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Rupal Patel and Jack Meaning, the Bank of England employees who have produced a guide to economics

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CAN’T WE PRINT MORE MONEY?

by Rupal Patel and Jack Meaning (Cornerstone £14.99, 320pp)

When Alan Greenspan was head of the US Federal Reserve (the US equivalent of the Bank of England), he liked to keep an eye on men’s underwear.

Or rather, let’s be clear, on sales of men’s underwear. He knew that during a recession, men tend to put off buying new underwear. Greenspan used the numbers as an indication of how the economy is performing.

He was my kind of economist, relying more on common sense than complicated charts.

Some of us disagree with the description of economics as “dismal science,” not because it isn’t dismal, but because it isn’t a science.

Alan Greenspan said that in a recession, men put off buying new underwear.  The head of the US Federal Reserve used it as a guide to the performance of the economy

Alan Greenspan said that in a recession, men put off buying new underwear. The head of the US Federal Reserve used it as a guide to the performance of the economy

In fairness to Rupal Patel and Jack Meaning, the Bank of England staffers who produced this very readable economics guide, they are suitably modest about the scope of the subject. Economic models can never be perfect, they say, but that doesn’t mean models aren’t useful.

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As Salvador Dali said, you must “not be afraid of perfection, you will never reach it”. Patel and Meaning freely admit that of the last 153 recessions in the world, economists did not predict 148.

And the book contains great facts. Inflation in Zimbabwe was so bad in 2009 that the country started printing a $100 trillion note – and it still wasn’t enough for a bus ticket.

In the early 2000s, some American prisoners used mackerel as currency. Unfortunately, the book doesn’t explain why this particular commodity has found favor, but it’s a helpful reminder that anything can be used as currency if everyone trusts it.

Prisoners are well known for using cigarettes, while some will remember Fletch from the TV sitcom Porridge with his Cadbury’s Fruit ‘n’ Nut. As recently as 2009, in parts of Italy, you could use huge wheels of parmesan cheese as collateral for a loan.

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There are also some nice jokes, like the line of a socially adept economist who, when talking to you, looks at your shoes rather than his. As entertaining as the book was, it reminded me why I’m so wary of economics. Part of it is the SOBOs (Statements Of the Bleeding Obvious) and the love of lingo.

CAN'T WE PRINT MORE MONEY?  by Rupal Patel and Jack Meaning (Cornerstone £14.99, 320pp)

CAN’T WE PRINT MORE MONEY? by Rupal Patel and Jack Meaning (Cornerstone £14.99, 320pp)

The “substitution effect”, for example. It’s the economists’ name for the fact that when something gets cheaper, people start buying it and stop buying more expensive alternatives. You do not say !

As is often the case with academics, it feels like just because they named something, they think they made it up. But my specific problem with this book is that the organization the authors work for thinks the answer to the question in the title is “yes”.

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Since the financial crash of 2007-2008, the Bank of England has, as the book puts it, ‘created almost a trillion pounds of new money and used it to buy things in the economy’ .

Patel and Meaning are careful to point out that you can go too far with “quantitative easing” (the new buzzy name for “printing money”). Delivering a wheelbarrow full of still damp £50s to every person in the country would be irresponsible.

However, you’re worried that all the clever jargon and flashy spreadsheets are blinding some people to the basic truth that money isn’t wealth. Money only symbolizes wealth, and therefore a country should only print enough of it to reflect the real growth that has actually occurred in the real economy.

Hopefully the old lady of Threadneedle Street understands inflation better than Zimbabwe.

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