Hey, folks. Meet the economics 'genius' behind Jeremy Corbyn

Flip it and reverse it

So, we'd like to be able to reverse it if V does return to normal, if we even do it in the first place. But having spent it on building and insulating, we can't reverse it. This is a permanent increase in M0 of £50bn a year. And, absent QE, M0 is only about £70bn in the UK. M4 – the full money supply – after all that banking system stuff, is more like £2.2tn.

This really is highly inflationary. And it's exactly what has triggered the great hyperinflations of the past, too. Weimar Germeny, post-World War Two Hungary, Zimbabwe recently, Venezuela today: they really did all start with the simple monetisation of government spending – printing new money for politicians to go and spend.

Over the years I've mentioned enough of these gaps in Murphy's economics that I'm now entirely banned from his blog site. So sadly, I'm unable to correct his more egregious errors as I have done in years past. Not that he's ever acknowledged that I was right and changed his views.

The causes of his misunderstandings are revealed by the man himself.

He is rather proud of claiming that he ignored his university economics lectures because they were obviously all neo-liberal-inspired. So he worked the whole lot out on his own, from first principles. This rather reminds me of Bitcoin, for as I've said, the whole alt-coin scene has seen the fast-forward replay of every monetary and banking mistake, fraud, scheme and scam that humanity has managed to cook up over the millennia in a mere few years.

Murphy's economics – ignoring, as it does, what tens of thousands of very clever people have found out over the past few hundred years, namely that we've really had “economics” – falls into the same error. It's just too large a subset for any one brain, however large, to be able to encompass from first principles without error.

As an example, when he stepped outside his cocoon to write for another blog, I was able to comment. Murphy started by assuming that an economist will assume that people maximise their net income. This is not so. Not at all. People maximise their utility.

This is easy enough to prove: any and every one of us could increase our income by increasing the number of hours that we work. We only need eight hours of sleep a day, so why not work 16 hours for seven days a week to maximise our income?

Quite. We don't, do we? Once we've got over the subsistence existence of the peasant lifestyle, then increasing amounts of our greater income are actually taken as leisure. That is, we maximise something other than our net income. We might say that we maximise the enjoyment of our net income, or what economists call maximising utility.

OK, well, obviously I'm extremely biased here. There's even a section of my personal blog (“Ragging On Ritchie”) dedicated to nothing but making fun of Murphy's pronouncements.

Of course, Corbyn is entirely at liberty to take economic policy from whomever he wishes. I've already managed to get the one I'm most passionate about largely enacted into statute, so it's not even sour grapes that keeps me going. Some of it is sport, even if it's cruel sport. But there's also a real worry that some of Murphy's ideas might make it into law.