Friday, April 5, 2013

When is printing money not printing money? Never, actually, but there’s bugger all you and I can do about it except choose to believe the bullshit

It’s always good to begin obliquely, so I shall begin this entry with a medical story. One night several years ago, about five years ago, I got up to have a pee. The next thing I remember is coming to leaning against the bath with my wife leaning over me. I had passed out. What made it all just a little more alarming was that two years earlier while using the rowing machine in the gym at work I had a heart attack.
My wife called an ambulance and I was taken to Derriford Hospital in Plymoth 40 miles away. The doctor who examined me had blood tests done, monitored my blood pressure and did various other tests, but could find nothing wrong with me. And my heart was in good condition. What had occurred had nothing to do with my heart. But she was loth to let me go. At about 8am the following morning a colleague turned up and she asked him for his opinion. She explained what had happened - that I had got up during the night to have a pee and had passed out - but that all the tests she had had done revealed that nothing was amiss. He told her what had happened, she told me, and within 30 minutes I was up and dressed and allowed to make my way home.
What had happened? Well, it was something which, the colleague told her, happens quite regularly, but almost always only to men. I had suffered ‘micturition syncope’. Sounds bad, doesn’t it, but actually it is not that bad at all. Translated into the kind of language you and I use and understand, it means ‘fainting while having a pee’.

This is rather a good example of medical men and women using ten words where two would do and possibly only trying to disguise the fact that they don’t really have a clue as to what is going on. Another example is NSU, and infection with which those of you who have ever had to visit ‘Ward 45’ or whatever they call it in your neck of the woods will be familiar. NSU means nothing more than ‘non-specific urethritis’, and that means an a general infection which inflames the urethra and isn’t gonorrhoea (and I don’t mean on of Lear’s daughters).

I’m not suggesting our doctors are rogues, but like most profession they are apt to resort to jargon not just for convenience but partly because it shuts the rest of us out. There are however, rather more dubious reasons to resort to jargon. For example, it was quite some time before I realised that when a company is ‘highly leveraged’ it means it has borrowed a lot of money. But saying Global Undertakings Inc/plc/Ltd is ‘highly leveraged doesn’t sound half as bad as ‘deep in debt’. And, finally to get to the point ‘pursuing a policy of quantitative easing in order to stimulate the economy’ sounds reasonably respectable, admirable even. But were we to be told that our Treasury, the U.S. Fed and, most recently, Japan’s Central


©Paul Zanetti

Bank is ‘printing money’, I don’t think any of us would be half as sanguine. But that is exactly what they are doing.

Mind, it’s all in a good cause - isn’t it? The idea is to ‘stimulate spending’. Again, who would argue with that. Well, savers for one thing, because the rates they are offered when they want to put a bit of money by for their old age are more or less non-existent. As usual, when you ask an ‘expert’ - I do so love ‘experts’, wish I were an ‘expert’ - whether the ‘policy of quantitative easing’ is worth a row of beans the answer you will get will depend solely on which expert you ask. Broadly, the are split down the middle: supporters say, yes, it has helped and the economy is now in better shape than had we not ‘pursued a policy of quantitative easing’.

The others, those who think it is totally daft totally daft to print money, for whatever reason, will tell you the opposite: that it is sheer madness to print money, whatever the reason. So asking for an ‘expert opinion’ gets you absolutely nowhere. I mean you have to know something about the subject in order to choose the right expert, one who might actually know what he or she is talking about, and if you knew something about the subject, you wouldn’t be seeking an ‘expert opinion’ in the first place. Q.E.D.

I must admit that I am aware of taking too simplistic view on this matter, and have been knocking around to find some explanation for quantitative easing which doesn’t involve printing money. To be fair, the various central banks are not actually printing money at all, but they might as well be: they are simply crediting themselves with money out of thin air and using that money to buy up government bonds. But it would be difficult to fool a five-year-old as to what is going on: it is exactly as though they were printing money.

Does it matter? Supporters insist that the economies of developed nations would be even more in the shit had quantitative easing not been adopted, but in truth there is no way we can test that claim. I simply take the view that I am in no position to make a blind bit of difference and never will be, so I might as well take it on the chin. But I do get just a little peeved that at the end of the day it will be the usual people who will carry the can - those at the bottom of the pile. At my age I might not see too much misery, but I do increasingly wonder what the future will hold for my daughter, 17 in August, and my son, 14 in May.

When I was in my 20s, the big problem the country faced was ‘beating inflation’. You went to the shops, bought a pint of milk, went home and by the time you opened carton, it had already gone up in price. Mrs Thatcher - the Saviour of the

Hans Jederman gets ready to go out for a pint of milk

Western World/A She-Devil Incarnate depending upon which prejudiced bastard you are talking to - dealt with inflation, but did it the Hayek way: she let firms fail and a great many people lost their jobs. For that, at the end of the day, is the only real solution.

Trouble is, of course, that if you are one of those paying the price, it’s not a solution you’re going to vote for. Hayek’s old sparring partner Keynes was all for spending our way out of trouble. Yet that means simply more borrowing, which again doesn’t these days seem to be the wisest thing to do. But never mind, the best brains in the land are on the case and have come up with a solution: print more money! But doesn’t that mean stoking inflations? Well, yes sir, it does, and it will be the salvation of the western world. At this point I think it is time to go an lie down. Sometimes there’s a lot to be said for being a simple fellow with a simplistic view of the world and her acorns.

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