Sunday, 19 October 2008
I was around Downing Street today, where civil servants are creating new spending programmes to keep the economy turning in the aftermath of the banksters.
To paraphrase: "Short of cash? let's borrow more. Money is printable."
And we have John Maynard Keynes being quoted by mediaconomists as the next worthy idea.
Keynes of the General Theory of Employment, Interest and Money, which (if my lessons with Mrs Fairclough serve me well) suggested a number of macroeconomic disconnects. Savings and investments would be independent of one another. Spending would be affected by marginal changes in wages. Nowadays we'd call it a tipping point.
The idea everyone has latched on to is that Keynes talked about counter cyclical spending (governments spending more in a downturn). Er, what if the same government has already been spending heavily in a positive market? And what if big business has been busily moving all its production and services to Chindia?
I suspect the politicos and journos are mainly looking for a simple label (Keynes? Galbraith?) and that finer points (eg of countervailing powers) will be glossed over. At the moment it seems to boil down to using public spending to generate employment, wages and grand investment projects during the upcoming tough times. Hmm - big projects using freshly printed money? ...sounds a bit like devaluation of a currency to me. Perhaps €uro 2012 is "game on" again for Britain after all?
Keynes had another thought in his theories, which related to something Lenin had said. It was about debauching a currency, using inflation to destroy wealth. I'm wondering if the City used a different form of debauchery driven from the bonus culture, with very similar consequences?