Tammy Woodsawyer lay on her hammock in the shade. She was busy. Officially, she was busy white-washing a neighbour's fence. Actually, she was thinking. She did a lot of thinking. The trouble was, thinking is best done lying on a hammock, but lying on a hammock did not count as work in the Great Society of Standardia.
Yet, she did not care. For one thing the subject upon which her thoughts dwelt was so serious, that considerations such as getting a scolding for being a lazy good-for-nothing held no fears for her, and for a second thing, her neighbours would indeed get their fence white-washed, and in double-quick time.
She had been offered two dollars for the job and as soon as she had the contract, she advertised amongst all the youngsters of the neighbourhood a wonderful new competition. The competition was to see who could white-wash a given section of fence the fastest. Entry was one dollar; the prize was five. As soon as she got eight players, which was as many as the fence could reasonably accommodate, the competition started and Tammy retired to her hammock to supervise and to think. Sure, she'd have to finish the bits left by the losers, but that would be far less than five dollars worth. Besides, she really needed to think.
With a scrap of paper in one hand and a stub of pencil in the other, she made a series of calculations, but try as she might, she could never overcome a serious stumbling block. She checked her calculations, and then re-checked them There was no doubt in her mind. Standardia was in big trouble.
"I've won!" came a cry from the fence.
Tammy eased herself off the hammock and walked over to check the claimant's handy work.
"Nope. You missed a bit," she judged.
"Hey, Tammy, I reckon I've won," called a second claimant.
Tammy scrutinised the declared panel, pausing to give time to allow the others to continue, which they did with an increased frenzy.
"Yes, I guess you have," she said at length.
She handed over the five dollars prize to the winner, and with that the remaining players dropped their brushes. They drifted off, surrounding and reconfirming their individual friendships with the winner.
"Oh, heck," cried the first claimant, watching them go. "I didn't need to lose that dollar. I thought I'd be bound to win."
"Never mind, Mike. Here, if you finish the rest of the fence, I‘ll pay you back your dollar."
"Oh great, Tam. That's swell of you!"
"And you can clean the brushes afterwards!"
Her white-washing concerns finished, Tammy re-checked her calculations and walked along the road to the Governor's house. She set off in a confident frame of mind, but as the impressive mansion that was the Governor's official residence loomed larger in her vision, doubts began to set in. If it was so obvious to her, why could no one else see the problem? No, she reminded herself, it was only obvious to her because she had been thinking about it. Yet, Miss Chalkdust, the school mistress, had shown no concern when Tammy had explained it to her, but then Miss Chalkdust said that economics wasn't something she knew anything about, and her mother had just told her to get on with her chores and stop worrying about things that didn't concern her, but then her mom was worried that if Tammy got a reputation for just lazing about in her hammock, she'd never get a husband, and would probably end up as some frigid old maid like Miss Chalkdust.
Eventually, Tammy arrived at the Governor's house. Mrs Stardust, the Governor's wife, was busy applying some white-wash to the front picket fence. Keeping that picket fence and the flag pole a pristine white was, it sometimes seemed to Tammy, Mrs Stardust's sole preoccupations.
"Oh, how you doing, Tammy?" called the woman, standing up to greet her young visitor.
"I'm doing fine. Thank you, ma'am."
"Say, you wouldn't like to earn yourself a dollar by finishing off this fence would you?"
"Thank you, ma'am, but I'd like to see the Governor, if that's all the same."
"Sure, Tammy, his office is always open to any citizen of Standardia."
Mrs Stardust made the phrase sound like a carefully rehearsed campaign slogan.
"He's in his office right now, doing some work with that... intern of his."
Tammy walked through the house and knocked loudly on the door bearing a brass plate which read ‘Governor's Office'. She pushed open the door as the summons to enter was uttered.
Behind the desk, the Governor was straightening his tie. Standing at his side, Mona Lustbather smoothed the creases from her tight dress.
Mona Lustbather was tall, curvaceous, devastatingly good-looking and, in Tammy's entirely prejudiced opinion, quite the dumbest creature ever to inhabit a Governor's office... or maybe not, she thought on further reflection.
"Hiya, Tammy, come on in. You know Mona, of course?"
The two young women smiled glaringly at each other.
"Take a seat. How can I help you?"
Tammy sat down. She glanced at the paper in her hand that was now rather crushed and a tad sweaty.
"Well Mr Governor, sir, its like this. I'm, er, well, the thing is, sir... I'm worried about the economy."
"The economy, Tammy?"
"You don't need to worry about the economy, Tammy. Everything is just fine."
And indeed, everything in Standardia was better than ever. Money was in good supply, every one who wanted to work had work. Houses were being built, new horse-buggies were being bought, new farm-buildings and workshops were being erected and more and more new consumer goods were appearing in the increasing number of shops that were opening. Also, taxes were low. They had gone up the year before to pay for more deputies to deal with the problems of the work-less and money-less, but there were few enough of them now. Just one or two drunken bums to act as a lesson to the rest of the population.
Apart from the Sheriff's office, the Judge's office and the Governor's office, the only other major public expenditure was on the increasing number of dual carriageway tracks that were being opened up, mostly in a westwards direction. The medical center and school-house were doing well, but they were entirely private institutions. Of course, if was a shame that not all the citizens of Standardia could afford to use them, but that was the way of the world, the way that the Source made things work.
Although precisely how the Source made things work was a matter for, at times, fierce debate, everybody held themselves to be honest-to-goodness Source fearing folk. They were independent free-thinkers and the Source was with them.
Governor Tex Stardust was a happy man. He was due for re-election in a few months time, but with things booming as they were, he had no doubts as to the outcome. He beamed magnanimously at the young woman before him and calculated that with the forthcoming election, she'd be voting for the very first time.
"Say, Tammy, why not ask Mrs Stardust for some cookies on the way out?"
"I am not here to bum cookies!"
"Whoa there, Tammy girl. No need to get riled."
"I have been studying the figures, Mr Governor."
"Oh, have you now?"
He was about say something about betting that the figures were not the sort he was wont to study, but realising he was in female company, he stopped himself in time.
"What figures, might these be?" he managed instead.
"The money supply figures."
"The money supply figures?"
"Yes. From what I gather from my uncle and Miss Chalkdust, Standardia has borrowed two thousand dollars from Barcla the Hoard. Is that correct?"
"Well, let me see, now. We borrowed a thousand first off, then another thousand a couple of years later... yeah."
"At 20% interest?"
"Yeah, which is kinda steep, but we can afford it, the economy is growing really fast."
"The size of the economy is not the issue, nor its rate of growth. The issue is the origin of the money supply."
"I don't follow you, honey. Surely the amount of money is determined by the size of the economy?"
He glanced up at Mona Lustbather for assurance, but she returned his quizzical gaze with a look of complete incomprehension. She had lost the plot since the word ‘interest' was mentioned.
"No. The size of the money supply is not determined by the size of the economy," stated Tammy
"But surely, an economy needs a certain amount of money. Too much and you get inflation, too little and you get stagnation. Like we had before we got that last thousand. Now we got just about enough."
"Yes, enough is what you need, but as I said, the size of the money supply is not determined by the size of the economy."
"Surely it must?"
"No. The supply of money is a wholly independent operation. Money is fed into an economy. It is not created by it. As an economy grows, like you say it is doing, there will be a need to feed more in."
"Of course," said the Governor, controlling his annoyance.
"We are agreed on that?"
"So how do you propose to increase the money supply?"
"By borrowing some more. Hey, Tammy, that's just the way the galaxy works."
"But if we borrow more, we will go deeper into debt, and we'll have to pay out even more as interest."
"Which we can easily afford from a growing economy!"
"But only up to a point."
"The point when we run out of money!"
"We ain't gonna run out money, honey!"
"Yes, we are! Look at the figures."
Governor Stardust leaned back in his chair. He looked up at Mona.
"Mona, honey. Be a doll and fetch us some coffee... Or would you prefer buttermilk, Tammy?"
"Thanks, coffee will be fine."
Governor Stardust decided to humour Tammy. She was clearly a bright kid who had just picked up a weird notion from someplace. Wean her off that and she could be useful, in more ways than one.
"Okay," he said at last, "let's take a look at your figures."
"Right. We borrowed two thousand in total. We've paid back four hundred so far. So how much does that leave in the economy at the moment?"
"Well, I don't know, Tammy. Take your uncle's business. That must be worth several hundred and his turnover will be pretty high."
"I am not talking about capital and I am not talking about turnover. I am talking about the money supply. We have sixteen hundred dollars in circulation."
"That's kinda precise. How can you be so sure?"
"It's simple arithmetic. We had two thousand. We've repaid four hundred. Four hundred from two thousand is sixteen hundred."
The Governor shook his head disbelievingly.
"Now, supposing we don't borrow any more money," continued Tammy.
"Which we will," countered the Governor.
"Let me finish. Supposing we don't borrow any more money, we have to pay another four hundred in interest this year, another four hundred the year after, another four hundred the year after that, and another four hundred the year after that. Agreed?"
Mona came in carrying the coffee which she set down in front of the Governor, as far from Tammy as she could mange. Then she settled herself onto a chair just behind his right shoulder and busied herself with polishing her already immaculate nails.
"I dunno, whatever, okay, I guess..." stammered the Governor.
"So how much money will we have in circulation then?"
"I don't know. It depends upon the amount of growth."
"Nothing. Not a penny piece."
"We will have borrowed two thousand and repaid two thousand. Two thousand less two thousand equals nothing."
"Well, that's right ain't it? You borrow some money, you pay it back. That's how business works, honey. You can't expect to have something for nothing."
"But that two thousand dollars that we will have repaid will only be the interest. We will still owe the two thousand dollar principal!"
"But, like I said, honey, things don't work like that. You're not allowing for growth."
"Okay, so we have growth, and like you said, we borrow more. Yes?"
"How much more?"
"I don't know."
"A thousand a year?"
"No, maybe that's too much. We don't want inflation."
"Well, we borrowed that second thousand two years after the first, so let's say five hundred a year. Okay?"
"Okay, yeah, whatever."
"So we repay four hundred this year, and borrow another five hundred. We'll have borrowed two thousand five hundred. We'll have seventeen hundred in circulation. We owe five hundred per year in interest, which we pay next year, and then borrow another five hundred. We'll have borrowed three thousand, but have only seventeen hundred in circulation, and we'll owe six hundred in annual interest payments..."
The Governor picked up his coffee and sat back in his chair to sip it. He decided to just let his visitor get on with her rant. Eventually she would have to finish and would leave.
Ignored by both of the other two people in the room, Tammy started furiously scribbling new calculations.
"In two years' time, we pay the six hundred, borrow another five hundred, giving us sixteen hundred in circulation and a debt of three thousand five hundred upon which we owe seven hundred per year. In three year's time, we pay the seven hundred, borrow another five hundred, giving us fourteen hundred in circulation and a debt of four thousand, for which we owe eight hundred per year..."
The Governor allowed himself to drift into a reverie. He wondered whether he could come onto Mona before the election, or should he wait until afterwards, just to be sure? He thought that maybe he could get her primed just ready, so that come election night, he would be able to celebrate in style, and come on election night. The thought warmed and comforted him.
"... In four year's time, we pay the eight hundred and borrow five hundred, giving us eleven hundred in circulation and a debt of four thousand five hundred, upon which we owe nine hundred per year in interest. In five year's time we pay the nine hundred and borrow five hundred, giving us seven hundred in circulation and a debt of five thousand upon which we will owe one thousand dollar's annual interest..." She paused for dramatic effect. "...which we will not be able to pay because we will only have seven hundred dollars available and we will still owe five thousand dollars as principal!"
The Governor became aware that Tammy had stopped talking. Even Mona looked up from her nails. Tex looked at Tammy. She was staring at him, expectantly. He tried to recall the last few lines of her rant. The words ‘in five year's time' came to him. In five year's time, he would no longer be Governor and it would be someone else's problem, if problem it indeed was and not some kid's fantasy.
"So, let me get this straight. What you're saying is that in five year's time, we're gonna have a problem?"
"Yes!!" exclaimed a thankful Tammy, happy that she had finally got through.
The Governor turned towards her, and looked grave and thoughtful. Tammy looked happy and triumphant. She was kinda cute, he thought, if only she'd spend more time on herself.
"So what I'm gonna suggest, Tammy, is that we don't try to deal with a problem until it arises. Come back in five year's time. Whoever's Governor then, I'm sure he... or she will pleased to hear all about what you've got to say."
"But it'll be far too late by then! Don't you see! Have you understood a single word I have said?!"
"Now don't you adopt that tone of voice with me, young lady! I am Governor of the Great Society of Standardia and I will have some respect around here!"
Tammy shrank back, and the Governor calmed himself.
"Now, Tammy, I have a great of respect for your aunt and uncle, and I would hate to see them get hurt. So I'm gonna overlook this... this of you making a fool of yourself, but that also means you not making a fool of yourself in public. These are foolish notions. They'll upset and worry people, them as can understand a half of what you've been on about. These ideas of yours are dangerous and... and un-Standardian. They're unpatriotic, that's what they are. My advice to you, young lady, is to go home, start and learn how to make something of yourself and then think about making some fine young Standardian boy a good wife.
"Listen, Tammy, I know you're a good girl, and I like you, I really do. I can see that your heart is in the right place. You care about people; you care about Standardia and that's a fine thing in a young woman, but, like I say, you should leave the running of Standardia to those of us who know about these things. Who put these ideas in your head? Your father?"
"No, and your father is a fine businessman. If he isn't concerned about the economy and, let's face, he's doing well enough, like most folks, then there ain't no cause for you to go troubling your pretty little head about it."
Tammy exploded at that last remark.
"You damn fool! You stupid stupid man! Your stupidity and incompetence and ignorance and... and... and stupidity will see us losing this planet! As things stand, we'll have to sell it to pay for our debts!"
The Governor said nothing, and the silence hung heavily between them. After that final outburst, Tammy controlled herself, rose from her chair with as much dignity as she could muster and began to show herself out. Wanting the final word, Tex called after her.
"Ask Mrs Stardust to let you have some cookies, you hear?!"