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Sir Murphalot should actually read Paul Krugman

Says a commenter of his:

Incidentally you could replicate the money system in a classroom where the teacher has the ‘authority’ say to stop the kids going to the school disco unless they pay their taxes and the taxes need to be paid in the teacher’s old business cards. When they ask how they get the business cards, the teacher says he will pay them for various jobs that need doing around the school. You could actually start a monetary economy (or a business card economy) where kids that didn’t want to work could obtain the cards from other kids by trading.

And says another:

Various examples of the same kind of model – Paul Krugman describes a Washington DC babysitting club in “End this Depression Now!” where tokens (scrip) were exchanged between sets of parents for promises to babysit.

And Sir Murphalittle says:

It is a good example

Indeed it is. Especially the bit where they create runaway inflation through excessive scrip issuance and the whole thing collapses. But Murphaloon appears not to have read that bit.

17 thoughts on “Sir Murphalot should actually read Paul Krugman”

  1. ” You could actually start a monetary economy (or a business card economy) where kids that didn’t want to work could obtain the cards from other kids by trading.”


  2. That babysitting scrip example really triggers me. It’s the epitome of “a little knowledge is a dangerous thing.” It’s used to justify all sorts of nonsense in monetary policy, when in fact the situation tells us far more about the dangers of attempting to equalise wages.

    I should be simulating this sort of thing but I’m too lazy.

  3. Presumably Murph does not understand the point about scarcity, although in the Indy he is now *massively* backtracking on all of this and says that PQE would only be used for small one-off projects, so if inflation started to tick up then no more projects would be started.

    Anyway, isn’t a baby-sitting circle blatant tax evasion?

  4. Blue Eyes

    Exactly right about tax evasion and scrip. In fact Murphy recently got apoplectically worked up about use of Bitcoin as a means of bypassing normal payment mechanisms, and thereby being used for tax evasion

  5. @BraveFart,

    Such scrip transactions are taxable in the US, as is plain barter: page 20

    Example 3. You are self­employed and a
    member of a barter club. The club uses credit
    units as a means of exchange. It adds credit
    units to your account for goods or services you
    provide to members, which you can use to purchase
    goods or services offered by other members
    of the barter club. The club subtracts credit
    units from your account when you receive
    goods or services from other members. You
    must include in your income the value of the
    credit units that are added to your account,
    even though you may not actually receive
    goods or services from other members until a
    later tax year.

  6. Blue Eyes

    “although in the Indy he is now *massively* backtracking on all of this and says that PQE would only be used for small one-off projects,”

    The problem is that Murph is never knowingly consistent, not from day to day, not from hour to hour, and sometimes not even in the same blog post.

    Here he is today “growth is what happens when you build homes people need, the IT infrastructure that is essential, the flood defences that will keep some key parts of the UK populated, and more. – See more at:

    Building houses gives you growth in Murph’s world. Setting the interest rate on government bonds and, presumably PQE bonds as well, to zero as he says here:

    “It technically adds to debt

    But interest need not be paid on it
    – See more at:

    And yet the returns on those PQE bonds will fund pensions. The guy is totally deranged.

    Add to this his concern that the Governor of the Bank is not achieving his inflation target when the evidence of the past 4 years shows that the Bank has been very successful. You get banned for pointing out facts on his blog.

  7. Diogenes,

    Re your point that “you get banned for pointing out facts on his blog”, I agree. I’ve been banned, plus I’ve noticed someone else who’s been banned – not you.

    I.e. the comments section on the Murphy blog is essentially the Murphy adulation society. Those not prepared to adulate are banned.

  8. @Ralph Musgrave

    I’ve been banned loads of times.

    Pointing out he’s factually wrong is being ‘pedantic’ pointing it out twice is ‘wasting his time’.

    Three strikes and you are usually ‘out’.

  9. Andrew C,

    “I’ve been banned loads of times.”

    You make it sound like it’s some sort of game.

    I only say it like that because I now remember Ironman doing the same thing over there once (repeating the truth) and to which Richard almost playfully then scolded Ironman with a “You know what happens next”, and to which Ironman somehow managed to get his “Bye bye Richard” reply past the filter!

  10. Who buys these zero-interest bonds, exactly, and why? I mean, if you lend a mate a fiver, you’re probably not going to charge him for it, but if you lend Richard Murphy five billion quid I would have thought that would not be the case. Or am I being childishly simplistic and there’s some reason why one would want to do something so apparently daft?

  11. BiCR,
    Do you not pay attention at all?

    1) Government debt increases private wealth, so lending the government 5 billion quid increases private wealth by that amount.

    2) Paying interest on the loan would increase private wealth by a little more, but not by much and one shouldn’t be greedy.

    3) What the government does need to do is look again at capital allowances. The smart move currently, as explained by Farnsworth, is to spend the entire 5 billion on plant or similar. At present, the government reimburses the 5 billion, plus a 10% bonus. This is bound to attract excessive investment.

    4) However, quite a lot of the 5.5 billion will come back to the treasury in income tax, corp tax, VAT, etc, thus reducing the amount the government has to borrow to cover it, thus reducing the increase in private wealth.

    5) This is why businesses don’t just spend their entire time buying stuff whether they want it or not in order to get the 10% bonus. They’re better off lending interest free to the government, as I’ve explained earlier.

  12. Diogenes,
    ‘Tis the way, the truth and the light.

    I’m looking forward to my “He Gets It!” badge from the great man.

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