Wednesday, 18 June 2014
Does it matter what new money is used for?
Positive Money is keen to have new money used “in the public interest”. See the above picture of theirs.
I beg to differ. As Keynes pointed out, the important objective in a recession (i.e. where a larger than normal amount of new money is needed) is to implement stimulus, and if the INITIAL use of the new money is blatantly futile, that doesn’t matter too much.
Keynes cited burying freshly printed £10 notes and “employing” people to dig them up. I seem to remember he also cited “employing” people to dig holes in the ground and fill them up all day long.
And at this point in the argument some cerebrally challenged Austrian normally pipes up with the Earth shatteringly original observation that digging pointless holes is – er – pointless. Yes, thank you Austrians. We all tumbled to that. As did Keynes.