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Spud and the Magic Money Tree

Spud notes the Telegraph stating that there’s a magic money tree:

The well repeated line that “there is no such thing as a magic money tree” is heard almost everywhere. Even Prime Minister David Cameron has uttered this phrase.

But it’s completely untrue. If the will exists, the central bank can issue unlimited amounts of currency.

And then goes on to note that:

So why the continuing lie about the magic money tree? There is only one possible explanation. That is that its use to fund investment to meet real need, like housing, or to boost productivity by investing in infrastructure and so promote earnings growth, or to boost our green future and so provide hope,

Yes! Spud insists that the magic money tree should have been spent on real assets!

That is, he entirely misses the next couple of lines of the Telegraph piece:

So when people say there’s no such thing as a “magic money tree”, it would be far more accurate to say that there is no such thing as a “magic resources tree” or a “magic value tree”.
There certainly aren’t enough resources in existence to satisfy every demand for them. This is the problem of scarcity, and addressing it is the key thing that economics sets out to answer.

But that’s what Murph is insisting there is, a magic resources tree.

26 thoughts on “Spud and the Magic Money Tree”

  1. @” If the will exists, the central bank can issue unlimited amounts of currency.”
    The Weimar republic tried that, how did it work out for them?

  2. Bloke in Costa Rica

    It universally ends in tears mass death, starvation, exodus of population and Owen Jones explaining why it wasn’t real socialism. FIFY.

  3. Mal Reynolds (Serenity)

    It always astounds me how people like Ritchie still don’t know basic basic things like inflation that we have known about for over a century.

  4. So there is a Magic Inflation Tree. Ritchie has discovered it, climbed it and found it’s routes buried up the darkest corners of his backside.

  5. Face it, one day some idiot like Murphy is going to get his hands on the MMT and we are going to end up like Zimbabwe, with barrows full of notes. They can’t help themselves, because they can’t accept natural laws trump human actions. They see themselves as the masters of the universe and everybody and everything must abase itself at their feet. Reality of course proves otherwise, but the insanity runs deep in many, and despite having their faces rubbed in their own doings for at the very least 30 years (and in reality double that since the death of Stalin, and the reality of his actions being revealed) they keep on repeating the same errors.

    We really need some sort of test applied at a young age that can identify via psychological profiling the sort of people who are likely to end up as Leftist politicians and ensure they are prohibited from public life.

  6. TW returns to the scene of his epic failures This boy can sure take a beating !
    TW on this blog 14 July 2012 “No banks don’t create money” Then 19Mar 2014″The short explanation is that banks do indeed create money out of thin air”.
    * The problem is : there is a money tree but the banks control it.
    You might care to read a proper Economics journalist: Martin Wolf of the FT see FT 24.iv.14 “Strip private banks of their power to create money”
    FT 9.xi.10 “The essence of the contemporary monetary system is creation of money,by private banks’ often foolish lending.”
    You can carry on making idiots of yourselves or you can do some reading. (Not something science graduates of my acquaintance were very keen on.)

  7. “So why the continuing lie about the magic money tree? There is only one possible explanation”

    Of course, there is only one possible explanation, if you are unbelievably ignorant yet convinced you are an expert.

    However, if you have even a single atom of curiosity about the world, or anything other than total self-belief in your own world view, you would probably think there were several, even many explanations, and would be interested in discovering at least a few of them.

    Still, at least we were spared another of his atrocious lists. Gods be praised.

  8. @Diogenes.
    Like a good little Arts graduate I support my argument with four checkable quotations , two of them from the most reputable sources.
    You witlessly say “you’re wrong” but can offer no counter-argument. I am forced to conclude you are not an educated person.
    Does n’t really matter though does it: where money comes from? Not fundamental in any way ?

  9. So, DBC, I think we’ve been here before. Two questions:

    1) What is the process by which banks create money?

    2) Are there any limits to the amount they create?

  10. DBCR where is your citation for me writing “you’re wrong”? Like anyone who is hitting the bottle, you are too befuddled to get anything correct.

  11. Rather than me trying to explain anything,it would be as well if people like Jack C, who has ,indeed, questioned the entire process before, read the BoE’s experts on “Money Creation in the Modern Economy” (on Net) which was published in 2014, shortly before Tim changed his tune over Banks creating money (see above).There is a video attached to this site which I have not viewed for technical, screwed up equipment reasons.
    @Dio Shut up. It is time for you to mount the counter argument : that banks don’t create money.

  12. Yes, I’ve read that.

    I’m well aware of the money creation process.

    However, it’s not unlimited money is it? There are very severe limitations, and the creation process requires more than just banks.

    So, no magic money tree, because the process is limited.

  13. Isn’t the magic that you just leave a fucked up mess for the next lot to fix, which is what is so appealing to politicians

  14. Mal Reynolds

    That meme is great – cheers -was on a high and then I noticed DBC Reed had commented further down. Oh well, I suppose that’s the issue with having no ‘comments policy’ – anyone, however ignorant, can comment freely. I suppose I had better read whatever non sequitur has found its way on to the page.

  15. Mary Mother of Christ – it’s not the LVT it’s that other staple which I haven’t seen (in fairness) for quite a few months. ‘money creation in the modern economy’ – I am not sure how many times you have to be told that this is not ‘the game changer’ you have often thought it to be. Are you saying Murphy is going to nationalise the banks and use them to create the money now? That is not something I have ever heard him say… as far as I am aware he advocates complete nationalisation of all economic activity so that is one aspect but the central bank would create all the money a la Zimbabwe. There is no way he would allow privately owned entities such latitude. Do you think Private banks in North Korea can just act without regards to the needs of the acurajus State?

    Besides which, any of the instruments used for money creation and QE (and FWIW I agree that there is a process by which banks can create money- given Asset price inflation in certain commodities this seems a tough one to argue against) have to be repaid at some point (which Murphy says they will not have to be in the case of People’s QE) ergo the process being talked about by Murphy bears little resemblance to that being talked about in the article, as Tim is saying….

  16. @Jack C
    Martin Wolf of the Financial Times enumerates the practical benefits of intervention in the free play of the banks with the nation’s money on “Strip private banks of their power to create money” FT 24.iv.16. I am afraid if you don’t get the point of this piece, you are beyond reasonable discussion.

    Ditto all the silly disparagers of LVT.If you don’t get what Wolf is saying in “Why we must halt the land cycle” FT 8 July 2010, it is probably because you are thick.

    The argument is not with me: there is an appreciable amount of authoritative background in these matters which is not affected by thoughtless bullshit from amateurs.
    Wolf deserves respect.

  17. @ DBC Reed
    Private banks cannot create money – all they can do is allow existing money to be used twice simultaneously. Martin Wolf should have been taught, when he was at school, the proper use of the English language – unfortunately he wasn’t, or has chosen to ignore it.

  18. So the banks were “creating” limitless money all thro’ your 1950s Golden Age Reedy? How’d that work? Where did all the cash go? On Elvis records and the NHS–or is that Elvis records on the NHS?

    As an example of sheer, name-dropping, solid, unremitting stupidity-in-the-service-of-evil your name is fast becoming a legend Reedy.

    You must hook up with Murphy. There has to be a place for a clown like you in his organisation.

  19. The point which the likes of the mentally challenged on here fail to register is that none of the points I have adduced about the creation of money is original to me. I am nothing if not unoriginal.
    If you think it wise to disagree on the issue with my sources ,such the BoE and Martin Wolf of the FT, armed with nothing but self confidence and nothing to back it up, then you have problems.

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