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[00:00:42] Well we met a group of moms who were enjoying quality child care for their kids and get this. It's not just cheap, they don't pay a dime.
[00:00:50] This is the Debunking Economics Podcast with Steve Keen amp Phil Dobbie.
[00:00:57] She's talking about a child care cooperative where parents share the babysitting responsibility with others in the circle. You take it in turns basically to babysit without paying anyone, it's barter basically easy with two couples because you just take it in turns.
[00:01:11] But throw many more people into the equation and then you need a system like the one in Washington DC back in the 1970s a babysitting cooperative that has attracted a lot of interest from economists mainly because many of them were part of the cooperative.
[00:01:24] So did it help them to understand how the monetary system works? Well look at that today on the Debunking Economics Podcast.
[00:01:39] So what can we learn from a babysitting group in Washington DC in the 1970s? It has been one of the most talked about economic parables mainly because Paul Krueman has talked about it in his New York Times column and a couple of books I know how much Steve loves Paul Krueman.
[00:01:54] So let's see what we can learn from the Capitol Hill babysitting cooperative. It gave compromise to members mainly congressional staffers who thought the easiest way of sharing babysitting responsibilities was to issue vouchers or scripts and each script equated with half an hour's babysitting.
[00:02:11] So when you join the cooperative, you were given several, you used them up and then you wanted to go out. You'd have to then they were gone. So obviously you'd have to go and babysit someone before you could go out again to earn some new vouchers.
[00:02:23] So Steve I mean in a way was its own closed currency wasn't it? So what could possibly go wrong?
[00:02:30] Oh that's the that's the theme of some of the articles. I mean the thing going wrong is that the point in my opinion is that all these mainstream economists spend their time talking about parables and never applied the same analysis to their own parables about about the money creation system.
[00:02:47] I've been doing that just recently for the conference coming up in Scotland where I was going to be presenting a paper with Stephanie Kelton on using Minski to prove the principles of MMT and you apply Minski's double entry bookkeeping to the conventional parables of money creation and economic textbooks and they fail.
[00:03:08] They simply can't work the way they think they do but let's let's talk about this. I wanted to talk about this because I think if you apply some of the logic to this and then then there would be questioning some of their approaches but they don't they seem to blindly follow this through.
[00:03:22] I mean one of the issues was wasn't it that people started hoarding you know if I hang onto my vouchers and others do the same then that you get this imbalance.
[00:03:33] There's some people who've got loads, there's some people who want to go out who can't because I've already used their up, used theirs up and that was part of the problem.
[00:03:41] So the answer obviously is to print more money isn't it?
[00:03:46] Would you say there's a liquidity issue? It's certainly a shortage isn't it of cash that's stopping the economy going out?
[00:03:53] Well you've got hoarding and that's the important point. The people want to hang onto the script because they think they'll have babysitting scripts then when I get an invitation,
[00:04:01] I can just use that to get somebody else to babysit for me and I can go to the party.
[00:04:06] And then if you're in the stage you've got zero then you can't get somebody from the baby sitting cover you've got to pay for somebody else I would do real money obviously.
[00:04:16] But yeah if you're trying to make sure that you've got someone hand and everybody's trying to hoard the ones that exist and if you have excessive hoarding then nobody is...
[00:04:28] You've all got capacity to buy but you want to buy people's time and nobody's providing the time to do the babysitting because they've already got enough of them.
[00:04:38] Right, so yeah.
[00:04:39] But actually just issuing more scripts which is what they did you would have thought would be part of the answer wasn't it the case that they had just restricted it by too much?
[00:04:46] Because there's only so many nights that you'd want to go out.
[00:04:49] And so yeah I mean you get over that problem in the short time you go well okay let's just issue...
[00:04:55] We seem to have grown to halt.
[00:04:57] Let's just issue more money.
[00:04:59] What does that do to the value of the money? Well it's still only worth the same isn't it still only half an hour's babysitting?
[00:05:05] Actually doesn't change the value of each voucher in any way all it's doing is sort of fixing a bit of a liquidity problem there's just not enough money going around.
[00:05:13] If you had twice as much for example there may be things would start moving again because you're only going to hoard so many hours worth because you're going to use it for babysitting.
[00:05:22] Yeah, I mean this is... I've actually started putting together a minskie model to take a look at this and see how it might work out.
[00:05:28] And it's a bit weird because it's much easier to use minskie model of the real monetary system than just to walk off all the fictional one like this because you've got to work on what the hell is the demand and so on.
[00:05:39] But the basic idea this is effectively another issue and double entry bookkeeping and what is required to keep it going.
[00:05:47] And if you look at the idea of scripts themselves, you know the script that the little thing this is half an hour's of babysitting credit.
[00:05:54] And if you've got to have those to be able to get somebody to babysit for you and then they might use that that themselves later.
[00:06:01] What I did was I divided the members into two groups, the homies.
[00:06:06] And you've had... you know if you know that expression in the homies?
[00:06:09] Well people just hang around at home a lot.
[00:06:11] Yeah, yeah. My American ex-wife used to use the expression quite regularly and was a hauling the piece of foot down in a New York culture as it turns out.
[00:06:22] But homies and party animals, you get two groups and then the party animals.
[00:06:26] Yeah, yeah. And the party animals try to accept every invitation so they've got a very high demand for scripts.
[00:06:31] And the homies regard using the script as wasting what they've got so they use a waste script.
[00:06:36] And then I haven't actually finished putting the model together but of course what can happen at the party time people except every invite and bang they're going to run out.
[00:06:44] At that point they can't accept any more invites so you have a break in the system.
[00:06:48] And that's what they... you know the near classicals would call liquidity trap which they think explains the great depression of course is usually totally wrong.
[00:06:56] But the point which I've just got to in putting this together was that if you're going to have the script,
[00:07:07] you have to think about money and double entry bookkeeping terms.
[00:07:10] So if you have scripts and people's hands and the scripts are an asset of the people who've got them but there are liability of the organization that issues the script.
[00:07:19] And then when you take a look at this and I've only just about mucking around identical action necessarily finished this and there's somebody pays me large amounts of money to a no for Krugman.
[00:07:28] But what I had was that they say 100 scripts in existence and 80 of the scripts with the homies and 20 with the party animals when you start the whole thing.
[00:07:37] Maybe I start 50, 50. But you know 80, 80 homies, 20 party animals.
[00:07:42] That means that the scripts have a negative equity of a... because the managers created the scripts and they're circulating amongst the members,
[00:07:50] the managers of the baby co-op have a net equity of minus 100.
[00:07:55] And that balances the positive equity of plus 100 of the members.
[00:08:00] And that is the first insight with these pardon the French, but you describe now classical economist morons already.
[00:08:06] It's the first where they come to mind. I'll go with morons for this discussion.
[00:08:11] The morons don't look at and say, oh it's interesting. So for this system to work,
[00:08:15] the issue of script must be a negative equity to enable the user of the script to be in positive equity.
[00:08:22] I wonder if that has any application to the monetary system. Yes, you morons it does because for the government to be...
[00:08:29] For people to be able to use the script created by the government which we call money.
[00:08:34] Then for that script to exist in that that's the private sector be in positive equity with the money they own.
[00:08:42] The government has to be in identical negative equity. And that's an as necessary element of being in a monetary system.
[00:08:48] So the first thing I take out of this is hey guys, get a hold of mincing in model the bloody system,
[00:08:53] the way it actually works and see how your own models are myths.
[00:08:56] Well he just described it really. I mean so they could go into deeper negative equity just by issuing more.
[00:09:02] That's what I've added.
[00:09:05] Yeah. So would you call it liquidity trap?
[00:09:09] The fact that it's moved to net imbalance and therefore there's...
[00:09:15] You know it's just the movement is stopped.
[00:09:18] Well the liquidity trap side of it comes if you look at it, you take my group of home users party animals.
[00:09:23] The party animals except all the invites they've got.
[00:09:26] Then in some part they run out of script and they can no longer get home used to go babysit for them because they can't actually pay the home is with the script the home is trying to accumulate.
[00:09:35] So at that point the liquidity trap is with the party animals who suddenly find they can no longer go out and party.
[00:09:42] That's the idea of a liquidity trap.
[00:09:45] But the point and this comes back to the whole issue of how do you explain the great depression?
[00:09:51] That was a way that effectively hits reinterpreted Cains to say that what actually caused the crisis was a liquidity trap where you couldn't drive by driving the price down you couldn't drive demand up.
[00:10:05] You reach a point where you know people didn't have the capacity to execute their trades and that was what caused the great depression.
[00:10:14] Now in all of this in their analysis they completely ignored the level of private debt.
[00:10:20] And that sort of turns up to some extent in a bit further elaboration of that babysitting thing as far as I've seen because they started they know people to borrow from the
[00:10:33] the managers to borrow script and then use that have to pay them back.
[00:10:38] And that in a sense is a form of private debt turning up as well because of course in the case of if you are going to if you were a party animal and you want to be able to go out and you haven't got any scripts and therefore you've got to borrow them from the managers when you borrow them from the managers, you've got to repay them in in babies which means you've got to go and babysit.
[00:11:01] Yeah, it's like you borrow you've always got to pay back but that process of borrowing the administrators presumably would have to issue more script borrow as well.
[00:11:09] Yeah, yeah so I've got that going on as well so I've got like if you this is trying to book and double entry bookkeeping terms you have the asset of the members of the sorry when you look at the members themselves the asset the members in total however the script they currently possess.
[00:11:24] So I've got like a hundred script in existence and I think he's a very the party animals have 20 and that's the overall last hour caution and then when you start when you get the hoarding getting to the point where the party animals ran out the only way that can be fixed is by the managers is sharing new script so they by adding the the new script is effectively a liability at the managers.
[00:11:47] So to issue it they've got to go into a negative equity so they start up with a negative equity of a hundred scripts have issued and if they want to double the scripts in existence they've got to go to minus 200.
[00:11:57] So in this sense this is like a figure currency the way that this is something which I only realized by using minskie to work out the logic in the monetary system the only way you can create see it money is for the government to go into negative equity.
[00:12:12] And in this sense actually quite like the baby sitting. Yeah, it's got a good analogy in lots of ways isn't it I mean it's yeah only simplifies but raises raises a lot of questions so on that on that on that you know that the 80 20 where they eventually it becomes 100 zero and does size if it was a massive baby sitting club with that still happened is the size element to all of this was it just too small to work so is it you know the way that you can do it.
[00:12:42] You sort of like you know US economy versus a small third world economy type situation going on here.
[00:12:47] I was also a potential to distort the conversation there but I'll restrain myself.
[00:12:52] Yeah, it is partly scale but I think with the other point they made and this is something I was trying to put into the model as well was a seasonality of invite so you're going to have lots of invites during summer and very few during winter.
[00:13:05] And so what I've added to that is another governor thought I just reckon like what that would mean is I need to have a cyclical economy in that sense generating the demand for parties versus less parties.
[00:13:15] I could actually make this part of a good one model in fact I could include the number of parties taking place being a function of the level of boom in profits so if this could just get nice and twisted which should be good fun.
[00:13:28] But the seasonality alone is an issue so you have lots of demand during summer very little mandering winter and then that will affect the distribution but the large yes the larger you make the system more likely to see going to have people who are going to have.
[00:13:43] You know we need the baby sitting therefore they're willing to do what for you in the future etc etc.
[00:13:50] And particularly the more script you have as well because you could get over that issue about the fact that no one is is baby sitting over winter but some will be but not many so there'll be a bit of a bit of an imbalance but most of the demand is in summer.
[00:14:01] That would be a reason to say well okay we need we need more script to try and solve that liquidity issue but it only works surely if there's a reasonable element of short supply.
[00:14:13] If you want to you know it there's going to be a lot of demand and people have to have the incentive to go out and do some baby sitting as well as being baby sad or having a baby sitar in.
[00:14:29] So there needs to be that element of demand there needs to be an element of a 80s this word because I know economists used not 90s but there's got to be an element of scarcity in those tokens.
[00:14:38] You want to have enough you want to have enough liquidity but you don't want to have too much to you.
[00:14:43] Yeah and this is the issue that found itself trying to balance all the time because sometimes there be too much scripting sometimes to little.
[00:14:49] But yeah I mean the essential point then this is what I wish they'd sit down and try to model this idea in something which can handle which is my minskie software double entry bookkeeping and the only way to increase the number of scripting existence is for the managers to go into negative equity.
[00:15:04] And that negative equity of scripts for the managers creates positive equity of script for the members and that enables trade to take place.
[00:15:11] So in that case with a with a fiat currency which is what this amounts to you need the issue or the fiat currency to go into negative equity.
[00:15:19] Hey presto you need what are called budget deficits.
[00:15:22] How far do you go with that? That is the eternal question isn't it for governments and for babysitter cooperatives.
[00:15:29] So look at that when we come back on the debunking economics podcast me and Steve Keane back in a second.
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[00:16:24] This is the debunking economics podcast with Steve Keane and Phil Dobby.
[00:16:31] So this week we are looking at the Washington Child Care Cooperative as it was in the 1970s and how this is being used in analogy for how the monetary system how an economy works.
[00:16:49] So pretty close to economy it's fair to say with only one product which is babysitting and Steve made the point just before the break that really it shows that there's a need to create extra script which means that needs to be created by the administers of the scheme which means that you basically have a government that's going into deficit.
[00:17:05] But how much script do you create because if you create too much and everyone's got loads of it then there is absolutely no reason for anybody to babysit for somebody else because they've got more than enough for them to use.
[00:17:18] So it inhibits that incentive to work doesn't it which is a problem with this too much cash is not what happens.
[00:17:26] Yeah well that part of still got to go through the logic what actually happened when you have two minutes scripts to stop because thing is this is not in this sense is not a legal tender because I if I give you a script saying half hour babysitting that doesn't force you to accept that script you couldn't even turn it down.
[00:17:45] Whereas we look at when we look at figure currency money money in general if you go into a shop and the shopkeeper has items on the shelves which is the same as a baby a person could babysit having free hours when I tender my 150 bucks for a new microphone then if that's the price advertised then the retailer is obliged to give all they are breaking the whole definition of legal tender.
[00:18:13] So you don't have that legal tender doesn't exist in this idea of the baby sitting car.
[00:18:18] But I mean it's an agreement it's an agreement that's an understanding isn't it so presumably everyone's playing ball on it but the idea that it fluctuates means that you have to fluctuate the amount of script in circulation doesn't it's almost like the administrators are almost like performing a role of a central bank or a treasury how do we make sure there's the right number of scripts in security.
[00:18:42] In circulation and how do we change that now they do change it because when they get new members I think when when everyone joins to get 30 hours or 30 scripts when they leave they have to hand back 20 so you know if they might have credit left which they're just going to hand in anyway but it means that the sort of like a it helps the turnover new people coming in they create new script for them so the incremental supposedly incremental 10 hours every time you get a new member.
[00:19:11] So that helps so it's related to the population so it's it's actually like saying well okay this is money creation related to growth in the population which is something that governments have great difficulty trying to get there around as well.
[00:19:24] But yeah important should you is that an important factor if you're trying to control and you know the amount of money in the circulation do you have to look at the population so we'll actually if the population grows the money in circulation should increase as well.
[00:19:35] And then this comes out of the issues about to have as a monetary economy function and like the fact that neoclassical try to pretend we live in the barter system and ignore the monetary system and that's what they do with their model they're not they're not trying to seriously model money they're trying to find excuses not to model money so they come with the money multiply model which doesn't work unless crazy conditions apply and happy to chat about that in the second half or they you know they just they use the loanable funds which doesn't have any money creation to it so they leave that.
[00:20:04] The essential elements of the real work they don't want to talk about them but when you do start talking about the real world and yes you have to look at things like seasonality you have to look at the question of if you have excessive accumulation of money what does that do to the system.
[00:20:18] And like the thing with the thing which I can see about this little system have got is that they have a way of adding new money which they can create new scripts and they they link the number of new scripts of people becoming new members as well.
[00:20:32] But they don't have any way for them to decay and this is one of the points of the gazillion currency that you would actually help to have a currency which depreciated over time so if you had if you didn't you didn't actually use your.
[00:20:49] Your yeah then they were worthless or the all those value yeah yeah well that would be easy way when people are joining at different times so it's not everyone runs out at the same time it's not like the two o'clock taxi handover that we're having Sydney where you couldn't get cab at all.
[00:21:09] I remember that because you'd have that but me with everyone was issued to take it at the same time everyone would be trying to wind them down at the same time wouldn't they before the end of the year so it would be impossible.
[00:21:19] They had one year validity from the date of issue yeah but I mean if people join at different times then they then that would get over that issue wouldn't it because then there's an immediate need to need to use them seems like a very simple solution but I mean it's a long way for us to go from that to applying that to the real world economy but maybe that's what we need to create this.
[00:21:36] I think I'd like them to learn out of this that when you start looking at you've got to think in double entry bookkeeping terms.
[00:21:41] Duh maybe it might be a good idea to apply double entry thinking to the actual monetary system which you live and why don't we check out your models and see whether they actually fit and make sense in double entry bookkeeping terms and so that's that's the inside I'd like you know Krugman in a particular to get out of this so you try modeling.
[00:22:00] Actually seriously modeling the money multiplier using double entry bookkeeping and then tell me whether you should have it in your textbook or not well there's no I mean they can look at this and say well there's I mean even without you know thinking that far.
[00:22:13] There's no money multiplier is that I mean it's I guess it's been I mean they would argue.
[00:22:18] They don't know that they can't be if you've got to the got a fixed stock that's true they have done is the only but the thing of the way they create and this is the again a point where she can tell that there's an applied a the insights of modern monetary theory which of course contradict the people who are talking about this babysitting model.
[00:22:33] They don't have any explanation of how money is created that makes sense but when you look at this and say if you're going to create this new script and look at a double entry bookkeeping terms then the only way for this new money to be created is for the managers to go deliberately go to negative equity to create positive equity for the members of the baby babysitting co up and that is fundamentally what modern monetary theory is saying about about the money supply for growing a coin.
[00:23:03] If you're going to grow the money is if you're going to increase the money supply and that has been in there's no economy on the planet which is grown with a shrinking money supply in terms of real output growing and money supply shrinking just doesn't happen.
[00:23:16] It might happen we are we make a one or two quarters were it applies but you know forget it for a general trend that means you've had a growing economy needed growing money supply how do you grow the money supply the answer ends up being when you put the double entry bookkeeping terms into it the treasury spends more than it gets back in tax ocean.
[00:23:33] I wonder how many of the people involved in this babysitting scheme were working for the treasury given you know it's all.
[00:23:42] Quite a lot of them and wouldn't they be figuring out themselves hang on a second in the real world economy in the you know we are trying to restrict the supply of money you know we don't like government spending at all we're trying to restrict it what would happen in their babysitting scheme if they said well okay we are going to issue less vouchers less spending by the government
[00:24:02] and see how that works for the scheme well they found you know they restricted too much they get this liquidity trap yeah but they don't do it and this is this to me I think the problem here they have the world's most dangerous meme in their heads
[00:24:18] and that most dangerous meme of the intersecting supply and demand curves and if you try to get the analyze anything that's what they drag out of their toolbox and it's completely inappropriate not just for the monetary system but for capitalism in general.
[00:24:31] So they got a mangle tool they try to use what they should really be doing is saying let's look at this and double entry book keeping term and then bang they suddenly find everything they believe goes out the window which is the point where they don't want to go out the window they want to stay home in that case the near classical economist the ultimate example of homies I mean the Austrians school of thought please well I just have to say good morning I'm sorry but I mean well okay the totally free market thinking here would be the problem they've got.
[00:25:01] Is that one voucher is worth half an hour of babysitting and it shouldn't be that it should be allowed to be determined by the person doing the buying and the selling how many hours would babysitting that voucher is worth and so that might would that solve anything because you get to stage work it's middle of winter
[00:25:20] we do need a babysitter there's people who are you know keen to do it it's not worth as much in summer you know a script might only get you 20 minutes babysitting rather than now for example would that solve the problem potentially I mean this is an isolated market and there's no you know the the issues of marginal revenue or marginal cost all that sort of jazz don't really exist there's a fixed supply of the things
[00:25:45] you want to get the supply roughly equal to the demand at all times so this is a bit like a load sharing issue for electricity generation but you got people hoarding at the same time see want to get them to not hoard and so at various times you'd want them to be taking advantage of a very good offer
[00:26:06] you know do do one hour of babysitting now get two hours for a later usage and so on so it's the sort of thing whether with the basic ideas of exchange in a neo-fascal model would function moderately well mainly because it's isolated it's a single system
[00:26:23] it's when you try to apply this thinking at the aggregate level where it has to be systemic and there are multiple commodities and multiple prices that's when the whole thing just simply kind of it can't scale by a past one one product so if we stuck with babysitting maybe because it's isolated from the rest of the economy you're not using actual dollars to do it then the issue potentially the process system could get you out of trouble
[00:26:45] on load balancing by the way just as an aside and I love the way I've got I'm just about to take delivery my new electric car hopefully over the next day or two but I have the charger installed
[00:26:55] I love the fact that the charger you plug the car into the car charger and that's logged into your electricity account with octopus energy is who I use they charge me I think it's seven and a half and pens per kilowatt hour overnight when I'm charging a car
[00:27:12] as opposed to usual I think it's like 27 or 30 and pens per kilowatt hour so seven and a half so substantial reduction even during the day if my car is plugged in set one o'clock in the afternoon when it's peak time for electricity if they go well do you know what we've actually got a bit of excess supply at the moment
[00:27:28] fills guys car plugged in we'll let him have that seven and a half pence that's that's a good use of load balancing isn't it because it's going into my battery and it's using power that I don't know what happens to excess power when there's not enough demand but this peak production
[00:27:43] but it's soaks up that sex on that spare capacity that's pretty cool isn't it yeah I mean this is the I mean I'm no expert on the only electricity grid but I'm aware that you basically
[00:27:54] the you cannot have a imbalance between the flow and the flow and the demand and supply fundamentally it's got to be absolutely matched or you get break down in the mechanics of the system which makes electricity
[00:28:06] you know very very different so that's why batteries come in as potential storage element but there's the scale of we just don't have the batteries to cope with the scale of fluctuation and demand
[00:28:17] yeah but we were getting with cars and battery packs on the sides of homes and so forth anyway I said that was a that's a much conversation for another day just you talking about load balancing reminded me about it that's all I got there was a just finishing off on this piece Tim Hartford wrote about this baby sitting cooperative in the FT back in 2012
[00:28:36] and he said you know what does this tell us about the global situation if we've got the you know the world's total income equals the world's total expenditure
[00:28:45] what's going to do to spending when consumers try saving up you know in the wealthy parts of the world I mean it's you know it's taking it too far to apply on a global scale but it just gets back to that
[00:28:58] hoarding issue doesn't it's inherent and I think what he's trying to say is well the rich are hoarding and the less wealthy nations yeah I got a struggle from that because we're basically grabbing money
[00:29:09] I see the point the point which is left out of this car which makes it not applicable to looking at the global economy is that you don't have the repayment of debt
[00:29:18] so when you look at the circulation it's just entirely circulating between homeies and party animals as I've done it here
[00:29:25] which is like circulating between savers and spenders and when the spenders repay the savers there's no change in the total stock
[00:29:34] and that's the sort of world that near classical economists think when they think about banking they think that if somebody repays a debt
[00:29:41] then they repay the person they borrowed it from and the person they borrowed it from has got more spending power compensating the fall
[00:29:48] spending power of the borrower therefore overall there's no major effects out of increasing or decreasing level of private debt
[00:29:55] that is bollocks when you apply it to the real world because we don't borrow much from each other unless you make them a stake of lending to a family member
[00:30:03] or something like that but if you normally borrow from a bank then when you borrow from the bank you increase the supply of money
[00:30:09] when you repay the bank you decrease the supply of money and that's the essential thing that this baby cop leaves out
[00:30:15] and that's one reason why it's misleading. There is a huge relationship between the two members of the property who are exchanging
[00:30:21] and it's a one benefits that you know the other one loses out or evens out they're assuming that exactly that same relationship
[00:30:28] between the person who's been issued the tokens from the bank and the bank of the administrators and the users of the system.
[00:30:35] Yeah, so this explains why an air classical economist like it because it's fundamentally a model of learnable funds
[00:30:41] there's a certain amount of money and existence to circulate between you if you pay somebody back they get more you have less
[00:30:48] it's this question of making sure nobody ends up with zero that's the reason they like this model but in the real world when you borrow
[00:30:56] you borrow from a bank that increases the supply of money and existence and that cause can cause a boom
[00:31:02] and then when you repay the bank you reduce the amount of money and that can cause a slump. So that systemic element of the real world is left out of this model
[00:31:11] which is another reason why an air classical like talking about it.
[00:31:14] Right, but it is in the model in that they recognize that they had this liquidity issue.
[00:31:19] The only way out of it was to issue more and they recognize that there was a need as you got a greater membership
[00:31:27] you needed to issue more as well. So the once an acknowledgement that you needed a bigger money supply
[00:31:32] so it's within the context of the company.
[00:31:35] You wish you soon after it's not as a ledger.
[00:31:37] Yeah, you wish you soon after trying to take all those scripts back as fast as he can because this is the thing which I've just
[00:31:43] been putting through like if you look at what actually happens in when the government runs a diff as a surplus
[00:31:50] it's actually destroying the at money and so all these people think it's great to be important with the government
[00:31:55] run a surplus. I think it's important to destroy the at money.
[00:31:58] So that is the advantage of this particular model because it shows well if you want the assistance of work
[00:32:06] and you've got hoarding going on internally then you need to create new script and the way you do that
[00:32:11] is you go into negative equity. Oh, that's sound like what the government does when it spends more than gets back in taxation
[00:32:17] so they should learn that lesson or they can never learn from this model as the lesson about private money
[00:32:23] if we credit money creation on the fact that when you pay back credit money you actually destroy money
[00:32:28] and therefore that repayment actually reduces the scripts in existence and that's what caused
[00:32:33] that's the real cause of the great depression which they can never get out of this baby sitting car model.
[00:32:38] Right, yeah and yes you know this idea that the answer is more money was hiding for them in plain sight
[00:32:46] but they just chose to ignore it so there we are an interesting analogy
[00:32:49] and it seems like everyone studying in great detail we're missing a few obvious things about it
[00:32:54] that's it for this week though thanks Steve back again next week.
[00:32:57] Bye bye.
[00:32:58] The Deepunking Economics Podcast
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