Their whole identity is wrapped up in the falsehood they have spent their lives promoting. They are totally invested in the household analogy, the belief that money is an exogenous variable within the economy, and not an endogenous one that governments can control, and if they accepted the truth, the whole of their reality – as they perceive it – would collapse.
Monetarism was the idea that money could be controlled by government. But monetarism is wrong according to Spud.
Money is a variety of things, one of which is a means to access resources. Murphy wants us to believe that it is a magic wand that can, when waved, increase the quantity and/or quality of the resources within the country.
The German and Austrian hyperinflations if the 1920s were caused by the state printing money, because they had no recourse to loans or inward investment.
We have now governments who can borrow and thus do not resort to creating money out of thin air. So we do not have inflation but we do have the serious possibility of defaulting.
I guess what Spud wants is that the government prints money, but by price controls and government owning the means of production and an autarchic policy the spectres of inflation or default never appear. It certainly worked for the USSR.
It wasn’t that loans or foreign investment were strictly impossible; rather, the geopolitical situation, structural deficits, and intentional policy choices rendered them insufficient, delayed, or unacceptable at the time.
No really. No one would lend to Germany and the French imposed reparations drained it of cash.
Stresemann went to the USA and brokered a number of loans and refloated the economy. GB and USA also rescinded their reparations demands.
In Austria Ignaz Seipel went to the League of Nations and arranged a network of loans that refloated the economy there, to the extent that Austrian banks could start lending abroad again.
No one would lend to the Soviets either and it prompted a brief loosening of the War Communism policy of Lenin to allow some form of private enterprise until Stalin called a halt.
Added to that the German government couldn’t pay back war bonds to its citizens so they had no money either and the government couldn’t use them as a source of borrowing.
The household analogy is close enough for government work. But what is recommended here is the household getting a whole lot of credit cards and running them up to their limit and using one to pay another. Apparently you can do that forever in spudworld.
Well, you actually can, you see! In Spudworld, you simply grow your way out by planting more crops and issuing more Chits. This devalues the existing debt while paying off the remainder with newly created currency. And because you’re merely settling debt you created with brand-new debt, the original obligation practically vanishes… erm, right up until the system collapses under its own weight.
I wonder how his entire model railway world would be possible in a state-controlled economy. What bureaucrat would allocate time, resources and labour to producing the unnecessary fripperies he plays with?
Remember it’s Spudworld, so he’ll be in charge.
A small model railway in an annexe of Potato castle will be justified as allowing the controller of the world to relax from his labours.
With a state-supplied Top Hat.
You’ve just described the DPRK.
Which is basically the country closest to Murphy’s vision.
Democratic People’s Republic of Kartoffel.
You’d think somebody who predicts an economic crisis ten times a day wouldn’t also keep asserting that we can’t run out of money.
The idea of everything he says is “Put me in charge”.
Here’s a Laffer tale for Tim.
https://archive.is/v6ZTU