When Too Much Monetary Good Cheer Can Become a Curse

Thursday, December 24, 2020

By Anthony Rowley
Special to PanOrient News

TOKYO: It was Christmas Eve and Scrooge sat in his counting house next to the US Federal Reserve building on Washington's Constitution Avenue. His image was different to that of Charles Dickens' character - the miser sitting alone in a dark and cold office with only a single candle for light and warmth.

This Scrooge looked distinctly prosperous and well-fed. Logs blazed in the fireplace and Scrooge (who somewhat resembled Fed chairman Jerome Powell) was attired warmly in a comfortable business suit. Everything about him spoke of prosperity and self assurance.

He called his clerk Bob Cratchit into his office."A Merry Christmas Cratchit," said Scrooge."I'm giving you a big bonus this year and raising your salary by a half in recognition of your good work." The clerk beamed. "Very generous indeed of you I'm sure Mr. Scrooge," he gushed.

"Don't mention it," said Scrooge. "Since the Fed decided to give banks and money lenders access to unlimited zero-interest credit I can afford to be generous." Just then Scrooge's nephew breezed in. "Merry Christmas uncle he cried, knowing that he too would receive a generous gift.

After him came Scrooge's neighbors collecting for Christmas charities. Scrooge reached for his cheque book but realizing that they preferred cash he went into a back office where he kept a Fed-licensed money printing press and promptly rolled off ten thousand dollars as his contribution.

It might be imagined that everyone was happy in this brave new world of limitless credit where Modern Monetary Theory decreed that lenders could behave like Father Christmas. But in truth it had become a topsy-turvy world where nothing seemed to be "anchored" any more - prices especially.

Inflation and currency depreciation were accelerating.Only that morning Scrooge had left a wheelbarrow full of dollars outside as a gift for the poor only to have it snatched and the thief make off with the barrow while dumping the dollars as not being worth the paper they were printed on.

Scrooge decided go home to his comfortable Georgetown house where he supped on caviar and champagne after which he retired to bed, being careful to leave his Christmas stocking at the foot of the bed, and certain that it would be filled with gifts from grateful citizens by the morning.

But the procession of nocturnal visitors he received that night bore no resemblance to Santa Claus. First Scrooge heard a clanking and scraping in the corridor outside his room and then the door was flung open by the ghastly apparition of his long-dead business partner Jacob Marley.

"Scrooooge," moaned the chained ghost, "repent now of your sins before it's too late. Scrooge was mortified "Repent of what?" he asked. "I repented years ago when you came and accused me of being a miser and of hoarding my wealth. Haven't I been giving it away to others even since?"

Marley moaned again."yes but now you've gone to the other extreme and the Fed has deluged the world with so much liquidy that inflation is running rampant and no-one knows the value of anything any more. A curse worse than Covid 19b has come upon the land. Repent now and change your ways."

Barely had Marley's ghost faded away when another apparition appeared at the foot of Scrooge's bed. "Who are you?" whispered the terrified Scrooge, "and what do you want with me?" The apparition replied, "I am the Ghost of Christmas past - and you are coming with me Scrooge.

Scrooge was whisked out of the window and they flew together through the snow and came down before Scrooge's former dwelling.Through the window Scrooge saw himself there as a man of then more modest means and habits who had abandoned miserliness but preserved restraint and responsibility.

"You were content and respected then for your financial circumspection and for keeping the monetary situation in balance instead of unlocking the floodgates of credit and letting in the demons of inflation," the ghost reminded him. "You can't heap all the blame for that on the pandemic."

Scrooge was scooped up again and flown back to his bed, only for another ghost - that of "Christmas Present" - to whisk him around the world stopping at intervals to witness the confusion and panic that Unconventional Monetary Policy and Quantitative Easing had begun to sow across the land.

Once he was back in bed, a third ghost - that of Christmas Yet to Come - again seized the dismayed and shaking (from fear as well as from cold) Scrooge and told him in doom-laden tones that he was about to learn of the awful fate awaiting him in the future.

This time, Scrooge was set down in Manhattan where riots and fires were raging - nothing to do with Black Lives Matter or other social protest but because inflation had destroyed purchasing power, jobs and all sense of restraint.Mobs were burning Scrooge (as a symbol of Fed policies) in effigy

Scrooge was horrified and terrified. What can I do?" he quaked. "Can the situation still be saved?" The ghost gave him a reproving stare. "Only if you act quickly and repent afresh of your extreme ways. Return to sobriety and propriety and start behaving with a sense of monetary responsibly"

Scooge was once more whisked back to his house. By now it was a cold Christmas morning. He flung open his window to let in the light - on his life and ways as well as on his room" He called to an urchin on the street, Go buy a turkey with these gold coins and take it home to eat."

"These coins will be a symbol of the 'gold standard' I intend to restore, in monetary matters, prices and of my own lending behavior he cried "It's going to be a time of adjustment and belt tightening but the world will be more stable for it in the New Year. A Merry Christmas to us all"

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