Daily Note
December 23, 2013
Macro Christmas
Our guide to how economists could take the fun out of Christmas…
Christmas
‘If
If you put two economists in a room, you get two opinions, unless one of them is Lord
Keynes, in which case you get three.’
three As Winston Churchill noted,, economists rarely agree
on anything. And the topic of Christmas should be no different. Here is our guide to the
macroeconomics of Christmas:
Christmas
Keynesians – place a lot of emphasis on the ‘macro stabilization’ properties of Christmas.
Ideally, they would vary the number of Christmases each year according to the state of the
economy.
y. This is best summarized by Paul Krugman’s depression paper ‘Wish
‘
it could be
Christmas every day’,, in which he also acknowledges his love
ve of British
Britis glam rock. The
Keynesians would like to see a larger role for the state, including publically-funded
public
Santas.
Austrians – Believe Christmas is dangerous because it inevitably ends with a nasty January
hangover. Also worry about the moral hazard
haza implications of gift-giving
giving and the propensity
for overinvestment in Christmas decorations. Reject the idea of ‘public
public’ holidays, arguing the
free market would lead to a better outcome.
Monetarists – Convinced they are the only ones who know how Christmas ‘really works’ and
quickly become frustrated with other economists’ lack of understanding. Their thinking can be
reduced to a simple identity, though this is vulnerable to shifts in the velocity of Santa’s
circulation. Hardcore
core monetarists believe in the tight control of chocolate coins to prevent the
hyper-inflation
inflation of waist lines and the hyper-activity of small children.
Chicago School – argue Christmas has no meaningful impact
act because gift-giving
gift
nets out.
Fully rational individuals will anticipate this and adjust their behaviour accordingly.
accordingly
Macroprudentialists – busy thinking up ways to ‘smooth out’ Christmas. They would like to
‘lean against’ the festive season,
season perhaps by tightening credit and raising
aising alcohol prices in
mid-November and reversing these policies in early January. Some hardliners would like to
introduce quantitative controls on Santa’s
Santa toy factory.
Secular stagnationists – claim Christmas hasn’t been as much fun since the mid-1990s,
mid
but
can’tt really explain why. Perhaps it has something to do with the music.
And, of course, the central banks are equally divided:
www.lombardstreetresearch.com
The Federal Reserve – big fans of Christmas and even have their own Santa lookalikey
(though, unlike the real Mr C, he is set to retire soon). Becoming frustrated that Santa’s
sleigh isn’t one of their policy tools and that they can only influence Christmas indirectly by
giving presents to bankers and hoping they re-gift them to the rest of society.
The ECB – Generally in favour of Christmas but have a small and powerful minority who
believe gift-giving is immoral and must eventually lead to hyper-inflation. President
increasingly frustrated with this group’s sobering impact on their annual Christmas party.
The Bank of England – committed to enjoying Christmas on the 25th December, subject to
several clearly specified caveats and ‘knock-out’ factors. Have produced a 24,000 page
paper explaining how these work.
The Bank of Japan – spent 20 years telling everyone Santa didn’t exist and that Christmas
was a waste of time. Have now changed their minds, but seem to have a credibility problem.
And not forgetting:
The UK government – See Christmas as a good opportunity for the Queen to educate the
masses, but worried about its intrinsic ‘socialist tendencies’. Ideally would like everyone to
work on Christmas day so the UK can better compete with China. (Plutocrats are excluded,
to support the demand for yachts/jets/country houses.) Believes Santa should be redeployed to take money from poor benefit recipients and re-gift it as state-subsidized
mortgages to potential voters.
US Congress – It just won’t feel the same this year without their version of the traditional
Christmas family row.
Dario Perkins [email protected]
The LSR office will be closed until Thursday 2nd January. Enjoy the holidays and remember
you’re taking part in the ultimate Keynesian festival!
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Daily Note - December 23, 2013