Margaret Thatcher and Irish economics.

 

Maggie Thatcher

The people in Britain are fed a lot of bullshit when it comes to economics, which most of them barely understand. How many times have we heard the saying there's no magic money tree or that Britain has run out of money?

Margaret Thatcher used what was called the "Household Myth" to compare the national economy with a domestic household or small business. She used to say that governments were no different than households or small businesses, in that they can't spend more than they can earn, or borrow. It was complete rubbish. The pound is a fiat currency and is not linked to precious metals or a currency regime like the Euro. You can run out of money, but there's a big difference between businesses, households, individuals and the national economy. The British government can print money or to be more precise, it orders the Bank of England to print it. If you tried to do it, you get locked up. Therefore, it can't run out money, or fail to pay its debts. 

If the British government wants to go to war, it will always find the money to do so, and it doesn't need to build up a war chest to pay for it. So why do politicians keep talking about there's no magic money tree or saying the country is running out of money as though there's only so much money in the pot? They do so because they're conning people and telling lies.

To a great extent money is an illusion. In itself it’s really a worthless piece of paper. What gives it value, is that it is endorsed by the head of state, and the government, as coin of the realm. It's merely a unit of account, a store of value and a means of exchange. 

Adam Smith, who wrote the book 'The Nature and Causes of the Wealth of Nations' in 1776, was convinced of the unimportance of money as such for the wealth of nations. He argued that there was no virtue in its accumulation as a commodity, but he believed that the real riches of a country lay in its raw materials, its people and their skills, all of which money merely measures as value. Money was not the wheels of trade but the oil that rendered the wheels smoother and easy. 

Smith points out that the Tartars were generally ignorant about the use of money. When the King of France sent an ambassador called Plano Carpino to meet one of the sons of Genghis Khan, he was asked if the Kingdom of France had plenty of sheep and oxen because that's how they measured wealth and determined whether a country was worth conquering. The Spanish conquistadors when they invaded Peru went there looking for gold and silver which they considered wealth but completely overlooked that the countries real wealth, lay in its natural resources, like fruits and vegetables. The humble potato has managed to feed a multitude since it arrived in Britain and Ireland. Gold and silver fed nobody but it drove up inflation.