The Cheque Republic

Via Warwick’s Prof. Michael McMahon, the Bank of England’s Underground blog features a nice comparison of Ireland in the 1970s and Greece in 2015. Check it out here.

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Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

3 thoughts on “The Cheque Republic”

  1. Very interesting piece clear thatwe may well see the rise of the crypto currenicies as the central banks all work in unison to undermine the fiat currecies

    Aseop’s cautionary tale below, we can all see where this is going

    Easter Island consists of two Islands, Easter Island concentrating on the heroic task of statue building with marginal agricultural activity and Resource island which has large reserves of metal, stone, food and basically all that humans need to survive.
    An Easter Island King takes 100 Easters from his account and gives to Aseop in return for his great services for building the largest statue, the king had a large deposit by taking a tithe of 10% on every labourer in the country particularly those involved in food production in order to pay the 100 and all was in order legally. Easter Island has a highly sophisticated financial services industry. Aseop doesn’t really need the cash as his recently floated statue building company has been highly profitable recently and since the Easter island king, a friend of Aesop’s has managed to reduce the wages given to the statue labourers basically to subsistence levels. However the king wisely made the central bank of Easter island “independent” and its sole function was to keep inflation at 2% and ignore everything else. In order to keep to this target it could 1. Change interest rates to any level they thought fit in including negative 2. Print Easters at will 3. Set the reserve requirements of the Easter Island banks. Anyway in their monthly meeting the Easter Island decided to print another 100 Easters and wisely use this money to buy a financial futures instrument the eastern Island statute building fund that basically tracked the performance of the Easter Island Statue building companies including Aseop’s which was just called “The Best”. Why did the Central bank do what it did, because after the kings very wise decision to tackle the labourers wages demand in Eater Island for all things including food and most important statues demand was somewhat slack and the price of everything including food and Easters Island statues was reducing in Easters and that was very important.
    The extra 100 Easters that the Central bank of Easter purchased from the “Completely safe Easter” a completely independent bank operating out of Easter City, this courageous decision widely applauded by Easter City elites. Using a fractional banking system the bank of Easter was able to create 2000 Easters as the reserve ratio had been set to 5% and they had evolved a highly sophisticated financial system involving abacuses. It loaned this cash out to Easter Island Elites to build more statues. It was widely applauded as the valuation of the statue building companies soared making Aesop much richer. Aesop then sold some of the shares in “The Best” that he owned back to his cousin Ashot and he used the cash raised to buy the only the only independent media company in Easter City. Immediately the media company started planting stories about how great the “The Best” was and how great the king was in ensuring the work of all the statue builders. The princess came forward and explained that on current trends they would ensure a job for all statue workers if they wanted one in twenty years. The Central bank in Easter City however was concerned that Inflation remained low and the kings courageous and bold decision to increase the tithe on labourers to 10% from 20% in order to balance the books for “austerity” as well as pressure on their wages by turning them in serfs had the unfortunate consequence of reducing demand and prices apart from the roaring trade in statues.

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