How incredibly quaint of Ritchie

Seventh, the inflation argument got silly. The Telegraph turned up with the Zimbabwe argument, on cue. The fact that PQE is either clearly intended to stop if there is a risk of inflation because full employment is achieved, or would be countered (in that case only) by tax was not noticed by them.

He seems to believe you can only have inflation if there is full employment. Wouldn’t Mugabe be surprised by that statement?

57 comments on “How incredibly quaint of Ritchie

  1. From the Summer of ’22 – a chapter in the Adam Fergusson book ‘When Money Dies’:
    “Far from having unemployment, it was pointed out, there was actually a labour famine, for one reason because many German labourers were seeking higher wages in Belgium, Holland and even in the border areas of France”

    The same book also quotes from the report of Basil Blackett in November 1921:
    “The one real temporary advantage is that Germany’s workmen are in employ, but even this is mainly due not to successful exporting but to the misdirected consumption of holders of paper marks who want to get rid of them, and therefore to misdirected production . .”

  2. I always assumed* that the higher the employment, the greater the likelihood of inflation, what with there being a greater level of wealth.

    *My dad told me

  3. The report doesn’t specify, but based on the rest of the book, it could mean cigarettes, bags of coal, liquor, small items of furniture, and new clothing, not because you needed any of it, but because you could trade it later on for a cinema ticket or food or whatever else you needed.

  4. First of all, “clearly intended” is Ritchiebollocks for “now you mention it”.

    And you have to laugh;

    “Sorry, chaps, we’ve had to stop printing the money, so bugger off home please, yes, right now I’m afraid. Well, we’ll put the roof on later, Reggie.”

  5. I think I used “Reggie” because I think Dick the Prick may be an invention of David Nobbs’ designed to irritate us beyond reason.

  6. It’s important to differentiate between supply side inflation and demand side inflation: the usual right wing trick is to conflate the two.

  7. @KJ What exactly is your point? How does the fact that there two sorts of inflationary pressures (external costs such as energy prices going up vs extra demand for goods and services causing prices to rise) affect the arguments about PQE being inflationary? If we print enough money to give everyone £1m each I assume you agree it might just be inflationary, so printing £50bn and spending it in the economy will have some inflationary effect, no?

  8. The mainstream attack on fiscal/monetary policy is really about demand pressures. We continually hear crude statements such as there’s *too much money* in the system.Under the NAIRU regime we have now, inflation is controlled using tight monetary/fiscal policy, which leads to a buffer stock of unemployment. A costly/unreliable target for policy makers to pursue as a means for inflation proofing.
    Now if we used employment buffer stocks, government could exploit the fiscal power of a fiat-currency issuing government to introduce full employment based on an employment buffer stock approach. A central tenet of MMT, : I have it on good authority that Murphy has been in touch with Bill Mitchell.

  9. A question for Comment is Free perhaps, but is it racist of me to hope that Corbyn turns Britain into the next Venezuela rather than the next Zimbabwe?

  10. Oh For Fucks Sake:

    ” which leads to a buffer stock of unemployment.”

    Chris Pissarides et al of the Alma Mater got the Nobel only a couple of years ago for explaining this. Frictional unemployment.

    Go read up on it.

  11. @Luke and Andrew Carey

    Misdirected consumption is of this sort:

    New car sales jumped by 47pc in April, suggesting Greek households pulled their cash out of banks and ploughed it into other goods and services.

    http://www.telegraph.co.uk/finance/economics/11800527/The-Syriza-effect-Greek-economy-grows-by-0.8pc-in-second-quarter.html

    In hyperinflationary times people just buy “stuff” as a store of value because money is such a poor store. This increases frictions in the economy and is one of the primary reasons why high inflation is bad.

    @John Square

    There is a empirical relationship known as the Phillips Curve that shows the trade-off between unemployment and inflation. Higher levels of inflation are associated with lower levels of unemployment. Of course if a government that monkeys with this – by running too loose a monetary policy, we tend to end up with higher unemployment for any given level of inflation.

  12. This question was put to the man himself. His reply –
    “In a controlled economy (i.e. One with a functioning government) high unemployment and high inflation is very hard. Of course the two can go hand in hand – but the examples are invariably linked to governance failures”

  13. Guess who?

    “In a controlled economy (i.e. One with a functioning government) high unemployment and high inflation is very hard.

    Of course the two can go hand in hand – but the examples are invariably linked to governance failures.”

  14. Ken

    “In hyperinflationary times people just buy “stuff” as a store of value because money is such a poor store.”

    Which would make buying new cars a terrible decision, unless new cars don’t immediately depreciate in Greece in the same way they do over here.

  15. “In a controlled economy (i.e. One with a functioning government) high unemployment and high inflation is very hard. Of course the two can go hand in hand – but the examples are invariably linked to governance failures”

    At which point he will chose two options – pedantically debate what “functioning government” means or just delete all comments.

    In the late 1970s we had a “functioning government” – there was law ‘n order, property rights, etc. Unfortunately that “functioning government” couldn’t stop the trade unions bringing the country to its knees. What does Richie think a “functioning government” should have done?

  16. Frances Coppola:

    I have already commented on your blog, at some length though very reasonably. Yet, like Murphy, you distorted my clearly expressed views and went off on a tangent. So, to those connoisseurs of irrationality who visit Tim’s blog, I offered a link for them to savour and digest the exchange, should they so wish.

  17. Which would make buying new cars a terrible decision, unless new cars don’t immediately depreciate in Greece in the same way they do over here.

    Britain does seem unusual in the rate at which car prices depreciate. But what would you rather have in two years? A two-year-old car, or no money because the government stole it. Sorry ‘bailed in’ the bank you had the money in?

    It’s one reason I bought a new car last year (another being that the falling oil price was inevitably going to trash the exchange rate and make cars more expensive again).

  18. “So how does Murphy explain stagflation?”

    I’m sure he’ll have the explanation after reading the introduction of the Wikipedia page on it.

    Must be an exciting pastime being an Economics and tax expert and coming across such exciting concepts for the first time.

  19. I agree with Theoprastus. FC believes she is some sort of holy saint who cannot see the trouble she may be storing up for the future by her ridiculous demand that we allow anyone and everyone who wants to come in in regardless.

  20. Edward M Grant,

    “Britain does seem unusual in the rate at which car prices depreciate. But what would you rather have in two years? A two-year-old car, or no money because the government stole it. Sorry ‘bailed in’ the bank you had the money in?”

    I’d rather have the money sat in various reasonably well performing stocks in London and New York and buy a 4 year old car. New cars today have to be one of the worst ways to spend money unless you’re seeking a status symbol. They have little utility value over a 5 year old car, yet cost more than double the price.

  21. Much as I hate to agree with Theo –on this occasion he is 100% correct and the remarks of Francis Coppola are an insult to the population of these islands.

  22. Wow. Ritchie’s echo chamber, on this thread. Ad hominems and moralising in response to someone’s criticism of me for, er, ad hominems and moralising. Take a good look at yourselves, guys.

  23. Take a look at yourself and the poison you represent as “compassion”.

    Your concern for all the poor migrants is clearly more than matched by your hatred for the white faces of your “fellow” countrymen.

    “The UK has been breeding terrorists and has a long history of religious conflict. It already has its fair share of homophobes and misogynists and is notably xenophobic. I for one would regard immigration as a good thing if it helped to shift dysfunctional cultural attitudes and entrenched racist xenophobia. ”

    Yeah import enough outsiders to supplant the native xeno/homophobic white trash with all those lovely migrants with their lovely culturally enriching lifestyles. Middle class cultural Marxist poison and hatred under the guise of bogus compassion.

  24. I’m sure that Frances Coppola is utterly charming to meet but I find myself inclined to disagree with her on the question of migrants. We could alas find ourselves at variance on other subjects too but I am happily confident that we are as one in our opinion of R Murphy.

  25. Incidentally, whilst I’d go along with the consensus that Murph & Corbynomics is batshit crazy doesn’t mean I don’t regard Ms Coppola, apparently a supporter of the current financial paradigm, as thoroughly evil. As are all quasi socialists.

  26. @Rob:”Which would make buying new cars a terrible decision, unless new cars don’t immediately depreciate in Greece in the same way they do over here.”

    Which would you rather have, an new Mercedes, or a barrow full of ‘New Drachma’? The car will hold its value far better in the short to medium term than the paper currency, if your euro bank balance gets swapped for a new Greek currency. Thats why they were out buying cars, they thought their euros could become drachma overnight. Indeed a new Mercedes would be exportable for hard currency, the new drachma might not be fully convertible for ages, and there could be capital controls too.

  27. “The UK has been breeding terrorists and has a long history of religious conflict. It already has its fair share of homophobes and misogynists and is notably xenophobic. I for one would regard immigration as a good thing if it helped to shift dysfunctional cultural attitudes and entrenched racist xenophobia. ”

    This quotation is odious. It has to be one of the most sneeringly stupid things I have ever read. Maybe FC should venture over to Syria or Egypt or Iran or Iraq or Saudi Arabia and see if they have any homophobes or misogynists or any xenophobic cultural attitudes. Simply staggering.

  28. “I for one would regard immigration as a good thing if it helped to shift dysfunctional cultural attitudes and entrenched racist xenophobia. ”

    OK, in rainbow pixie land gamboling amongst the unicorns, it may. But in real life, does it “help to shift dysfunctional cultural attitudes and entrenched racist xenophobia”???

    And do we have any empirical examples of it doing so in the real world ? remind me how Saudi Arabia treats its immigrants again.

  29. Frances

    They do have a point.

    In terms of racism, xenophobia and misogyny could you list which of the 200+ nations on earth you’d rather live in than the UK?

    Not saying it’s perfect here but it ain’t bad

  30. @Andrew,
    She strikes me, like so many of her kind, as never having come up against real racism, xenophobia or misogyny in her entire life. So sees it everywhere.

  31. Don’t even need hyperinflation to make buying hard assets (like cars) sometimes.

    Here in South Africa, add roughly 6% inflation to a steadily depreciating currency and my 2 year old car is worth roughly as much as I paid for it – in local currency at least.

  32. The Phillips curve is traditional, discredited, neo-liberal economics, not murphonomics. He has no idea it exists.

  33. FC has a fair point imo. How can anyone not feel a twinge of compassion for those poor folk arriving on boats in Greece or Italy who have seen horrors that I, sitting in a bar drinking beers before I head back to my 5 star hotel that I’m not even paying for myself, could never imagine.

    Yes there are economic issues, they arent all fleeing a civil war, some are probably also terrorist hell bent on killing us. From what I read all FC said mind is just that there is an element of humanity involved too.

    I won’t pretend to have the answers because I’m not Richard Murphy.

  34. Frances Coppola associated herself with some, by the standards of this sinkhole, quite mild ad hominem criticism .She then gets assailed on here by people who agreed with her initial ad hominem criticism (because it involved Murphy) but who now take the opportunity to go in for their own routine ad hominem smearing, of herself this time, adding a soupcon of sexism about her getting emotional and being a woman playing “the moral trump” ( presumably trump card ; not too good with words these fellows ).
    You could say it serves her right but the ad hominem criticism she’s now getting is disproportionate.(I’m sure somebody above calls her thoroughly evil; but I can’t be arsed to find the quote.Of course you could say this is emotional and hysterical but its the law that men can’t be so.

  35. Not much of a card player, are we DCB? It’s common parlance to refer to a trump as a trump because the player is laying not the card – it’s value indicated by its face – but the attribute. It’s ability to outrank any other card. Except a trump of a higher value.
    See victim Poker.

  36. I find it far easier to look at the migrant issue through an economic lens- irrespective of the rights and wrongs of policy etc. the amount of human suffering involved is just too disturbing for me otherwise.

    And yes- i’ve read the news and views of all sides on this. It’s just too horrible. I’m reminded of events in the Balkans in the 90’s.

    Also- Ken: ta for the info on the Phillips Curve- suspected there’d be something like that out there, and the logic seems (er…) logical.

  37. Funnily enough, the UK has started “breeding terrorists” on a far greater scale in our multicultural paradise. They don’t tend to have pasty white faces these days.

  38. I don’t actually know a single English xenophobe. I know lots of people who quite liked their country as was and have just about reached their limit vis a vis it being changed for them without their being consulted. I note that Frances lives in Rochester which is 92.7% white (http://www.medway.gov.uk/pdf/demographic_profile_-_rochester_east.pdf). I must say I’m surprised that one so committed to our new multiculturalist ideal chooses not to live it. I can’t help thinking a lot of it is about posture.

  39. Bloke in Spain,

    Not only did I work at RBS, but in a previous life I was housing officer for a sink estate in the east end of London. I’ve seen more racism, xenophobia and misogyny than you’ve had hot dinners.

    Andrew,

    I like the UK. But I’m not blind to its faults. Have to say the comments on this thread don’t exactly show it in a good light.

    Interested,

    I live in Rochester because it’s cheap, not because it’s white.

    Rob,

    You’ve forgotten about Northern Ireland, then.

  40. Frances Coppola – “I like the UK. But I’m not blind to its faults. Have to say the comments on this thread don’t exactly show it in a good light.”

    I think, given your call for the replacement of the British people (or at least their reduction to a minority in their own homeland) the very restrained response you have got here is proof of how polite and civilised Britain is. There are few countries in the world where you could express such hatred for the majority community and not end up in jail or at least in hiding from an angry mob.

    “I live in Rochester because it’s cheap, not because it’s white.”

    Yes. As Charles Murray said, the problem with the Upper Middle Class is that they will not preach what they practice.

    Of course it is property prices. It always is. I note, in passing, last year the average property price in the UK would have bought you a house boat in Rochester. At least if the Daily Mail can be believed:

    http://www.dailymail.co.uk/news/article-2669885/From-micro-flat-three-bed-detached-What-Britains-average-home-price-And-London-shoeboxes-cost-4-000-month-rent.html

  41. @Frances Coppola:
    It may be a little unrealistic to criticise others for a lack of courtesy and then address a swathe of folk here in such intemperate terms.

    I note with amusement how you and Richard Murphy have patched things up in a spirit of expediency.

  42. @Frances Coppola

    ‘I live in Rochester because it’s cheap, not because it’s white. ‘

    If cheapness is (as you suggest) the major factor, why don’t you live somewhere cheaper still? Tower Hamlets, say.

    I think it must be because you are xenophobic*.

    Of course, you say it isn’t. But then you would, wouldn’t you?

    *If you accuse countless others of this with no evidence then it’s only fair that that boot be applied to other feet, and thence to your backside.

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