanchflower and Murphy believe it is time for the Monetary Policy Committee to be both democratically accountable, and to reflect the wide range of business, financial and economic experience that is available right across the UK. Only if this happens do they think that this committee might set policy in the interests of everyone in this country, or the person on the Mile End Road omnibus as they call them.

The aim of the proposal is to encourage diversity of thought.  At a later date Blanchflower and Murphy will also be making suggestions on how the remit of what the MPC targets might be changed.

They have today called for the Bank of England’s Monetary Policy Committee to be radically reformed. Their suggestion is that the Governor of the Bank of England should be appointed by the government. The Deputy Governor should be appointed by the Mayor of London to represent the city where the bank is based, as a whole.  Of the remaining members three should be appointed by the devolved governments of Scotland, Wales, and Northern Ireland and the last four should be appointed by regional committees of MPs to represent the diversity of opinion and needs across the rest of England. These members should be elected for fixed terms, not be allowed to serve for more than one term, and should be supported by strong regional offices of the Bank that are intended to inform the decision making of these members based on local need throughout the UK.   This would mean staff, including forecasting staff should be moved from Threadneedle Street to various parts of the economy, where their focus would be on both the regional and national economies.  These members would represent and seek for the interests of people in their regions and would be well paid and the jobs would be full-time.  Each region would get to decide the background and experience of the person it appoints to represent its interest.

This way five goals are achieved. The committee will become very much more democratic. Groupthink could be overcome.  The committee is bound to be more diverse. The range of professional interests reflected upon it will increase, which is important given the massive impact of monetary policy on all aspects of UK life, and there will be a clear opportunity to remove from office those who fail in their duties.

The potential harm that the current approach, with its inbuilt bias towards the interests of banking and the City of London is what motivates the call for reform from Blanchflower and Murphy.  Professor Danny Blanchflower said:

There is a role for a monetary policy committee, but it must be accountable, and it must be representative. Our proposal diversifies the professional and regional experience of those on the committee in a way that is bound to ensure that the interests of ordinary people are better reflected in the Bank of England’s decision-making processes.  We need to encourage diversity of views to stop the groupthink that has dominated the MPC since its inception.

Professor Richard Murphy added:

The current MPC brings together a range of people with deep experience of economics rather than a wide range of lived economic experience that might be of greater benefit when making decisions with massive real-world implications for the people of this country. We don’t need theoretical answers to the current crisis: we need real ones. Only by changing the composition of the MPC can that be delivered.


[1] The Mile End Road starts a mile from Aldgate, one of the gates into the City of London.

Notes to Editors: 

  • Prof David (Danny) Blanchflower, CBE, is a British-American labour economist and academic. He is currently a tenured economics professor at Dartmouth College, Hanover, New Hampshire. He was a member of the Bank of England Monetary Policy Committee from 2006 to 2009.
  • Richard Murphy is Professor of Accounting Practice, Sheffield University Management School, a chartered accountant and economic justice campaigner.
  • Details of the membership of the Bank of England Monetary Policy Committee can be found at

Why isn’t the private estate of the Queen subject to inheritance tax?

Published by Anonymous (not verified) on Tue, 13/09/2022 - 5:26pm in



I posted this Tweet this morning:

I very firmly believe that the monarch has to be our equal before the law.

This abuse has to end.

The UK is very clearly in breach of the UN Declaration on Human Rights

Published by Anonymous (not verified) on Tue, 13/09/2022 - 5:04pm in

I posted this Twitter thread this morning:

Like many, I was shocked by the arbitrary arrest of protestors suggesting that King Charles III was not their choice of head of state yesterday. Support the monarchy or not, the issue of free speech is fundamental to all our freedoms. A thread….

The UN Declaration of Human Rights, put in place in 1948 with support from the UK provides very clear indication that these arrests are a breach of human rights.

Article 19 says:

Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.

That is unsurprising given Article 18, the core element of which says:

Everyone has the right to freedom of thought, conscience and religion.

These rights are reinforced by Article 9, which says:

No one shall be subjected to arbitrary arrest, detention or exile.

Remember why it was thought so important to express these human rights. The world had just lived through the horror of fascism. It had seen what totalitarian regimes did to those who protested. It was determined that dissent should be allowed so that democracy might flourish.

What the Declaration made clear was the right to dissent was fundamental to our freedom. And what the Declaration also made clear was that we had the right to express that dissent, whoever we might be, and that we should be able to do so without fear.

Of course those preparing the Declaration knew when saying this that some who might dissent would express inconvenient views that might offend some. That’s why it had to be said that they had the right to do so.

And then we come to yesterday. A monarch has been put on the throne without any form of consent by the people of the country being required, and without an alternative choice being made available contrary, I suggest, to Article 21 of the Declaration.

The first key part of Article 21 says:

Everyone has the right to take part in the government of his country, directly or through freely chosen representatives.

The second crucial element of Article 21 says:

The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures.

And yet in the UK we have a monarch who acts not just as Head of State but who also plays a fundamental constitutional role, with a right to hear and be heard before consenting to legislation, whose appointment involves no such process of popular consent.

The UK does not, as a result, provide the people of this country (who are subjects and not citizens as a result of this arcane system where the monarch is our feudal liege lord and we are their vassals) with the human rights we should enjoy.

Worse, it now seems that our human right to object to this abuse has been removed, and we might be subject to arbitrary arrest for doing so.

What is there to conclude? It is that in the UK not only do we have an unacceptable system of government in that what we have clearly contravenes international standards of acceptability, but that we may not say so for fear of arrest.

Now let me loop you back to 1948 and remind you why these human rights were declared inviolate. It was precisely to stop oppressive regimes from preventing those from within their borders the right to protest about the form of government they suffered.

That is now where we are. People are being denied the right to dissent by a UK government intent in removing our human rights, our equal right to participle in democracy, and our freedom to protest, whilst granting the power of arbitrary arrest to the police.

Today’s royalists taking offence might be those arrested tomorrow. That’s what happens when there is arbitrary power that does not respect human rights. They should be as worried as I am.

We have a regime of precisely the sort the visionaries who drafted the UN Declaration on Human Rights sought to protect us from, and politicians of exactly the type they knew might re-emerge when the lessons of history were forgotten.

Worry, a lot. Your freedom depends on dissenting from the oppression that our government is imposing, contrary to our internationally declared human rights.

Welcome to the Kingdom of Charles III where dissent is not permitted

Published by Anonymous (not verified) on Mon, 12/09/2022 - 5:45pm in

There have been two reports of people being arrested yesterday for protesting at proclamations of King Charles III. Both the protests appear to have been personal, rather than organised. Neither protestor did anything more than express an opinion.

In the land of Liz Truss and, apparently, King Charles III, such protest would appear to be unacceptable.

I have already noted the absence of any apparent democratic consent to the ascent of Charles to the Throne. That troubled me. That those who wish to express their dissent about his ascension are arrested for doing so troubles me even more.

As I understand it, the reason for the multiple proclamations of the monarch was to gauge the level of support that they might enjoy. In other words, the process recognised that consent was not automatic, and might even be withheld.

This, apparently, is no longer the case. Now the proclamation is an edict that we must take or leave, without our opinion being sought, and with dissent not being permitted.

It is a standard right wing argument to suggest those dissenting from the opinion of those others with power are very rude to disagree, and must be suffering some sort of affliction for doing so. At the very least, dissent is cast as rude, and as justification for ostracism within society.

Alternatively, the person complaining must be very jealous, and so we get the narrative of the politics of envy.

Move just a little further, and the dissenter is a threat to peace, law and order and must be detained. They become a criminal.

But that is not what dissenters are, of course. They are expressing their human right to free speech, and so to disagree. This right is at the very core of all human liberties. It is the bedrock of democracy too. And that, no doubt, is why fascists and Tories alike loathe that freedom, and seek to constrain it, through legislation and inappropriate police intervention of the type seen yesterday.

I would rather we did not have a new King. I think the demands of monarchy an impossibly unfair imposition to place on anyone by accident of birth when I think none more suited to a task by reason of birth than any other. I am also a democrat, and would rather have a say in who is my head of state, and to have a chance to remove them. And I am convinced that endorsed privilege needs to be removed from UK politics when the harm it has caused is now so obvious.

And yes, I think I have the right to say that and that no one should be arrested for doing so.

As they have been, read that for what it says that we have: a fascist, police state.

Truss is putting the monarchy at risk by joining Charles on tour

Published by Anonymous (not verified) on Sun, 11/09/2022 - 6:47pm in


Ethics, Politics

I posted this thread on Twitter this morning:

I had decided that I would leave aside discussion of the monarchy and its role in our society until the Queen’s funeral had passed. But now that her death is being used by politicians to further their aims I have changed my mind. A thread….

I have written since the Queen’s death about her own significance and about the need to respect her family’s grief at her loss, and to respect the grieving of those who feel likewise. I stand by that. But, too much has happened very quickly to ignore its significance any longer.

The good governance of any country requires that it have an effective government that is accountable for the decisions that it makes to the representatives of those who put it in place, and then to the electorate.

It was very hard to say that we had anything approximating to such a government over the summer due to the Tory party leadership election, which left us in limbo for months when decisions on the energy crisis needed to be made.

Now, after only limited debate, and an almost meaningless statement from Liz Truss on what might best be called a non-plan for energy last week, parliament has been suspended indefinitely as a result of the Queen’s death. This is utterly unacceptable.

The role of the monarch in the UK is to be part of the mechanism of government. It is not to open hospitals, or to host banquets. It is to be the person who consents to the passage of legislation after giving and receiving advice on the issue.

In that case, if the continuity of the monarchy is to be emphasised the most important thing to happen would be for the business of government to continue - after the appropriate pause for reflection that was provided on Friday and Saturday - starting on Monday morning.

Other business is continuing next week. Debts will also be chased. Schools and other public services will all operate. But the process of accountable government will be suspended. That is a powerful and worrying symbol suggesting there is no accountability in the UK, after all.

There have been ample such other symbols, all of which have been troubling. I was astonished that the Accession Council was not asked its opinion on the ascent of Charles III to the throne: not once were the 200 or so Privy Councillors assembled asked their opinion.

If the so-called ‘great and good’ were present to offer counsel - as is their task - why was their opinion not sought on the matter laid before them? And yet it was not. A simple call for ‘Ayes’ and ‘Noes’ would have sufficed. But it did not happen. So, nor did democracy.

Instead Charles III ascended as of right. And of course, the Accession Council would have confirmed that fact. We all know that. But that is not the issue. Eugenics trumped democracy here - and our leaders didn’t even pretend otherwise.

Worse, the accession proclamation said that Prince Charles has ‘become our only lawful and rightful Liege Lord Charles the Third’. A liege is the vassal of a feudal superior, where vassal means a person holding rights on conditions of homage and allegiance.

I have to say that I object to the idea that I hold anything as a favour from a monarch who did no more to acquire that right than to be born. Every political sensibility that I have is offended by that idea.

This notion also affronts my senses as a believer in the equality of all.

It offends me as a democrat.

And as a libertarian (and socially I am a libertarian) this suggestion challenges all that I believe about my freedoms and rights.

Let’s also be blunt: there is nothing about this that can be reconciled with any declaration of human rights. So the question has to be, why was this wording used?

I know many will say that tradition and ancient forms of wording require this. But tradition would also require support for slavery, child labour, gender discrimination and much else too, so that is no excuse. Those issues were absent. There was, then, no excuse for the language used.

That is, unless its use was deliberate and a reflection of what is really happening on this accession. Might it be, in other words, that the language was deliberate, just as the rush to get Charles on the throne whilst the country is still in shock also very deliberate?

In other words, the whole point of this massively rushed exercise that emphasises status, inherited power, the perpetuation of wealth and control of the populace, coupled with a wholly unnecessary suspension of parliamentary scrutiny, is to highlight the real power in this country?

I wondered until it was announced that the new King would do a tour of the capitals of Scotland, Wales and Northern Ireland. I cannot object to that. I can when he is to be accompanied by Liz Truss as new prime minister.

It could, of course, be argued that the King must act in consultation with ministers. But the message is deeply dangerous. First, it seeks to tie the Crown to the Tory party, which is threatening to the monarchy. Second, it makes the Crown political, and it should not be.

Truss is playing with fire here. We know her own love of media attention. We know too of her party’s distaste for inclusiveness and democracy. And we know the links between old hierarchies of power and the Tories. In other words, we know she will tolerate abuse.

But if Truss links traditional, patrician Tory values too overtly to the Crown she risks drawing into public view the unacceptability of its claims to power and loyalty to which I have already referred.

At a time of national crisis all this worries me, greatly. Truss has already made clear that she will allow energy poverty to continue. This was implicit in the statement she made last week. She has also refused to tax the war profits of energy companies.

Truss could not than have made it clearer, already, that she favours an unfair and divided society. Charles has ascended to the throne on the basis of feudal promises, and deeply divisive oaths pertaining to religion. Associating these things is deeply unwise, but is happening.

The point I am making is that democracy, equality, and the right of the citizen to be who they wish is under varying challenges in these arrangements, promoted when parliament, and so democratic accountability, is suspended.

This is not the working of a functioning state. Nor is it the work of what I think a parliamentary democracy should be. There is instead in all this an ancient regime seeking to remind the country where power lies, backed by a prime minister all too willing to reinforce division.

I very much doubt the Queen would have been so unwise as to agree to a tour of the country with a new prime minister, herself deeply unpopular and desperate for publicity. Charles has agreed. That, to me, is a very bad sign, amongst many that are worrying.

Truss has made this period of mourning political. That has to be said. And the unacceptability of this has to be noted. Charles has joined with her in making this the case. It is, then, appropriate to provide a political response.

As a result, please don’t suggest this thread inappropriate. Look at what is happening instead and worry for us, our democracy, and the Crown as well if you support it, because it’s being put at risk.

Just as governments only rule by consent, so too do monarchs. It seems that far too many are forgetting that. Alienating people will not deliver that consent.

And if you doubt me, just wait to see how long it is before the Mail turns on Charles. I suspect it will not be long. He is far too woke for them. He’s a Megan Markle in the making for the tabloids. We are moving to turbulent times.

A wise new King would have avoided being used as a political pawn right now. It is not clear that we have a wise King right now. In a febrile United Kingdom that adds another uncertainty into an already unstable economic situation, and that does not help.

I am worried. It’s right to say so given what is happening.

Real life has not been suspended

Published by Anonymous (not verified) on Sat, 10/09/2022 - 6:07pm in



I posted this on Twitter this morning:

I understand mourning. I know all about grief. You don’t get to sixty four without having experienced both.

I also appreciate the role of the royal family in our constitution, whether appropriate or otherwise. And I have watched my fair share of the coverage because this is about politics, and most especially the power relationships that define political economy.

But, and I think it only fair to say it, whatever some journalists struggling for yet more words to say at this moment might suggest, I do not think that this country was built around the monarchy, let alone a person who managed to remain almost unknown fur more than seventy years.

Any country is built around its people; every single one of them. What they have in common - included shared conventions such as having a monarch - matter. But so too does their diversity. Without disrespecting those who wish to mourn, lives should be allowed to go on. In its own way that is celebration, most especially in the realm of monarchy, where continuity is on of the critical themes that underpins its narrative.

I don’t think we all need days more denial of the reality of the rest of life as a result.

Nor do I want for more myth making that pretends that the issues that trouble so many are suspended at present, because they aren’t.

If we are to truly respect what is happening then we may by all means mourn a person, and allow space for others to do so. But the world does not stop for anyone’s death. That is the mystery of life. It continues, and we learn, adapt and deal with it.

I am not convinced that the coverage I am seeing reflects this in anything like a healthy way. And that troubles me.

Truss’s plan to borrow to spend is inexcusable when there are better options available

Published by Anonymous (not verified) on Thu, 08/09/2022 - 5:23pm in

I have posted this thread to Twitter this morning:

Truss apparently has an energy plan. What is more we are to hear about it today. It sounds expensive, because it will subsidise those who do not need support. But it will also, apparently, be funded by borrowing, and that is bizarre (to be polite). A thread….

I will discuss the strengths and weaknesses of whatever plan Truss announces today when we know more details of who it will support. The one thing we do apparently know for sure is that the £130 billion (or more) cost will be paid for with borrowing. That’s not necessary.

When it comes to funding its spending there are three choices available to any government. It can tax. It can seek to persuade savers to deposit their money with it, which is usually and incorrectly called borrowing. And it can create new money to pay for the spending.

It seems that Truss is planning to ‘borrow’ the funds that she needs to deliver this plan. What that in effect means is that she is planning to push up the interest rate the government offers to savers to lure money from institutional funds into government bonds, or gilts.

Let’s be clear what those institutional funds are. They are pension funds, banks, insurance companies and others who manage money on behalf of others. The higher interest rate will be required to persuade them to reallocate funds to gilts, as government bonds are called.

The current interest rate on government savings varies depending on what precisely is on offer, but is around 3%. If Truss wants £150 billion more that will increase: 4% is quite likely. That, for the UK government, is very expensive money in terms of recent history.

So, the question is why is Truss going for this very expensive option when there are alternatives?

Tax is one such alternative. The current UK windfall tax is absurd: it will raise £5 billion when excess energy company profits might easily exceed £150 billion as a result of this crisis. But inexplicably Truss is refusing to tax this money.

No doubt Truss could also do a windfall tax on bank profits, which I expect to increase by around £40 billion or more as a result of increasing bank interest rates, which they have done nothing to earn. But again, I am not expecting action there either.

Give or take, there may be £200 billion of such excess profits in the economy soon (which will represent the cost she will be paying out from the government) and right now the tax take on this at ordinary rates will be less than £45 billion.

If the overall rate were increased to, say 60%, that take would rise to £120 billion. Could any company object? Well, of course they would. But my argument is let them: these are windfall gains arising through no entrepreneurial action of their own.

At a time of national crisis the companies should be grateful for the chance to keep 40% of their ill-gotten riches. They won’t see it that way. I don’t care. My concern is that £120 billion of borrowing could be prevented as a result.

What else could be done? The next alternative is to simply borrow the money required to pay for this energy package from the Bank of England. It can do this.

There is a facility called the Ways and Means Account that could simply let the Bank of England provide the government with an overdraft of the required sum.

And it need not charge interest on the loan either, because the Bank of England is owned by the government anyway, making charging interest on the loan irrelevant.

I know that to do this would be unconventional, to say the least. It would also have contravened EU requirements but I would have thought the government should have noticed we are no longer in the EU, and so can do this.

The advantage is very clear: it is that the pressure to increase interest rates on government borrowing would not then exist, and that means rates will not be forced up in the market more generally.

Right now the last thing we need is an increase in interest rates, forcing people with mortgages to default on their debts. If direct lending from the BoE to the government could prevent that it would be a very good thing.

Then there is the last alternative, which is Bank of England lending to the government disguised as quantitative easing. The net effect of this is the same as the BoE lending direct to the government. QE is only done to get around the EU rule that such lending should not be done.

In a QE deal the Treasury could issue a £150 billion bond to the financial markets tomorrow, making it clear that the Bank of England will buy it back in a week’s time. The financial markets will then get a risk free cut on the arrangement to make them happy.

In effect though, there would be no new net borrowing from the financial markets, excepting a one week period. In effect the BoE lends direct to the government under QE, and pretends it is not, which is a stupid game but one that has been played.

Is direct lending by the BoE to the government better than QE? Of course it is: no bung is given to the finance markets for partaking in a wholly unnecessary arrangement. That’s the win.

But let me address the problem in both these schemes involving the BoE creating new money for the government to spend, which is what the BoE lending to the government really involves, however it is disguised.

That new money that the BoE creates as a rule of this lending has to get from the government into the real economy, which is you, me, businesses and everyone else. It moves from the government to the economy via our commercial banks.

In effect, the BoE puts money into a special type of deposit account that only the commercial banks can have with the BoE. There is over £900 billion in those accounts right now. And interest is paid on them at the BoE base rate.

There is no law requiring that interest be paid on these accounts at the BoE base rate. Before 2008 nothing was paid on the balances. But since QE happened and the balances have risen this interest rate has been paid.

This was not a problem when the interest rates were as low as 0.1%. The cost to the government was next to nothing and the issue was ignored.

Now the interest rate is 1.75% and by Christmas it may well be 3%, and by next year 4% is thought possible. The cost is rising rapidly: it could be £40 billion next year, paid on money gifted to the commercial banks.

This is unnecessary and a complete waste of money. To avoid this charge, the new money needed to tackle the crisis should not be injected into the economy via those accounts but via new accounts where the rate paid should be fixed at 0.1%, forever.

This would be legal. And it would be better than a windfall tax on these profits because it would simply stop the banks profiting in the first place.

So, of the four options (tax; inducing savers to deposit funds with the government or borrowing; direct lending by the BoE; and QE) which is the best?

Not taxing windfall profits is inexcusable. There is no other word for it. Truss will not do it because she believes in making the rich richer. That is the only explanation I can offer for her refusal. Anything else she says makes no sense.

Increasing government deposit taking, or borrowing, requires interest rate rises and the effect of this on mortgage holders and on renters, where rents tend to increase in line with mortgage costs, will be as bad as the energy crisis for many households, so it has to be wrong.

Then we come to the Bank of England lending the money to the government either directly or using QE. Direct is best because it is honest, and cheapest. And it is legal. And if the BoE governors would not do it they should be sacked.

If, however, international niceties are to be honoured even though we are not in the EU, QE could be used instead. And if in both the last two cases the interest rate to banks was limited the cost could be minimal.

What is clear is that of all the available options Truss will be taking the worst. The question is, why is she doing that? Could it be that this is the one that maximises the return to energy companies, banks and the wealthy? I have no other explanation.