Almost all money comes into this world out of thin air, writes MPA Hankey. Photograph: Sukree Sukplang\/Reuters<\/p>\n
Tory politicians now frequently accuse Labour of believing in the existence of a magic money tree that will enable a Labour government to pay for it (Front page, 3 June). They hope that none of us will remember that in its 2014 Q1 Quarterly Bulletin the Bank of England published a graphic and explicit account of the facts of money: almost all money comes into this world out of thin air, conjured into existence by the book-keeping act in which whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrowers bank account, thereby creating new money. This had for very many years been well understood by bankers, but for some reason most of them had been too shy to admit such facts outside a small circle of consenting adults. <\/p>\n
The secret of political understanding is that most accusations hide guilty secrets. In this case the money tree is by no means a fantasy: it is the very real tree of quantitative easing, a tree that has dropped billions of pounds of new money into banks and financial institutions. The resulting inflation of asset values has allowed the few to become obscenely wealthy while the Tories have increased the national debt by nearly 800bn since 2010. <\/p>\n
Meanwhile, what needs to be done and what Labour says must be done, cannot be done because of austerity. For now the money tree operates to Tory advantage. The question on Thursday is, who owns it and what should it properly do? MPA Hankey Northmoor, West Oxfordshire <\/p>\n
Austerity, the Tories tell us, is a tough road. The implication is that austerity will rebuild the economy, giving us once again the level of services that existed before. However, the first seven years of austerity have almost doubled the debt they were supposed to eradicate. Sowhy would anyone believe that a further eight years of the same will do any more towards that end? The real reason for austerity is an Ayn Rand-esque assault on the public sector. <\/p>\n
In an Ayn Rand society, there would be no public sector and no taxes. If you want to drive your car, you pay to use the road; if you want an education for your child, you pay for it; a public health service would be inconceivable. <\/p>\n
It works out extremely well for those who can already pay for everything they want they do so while enjoying even lower taxes. For everyone else its a nightmare. To see a past Ayn Rand society, look at Victorian Britain, with its extremes of wealth and poverty, and actual starvation. To see a future one, check out any of many dystopian sci-fi movies, where the rich live in fortified palaces, protected by private armies and police forces, and everyone else fights forsurvival in a living hell outside. <\/p>\n
The creeping privatisation of prisons, schools, the NHS and so much more is work in progress. Austerity is about completing and normalising this and getting us used to the privation and exploitation that come with it. Dr Stephen Riley Bruton, Somerset <\/p>\n
In last Wednesdays live BBC televised debate, home secretary Amber Rudd accused Jeremy Corbyn, of relying on the fairytale money tree that would be needed to honour the spending pledges in Labours election manifesto. <\/p>\n
The real elephant in the British fiscal coffers room, which the Tories strenuously refuse to see, is huge income inequality, appropriation of insane chunks of wealth by the top 1% and systematic public underinvestment due to relatively low direct income tax rates for the highest earners. <\/p>\n
Besides configuring the fiscal revenue space (together with other direct\/indirect taxes, insurance contributions and government borrowing), we would like to point to another, much neglected, redistributive function that progressive income tax should serve in a rich, albeit highly polarised and divided advanced economy such as the UK. <\/p>\n
Instead on focusing on the absolute income tax contribution, in our research we have developed a novel and holistic index which tracks the ratio of the effective income tax rate per income group divided by the percentage of total personal wealth (alternatively, one may use the percentage of national income) owned by the same income group. <\/p>\n
Under this metric, we show that the bottom 99% pays in relative terms at least 10 times (1,000%) more tax than the top 1%. <\/p>\n
From the social justice perspective the money tree will blossom when the richest 1% will pay a higher and fairer income tax rate. Professor John Hatgioannides Faculty of Finance, Cass Business School, City, University of London Dr Marika Karanassou School of Economics and Finance, Queen Mary, University of London <\/p>\n
In your editorial on the general election (3 June) you mention Labours economic reputation. It is a myth that a Conservative government is better for the economy. In the last 25 years, the only time there has been a budget surplus was under a Labour government. The recovery since the financial crash has been the slowest in 300 years. Why? Because the Conservatives imposed austerity rather than increasing productivity. <\/p>\n
Currently, the profit of large companies accrues to the shareholders at the expense of investing in the company and improving productivity. Long-term gain is sacrificed for short-term profit. The chief of Unilever tells Nils Pratley (21 May) that he could easily manufacture a higher share price by cutting jobs, factories and research. Graveyards are full of companies that have been cutting costs <\/p>\n
In Germany it has been found that including employees on the board of a company improves productivity. It is in the interest of employees for their company to succeed. But the Conservatives recently decided not to take this simple step: one example, among many, of their economic weakness. <\/p>\n
Instead of improving productivity, the government is relying on consumer debt to fuel economic growth. This is not wise or sustainable. Consumer debt in the US led to the last financial crash. <\/p>\n
Labours economic policies focus on how to lessen the likelihood of consumer debt and how to support companies to improve productivity. A Labour government is essential for the economic wellbeing of the country. Jean Lally Little Hayfield, Derbyshire <\/p>\n
Philip Inmans article (Double edge of debt, 1 June) rightly notes that Britains credit habit is returning, despite a decrease in consumer confidence. <\/p>\n
AtNational Debtline we see the human cost of this with a huge rise in contact from people who are struggling to pay their household bills, council tax, rent arrears, water and utilities. The effects of being in debt on mental and physical health have been well documented. While credit can be a valuable tool, equally we need to look again at households using credit as a way of keeping their heads above water. There are better protections, too, for people in debt that could be explored, such as enhanced rules on enforcement by bailiffs. <\/p>\n
As politicians seek the publics support, we urge them to be thoughtful about how the increasing gap between wages and prices affects people struggling to make ends meet, and to focus on addressing underlying causes and possible remedies. Joanna Elson Chief executive of the Money Advice Trust, the charity that runs National Debtline <\/p>\n
There isnt a magic money tree, says Theresa May. That perverse branch of financial services, the tax avoidance industry, is a veritable forest of magic money trees, the rich fruit of which is harvested by those who need it least. Denis Ahern Stanford-le-Hope, Essex <\/p>\n
Join the debate email guardian.letters@theguardian.com<\/a> <\/p>\n Read more Guardian letters click here to visit gu.com\/letters <\/p>\n <\/p>\n Read more here:<\/p>\n Make the magic money tree work for everyone, not just the rich - The Guardian<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Almost all money comes into this world out of thin air, writes MPA Hankey. Photograph: Sukree Sukplang\/Reuters Tory politicians now frequently accuse Labour of believing in the existence of a magic money tree that will enable a Labour government to pay for it (Front page, 3 June). Continue reading