As Mark Twain once quipped: “Lack of money is the root of all evil.”
And so entered the governor of the Reserve Bank of Transformable. “Suffer all those short of cash to come unto me,” quoth he. “For I have the key to the mother of all ATMs.”
Forsooth, he was being a little bit insular. The US Federal Reserve controls the mother of all ATM, not he. But his flock was forgiving because his intentions were pure and his ATM sufficiently cavernous.
Thus the banks and other worthies were pleased to come forward. They exchanged their government bonds for cash at the Bank’s ATM for a tidy profit. By June 2020, the profit was $3.3 billion, according to the nit-picking bean counters at Transformable’s Treasury.
The population’s wellbeing was surely enhanced by the bean counters’ estimate that the same arrangement would mean taxpayers lose a further $6.1b in 2020/21 and $1.7b the next year.
The Government of Transformable was mildly pleased. Redistributing wellbeing is at the centre of everything it does, so a few billion here and there is trivial.
Winners think big. Societal transformation is big. Winners can save the rest of us from ourselves. The Government of Transformable and the Bank governor are as one on transformation. What the bean counters thought, they kept to themselves.
The governor continued to huff and puff beyond June 2020. In a mere eight months he had borrowed enough money to more than double the Bank’s liabilities and assets.
But he was just warming up. Much more is in train. After all, if some credit creation is good, surely more is better. Why not use, the Bank’s ATM to buy Facebook. Facebook needs help to sort out its social responsibility problems and the Bank could help it on climate change?
Along the way, the governor doubled the money base relative to nominal gross domestic product. And he saw that this was good. Money represents command over resources. More money makes you feel richer and more secure.
More cash means the citizens of Transformable can pay more for the same house. Rocketing house prices are redistributing wealth and wellbeing marvellously. They are truly transformational.
Only an ageist, racist and sexist system would keep people’s pockets empty. Those disbelievers who ask: “if money is not scarce, what is it worth?” have obviously not taken Mark Twain’s words to heart.