Handbag economics: The ideology of austerity

from Mary Mellor Handbag economics is the common sense of our age.  Public sectors are like households, they must live within their means, balance their books, cut their coat according to their clo…

GIBS Information Centre / GIBSIC‘s insight:

Economics – “

According to handbag economics there is only one breadwinner in the economy, the private sector. Only the private sector can determine the size of the public household budget. In this gendered analogy, the public-housewife must not ask for more house-keeping, or borrow more, to make ends meet. Most emphatically, the public-housewife must not set up a printing press in the back room to create her own money.

There is a shed, though, at the end of the garden beyond her reach.  This shed has a printing press and every time the private sector-breadwinner runs out of funds he asks the gardener-central banker to crank it up. Despite this, handbag economics denies that the public household should have any access to this money, even though it has a monopoly on producing coin and its garden shed has the monopoly on producing banknotes. Handbag economics, in any case, has its own money supply, debt.

New money as debt is created through the banking system. Anyone with half an idea can ask to have new numbers credited to their bank account on which they can draw. Preferably though, it should be a big idea like betting on the value of sterling, buying a chemist chain, or smaller bets like buying a football club. Mortgages are another great way to increase money supply through debt, particularly if prices are rising and houses are changing hands quickly

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