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A Dickensian Christmas Gift: Mister Micawber's Economic Wisdom

“Annual income twenty pounds, annual expenditure nineteen pounds ninety
five, result happiness. Annual income twenty pounds, annual expenditure Twenty
pounds and five pennies, result Misery.” (Wilkins Micawer!s advice to "avid in
#harles "ickens! "avid #opperfield. 19
th
Century engraving$

Charles Dickens invented Christmas as any fule kno and therefore is is sensible
to look to Dickens for advice on how to get out of the economic mess that has put a
damper on the festive spirit. But why do we need a Christmas economics lesson from
a fictional character created 150 years ago to why the economy is in a mess and why
we can't seem to get out
!overnment ministers" central bankers and academic economists everywhere in
the developed world are intent on telling us that the way out of the present crisis is to
raise ta#es so government can spend more. $eynesianism they call it though %ohn
&aynard $eynes would be spinning in his grave if he knew how his economic
thinking was being wilfully misinterpreted by &ar#ists and collectivists.
'nd yet politicians of the left and centre" the unelected bureaucrats of the united
nations" imf and european union and those left wing media commentators who
delusionally regard themselves as part of the (intelligentsia( mindlessly chant the
(more government spending( mantra which goes )higher ta#es" higher ta#es" ta#es
ta#es" higher higher"* +appy polly loggies to !eorge ,arrison and the ,are $rishna
-emple.
-he more independent minded and therefore less indoctrinated among you might
think that e#cessive government spending was what got us into this mess but" as
plenty of half/educated shit/for/brains academics will happily tell you in televised
discussions" lectures" articles and internet comment threads you're simply revealing
your ignorance of economics.
0ot everyone agrees.
'1ractical men who believe themselves to be 2uite e#empt from any intellectual
influences" are usually the slaves of some defunct economist"' is a 2uotation that
describes the $eynesians perfectly. 3ho said it %ohn &aynard $eynes actually.
-hese 'practical men' or practical people as we should say in this era of political
correctness are now pursuing a doctrine so at odds with what $eynes actually
advised" so counter/intuitive" lacking in common sense" at odds with the evidence of
the past five years and of economic history generally" that it's only their office" and
the theatrical gravitas they have perfected" that sets them apart from the grotes2ue"
baggy trousered clowns who are scaring children witless in Circus shows at this time
of year. -o anyone approaching our present discontents without preconceptions" it is
the '$eynesians' who are the doctrinaire e#tremists" clinging to their creed that holds
printing money and profligate government spending will lead us to collectivist utopia
long after the 4005 crash blasted away whatever shreds of credibility such
looonytoons thinking might one have had.
3hat $eynes actually said was that governments should spend their way out of
recession and fund that spending from a cash reserve built up in times of prosperity.
!overnment spending and the spending of businesses should never e2ual income but
should always be comfortably within income" and in the case of governments that
income should always be the lightest burden upon the 0ation that it is possible to
achieve.
't the moment businesses aren't hoarding cash" they are closing.
3hen you have accelerating margin compression +an economic term" input prices
are rising" overheads are rising" but retail prices are higher than the customer is
prepared to pay or able to pay." increasing overheads and reduced sales which can
only be made at discounted prices" these consume profit margins until the point is
reached where businesses logically have to close the doors to prevent further losses"
or things go too far and they are forced into bankruptcy.
'ccelerating margin compression is the stage 6ust prior to a deflationary collapse
+refusing to allow the &arket to function with its normal trending towards mild
deflation" stores it up so it arrives all at once" with a considerable additional penalty
for being so insane as to engineer conditions so that it must happen that way..
3e are over forty years past the stage where a deflationary ad6ustment could have
worked. 1revention isn't necessarily better than cure" because in this case" prevention
of healthy cycles working as they should" can guarantee death.
-he left traditionally call for regulation and blame 'markets' for the economic
woes that inevitably result from their policies. But markets do not cause inflation"
printing money or 2uantitative easing to give it the obfuscatory name academics and
politicians prefer" is the cause of rising prices.
7 know 7'm wasting my time because the left are economically illiterate and
everyone else is capable of thinking it through for themselves" but here" in very
simple terms" is why 2uantitative easing will destroy your savings" erode the buying
power of what you earn and eventually bleed you dry.
7magine there are 5"000 units of production" and 5"000 units of currency" then the
ma#imum price per unit of production is one unit of currency.
7ntroduce another 5"000 units of currency" or 5"000 units of unsecured credit" for
the same 5"000 units of production" and the available ma#imum price per unit of
production" becomes two units of currency.
7nflation +by 2uantitative easing. is deliberate debasement of the currency" and is
very much a stealth ta#" counterfeiting money by oversupply due to printing
banknotes or making available credit +while credit is not 'currency' it is 'fungible' with
real money i.e. it can be used as a soft substitute for hard currency..
7nflation is also a punitive ta# that seriously affects all" and hits the very weakest
hardest +so much for all those political promises to 'protect the poor'." as well as
penalising the most responsible members of 8ociety. 7nflation loots" pillages" and
asset strips" the entire 0ation.
7t is worth mentioning here" that the &arket always tends to mild deflation +sic.
due to competition" improved efficiencies" etc. -hat markets are not trending to mild
deflation and haven't for several decades illustrates the degree of &arket
manipulation and currency counterfeiting that has been going on" and which
continues to go on.
3hen demand falls off a cliff" commodity and retail prices don't tend to go up"
which is what they have been doing very rapidly since 4001.
9conomic socialists +a.k.a. Communists" collectivists or kleptocrats. argue that
socialist measures have failed wherever they have been tried only because those
governments were not socialist enough. &ore confiscatory ta#ation" more
suppression of individual freedom and more centralised control by a totalitarian
government would have paved the way to a successful socialist society. $arl &ar#
wrote that in the perfect socialist state private property would be abolished and the
individual would seek to e#ist and all humans would become components of the state.
7f the received wisdom in the economic community and the political left is
looked at in the conte#t of the approach to 3orld 3ar 4 it would look as if the British
government had responded to ,itler's invasion of 1oland by arguing that
'ppeasement hadn't been tried properly" and that we needed more of it.
&ister &icawber's advice states the case for 'ustrian economics in simple terms.
1erhaps you have to be an economist or a politician not to see the logic in it but
clearly common sense is something those clever minds simply cannot understand.
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