It seems as relevant today: Greece is falling over and needs bailing out. It won’t be alone.

The point is a simple one: this is about money required until confidence is restored, and it is confidence that is key. Because the reality is that confidence is all there is to money because it literally comes out of thin air:

Sigh.

Greece isn\’t illiquid, it isn\’t a matter of confidence. Greece is insolvent.

Please, come along now, accountants are supposed to understand this difference.

24 thoughts on “The Murph”

  1. why have a group of people taken something that has always been very well known – that central banks print money “literally out of thin air” and other banks multiply it via fractional reserve lending – and turned it into the idea that solvency, i.e. being about to tax roughly as much as you can spend, is irrelevant?

    (I say roughtly becuase you can exploit seignorage to some extent)

  2. JustAnotherTaxpayer

    “money created by the government”

    Chartalism. Hook, line, and wanker.

    I think this is the new battle that (classic, Hayekian) liberals will have to fight. The Socialists are realising that we have won the argument, we have reached the point where we have run out of “other people’s money”, and there is no way to continue increasing government spending. All the UK political parties went to the electorate on a pledge to cut spending.

    The logical progression is to a philosophical framework where government spending is not limited by borrowing. Chartalism and the Modern Monetary Theory fit this bill.

  3. Restore confidence? In Greece? What the fuck is he on? The only confidence anyone has about Greece is that once bailed out they will go back to splurging other countries’ money while raising little from their own taxevaders.

    Murph is worried that thw whole European project is wobbling on tbe brink.

  4. He really is a fucking idiot. But then someone who frequently cites religious justification for his completely untenable moralistic solutions to real world problems is bound to suggest the answer is simply to believe.

  5. So he thinks that HMRC should clamp down on British taxpayers, to raise money to send to Greece, so that the Greeks can carry on not paying their taxes?

  6. Hey, Richard, my sister has a £20, 000 credit card bill, but no one will lend her anymore money because she won’t pay the minimum on her card every month and keeps on buying shoes.

    Will you lend her £5,000? Surely it’s just a matter of ‘confidence’ until she gets herself together and pays you back? She’s good for it, right?

  7. incidentally, when I look at the name Timothy Worstall, all I see is totally shit worm, and various combinations. Just though I’d add that to the infantile nonsense on here.

    Stuck Record

    Isn’t that what the banks were doing with the various AAA rated junk they were trading? This isn’t ‘someone’s’ money, is it?

    It’s an artifice to create confidence. Just like the finance industry as a whole.

  8. Arnald,

    I may be wrong here, but the OP was about Greece’s ability to pay.
    The Greek Government spent (I’m sorry, ‘invested’) waaay over its income from taxes. You may have heard of this concept: a structual deficit. This was financed by borrowing money from everywhere else its seems.

    It appears that no one now thinks much of the Greek Goverments ability to pay these extant debts. Greek borrowing becomes more expensive until they can borrow no more.

    How is this a liquidity/ confidence problem?

    If you run a business and finance losses in a financial year with borrowing, the can is kicked further down the road. If you act to change practice, maximise turnover, decrease costs etc, disaster *may* be averted.
    Do nothing and your business becomes insolvent, you can’t borrow anymore and the end is a lot more painful.
    Pretty much describes the situation for our Mediterranean cousins.

    Incidentally, you don’t need to put so many commas in your sentences. It reads like you’re out of breath.

  9. Surreptitious Evil

    Arnald @14

    No. But nobody said it was.

    In some ways (like borrowing), however, a country operates in a similar way to a business. People just understand the rules (these are “the way the world really works” rather than “the way we think it should work” or “imposed by the Bilderberg group, giant lizards, evil Jewish conspiracy etc”) more easily when applied to organisations that they know can fail.

  10. I can’t believe it, but has anyone else noticed that Arnald isn’t an anagram of ‘I don’t know what the fuck I’m talking about, but in the manner of other 6th formers, if I shout loud enough about my poxy ill-informed view, someone will take notice of me’. Amazing !

  11. Arnald,

    If you had a sovereign currency that you could devalue and/or control over interest rates then, no, not much like a business. I don’t remember Greece having those options though.
    Perhaps I’m wrong, in which case you can correct me. If not, why not think of it in nominal terms? Income vs Outgoings?
    I know you appear to have issues with your Grammar but those of us who have passed GCSE English would refer to the above as an ‘analogy’

  12. Ah yes, analogies. Level playing fields and the like, hmm?

    SE – Steve C said
    “If you run a business……
    Do nothing and your business…..”

    Steve C
    Unlike some I won’t sneer at the use of analogies too illustrate a point (any pedants out there?). Is that Grammar with a capital G? Oh dear. Anyhow, I jest, I couldn’t give a toss.

    But the argument remains, to raise the incoming you have to promote confidence in the product. Are you telling me that the massive hole is ALL caused by reckless government spending. Or do you think that some market considerations have exacerbated the debt. and a whole other bunch that my tiny 17 year old brain is completely unable to be bothered to repeat. So it isn’t like a business. Not at all. Incomings and outgoings are trends, actions need taking to steer trends positively, but to hack a country apart, as a deranged PE buyout would do to, say, a British music institution, can only make things worse for real people.

    Worzel

    I think you’ll find there’s no space between the word and the explanation mark.

    I can’t help it if I channel Richard Stilgoe. Is he dead yet?

    You never have a point. You are only concerned with the inside of your arse. You obviously don’t understand levity. Where do you get your ‘information’ from. Ranting, badly articulated UKIPping egoists (popular guys, them) or REAL FUCKING LIFE.

    gimp.

  13. Can I urge people not to engage with Arnald. He’s immature and not interested in learning. Only life experiences will put him right (assuming he doesn’t join the Labour Party and become a life long politico).

  14. So Much For Subtlety

    Dennis, re-start your blog mate. Please. Richard Murphy’s wrongness is too much for our kind host to manage all on his own. He is an industry in his own right. I am begging you.

    And I am not sure I can survive much more exposure to Ms. Marcotte without a counter-venom.

  15. Richard Stilgoe? Gimp? A british music institution? He’s not 17. He might actually be Richard Murphy, but without the ideas. I wonder at the fury with which he says nothing at all.

  16. “Arnald”…

    Might one respectfully suggest that you take some notice of the old adage that “it is better to keep your mouth shut and have people think you a fool than to open it and prove them correct”..?

  17. Ambrose.
    You are funny, you. Putting all those words in a row without any understanding. I wonder about your cocksuredness without any connection between brain and wrist.

    Pogo
    It is better to open your mouth and have people think you a fool than to accept this fucking nonsense.

  18. @JustAnotherTaxpayer:

    Though the rhetoric may sound Chartalist, I’m not sure the charlatan is really operating on that theory. Social Credit may better fit the bill. Purported ‘Keynesians’ who meet *both* growth and recession (and indeed any other problem) with an acceleration of government spending seem to be following the same intuitions.

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