As you're reading this list, please remember that it was first written 45 years ago. Here goes:
(1) Prevent or delay liquidation. Lend money to shaky businesses, call on banks to lend further, etc.No, Uncle Murray was not travelling in a time machine to observe what Gordon Brown just did in the last few weeks to save the Universe. The list above, written out 45 years ago, was taken directly from the Austrian business cycle theory, which itself had worked out in the 1920s all of the actions necessary to turn a recession into a depression.
(2) Inflate further. Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments, which, in their turn, will have to be liquidated in some later depression. A government “easy money” policy prevents the market’s return to the necessary higher interest rates.
(3) Keep wage rates up. Artificial maintenance of wage rates in a depression insures permanent mass unemployment. Furthermore, in a deflation, when prices are falling, keeping the same rate of money wages means that real wage rates have been pushed higher. In the face of falling business demand, this greatly aggravates the unemployment problem.
(4) Keep prices up. Keeping prices above their free-market levels will create unsalable surpluses, and prevent a return to prosperity.
(5) Stimulate consumption and discourage saving. We have seen that more saving and less consumption would speed recovery; more consumption and less saving aggravate the shortage of saved capital even further. Government can encourage consumption by “food stamp plans” and relief payments. It can discourage savings and investment by higher taxes, particularly on the wealthy and on corporations and estates. As a matter of fact, any increase of taxes and government spending will discourage saving and investment and stimulate consumption, since government spending is all consumption. Some of the private funds would have been saved and invested; all of the government funds are consumed. Any increase in the relative size of government in the economy, therefore, shifts the societal consumption–investment ratio in favor of consumption, and prolongs the depression.
(6) Subsidize unemployment. Any subsidization of unemployment (via unemployment “insurance,” relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available.
Governments being utterly stupid and wrong-headed, it is therefore inevitable that they should unconsciously adopt this list of "what not to do" as the precise roadmap for their "heroic actions", whenever faced with such a crisis - always assume that the best thing a government can ever do in any situation is always the exact opposite of what they actually end up doing (though just like the famous Nutrimatic drinks dispenser, from the Sirius Cybernetics Corporation, they also occasionally get things right, but only by rare and particularly exceptional accident).
So what does Uncle Murray's list predict that Gordon will do next? Obviously, I've had to mix in a few things that we already know Brown will do, as his actions are a continuing narrative of total stupidity, but here are my top ten observations and predictions based upon the list above and predicated by Gordon Brown's over-arching ambition of becoming an elected prime minister:
(1) He will keep putting pressure on the Bank of England to reduce interest rates, perhaps even down to zero per cent (or close to it), to follow the Japanese play book.
(2) He will force banks to lend to bad credit risks, particularly in marginal constituencies, especially to voters requiring mortgages and to companies employing large numbers of voters.
(3) He will ramp up government borrowing even more than the £100 billion the market is expecting. The Bank of England will monetize this increasing government borrowing through their open market operations to directly stimulate monetary inflation, which will pyramid fractional reserve inflation, which will cause the "impossible" Keynesian nightmare of stagflation. (Although stagflation is impossible under the key tenets of Keynesianism, don't expect any Keynesians to admit that Keynesianism is bunk due to a little slip like this.)
(4) He will particularly increase government spending in marginal constituencies, no matter how wasteful the end result.
(5) He will increase taxation, particularly by targeting what he will portray as the "enemy class whose greed and narrow-minded selfishness created this crisis" (i.e. anyone who doesn't look like they'll ever vote for the Labour party).
So far, this is all rather obvious and you've read it all before on AngloAustria. What becomes interesting, however, is what he will do when the depression really begins to bite, due to the incompetent measures already described above.
(6) He will force wage rates to stay up, perhaps by making it illegal or at least extremely difficult for companies to offer their workers a choice of lower wages against the inevitable reality of redundancy.
(7) He will bring in price controls to "look after our farmers", to "look after our small businesses", and to "look after our hard working families". These price controls, keeping prices up, will empty the shelves in the supermarkets, but what the heck, it's all the fault of the exploitative capitalist class, so let's expropriate them too while we're about it!
(8) Taxes may be increased on savings to encourage people to spend.
(9) Inflation may even get deliberately stoked up to force people to spend their savings before their money becomes worthless.
(10) And finally, unemployment benefits and other related welfare state measures will be increased both to hold up the Labour party vote and to "protect our families in poverty from being further exploited by the failures of capitalism".
Dear Lord, I think I need to apply for a job as a Brown speech writer. I'm beginning to get the drift of it! :-)