This post contains a bedtime story to introduce young children to modern money. It was written by Janice Reavell and Elf Number 35 (Malcom Reavell) in Scotland, and me, Jeff Epstein, in the United States. This version of the story is tailored for the US. A version specific to the United Kingdom and Scotland is forthcoming. The chain of events that inspired this story is documented at the bottom of this post.
Note that someone gave me a great suggestion to improve this story. It’s a big change so will take a bit, but FYI, a change is coming…
Here’s audio of me reading the story to my 12-year-old, with him providing color commentary, demonstrating a better handle on modern money than the vast majority of economists, politicians, and adults in general.
Top image: Malcom Reavell reading to his grandson, two-year-old Davie Birt. From this tweet. (A full screenshot of the tweet can be found at the bottom of this post.)
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This post was last updated October 14 2020.
Elf Number One and the Keyboard
Once upon a time there was a very happy land ruled by a great and loving King. In this happy land, everyone had a nice home to live in and plenty of healthy food to eat. All the children could go to school and college to learn, and there was a publicly-funded health service for everyone to use. The health service would look after them when they were hurt, sick, or feeling down.
In the middle of this happy land was a very special building called The Big Bank. Inside The Big Bank was a very special computer with a very special Keyboard. The special Keyboard was used to type numbers that created all the money in the land. The Keyboard was manned by the King’s wisest and most trusted advisor, Elf Number One.
Every day, Elf Number One sat down at his special Keyboard and typed just enough numbers to make sure that everyone had the money they needed to buy and sell things. No one was poor, no one was hungry, and no one was homeless.
It was a happy time.
Then one day, right around 1983, a bad fairy named Bad Fairy Thatcher arrived from a faraway land called NeoliberVille. Bad Fairy Thatcher cast a spell on the land which made the good and loving King fall into a deep, deep sleep. Bad Fairy Thatcher made herself Queen and told all the people that unless Elf Number One stopped using his special Keyboard right away, The Big Bank would run out of money! She said if The Big Bank ran out of money, it would cause terrible suffering for everyone – even the children that had not yet been born!
The next morning, Bad Fairy Thatcher banished Elf Number One from the land. She told the people that in order to prevent terrible suffering, the special Keyboard would have to be hidden away forever. She said form now on, if the people wanted houses, roads, schools, and hospitals, then the people would have to pay for it themselves.
At first the people didn’t understand. They knew about the special Keyboard. They knew how before Bad Fairy Thatcher came along that no one was poor, homeless, or hungry. But the spell Bad Fairy Thatcher cast was a powerful one, and gradually, everyone forgot how good it used to be.
Worst of all, when the people went to sleep each night, Bad Fairy Thatcher held a secret party at The Big Bank. She invited all her evil minion friends from the top-end of town and let them use the very special Keyboard to type as many numbers as they wanted. They kept all the money to themselves and got richer and richer while everyone else got poorer and poorer.
Then one fateful day, Bad Fairy Thatcher told everyone that there was no money left at all in The Big Bank!! She said that in order to make The Big Bank some money, she would have to sell all the nice things the people had needed. She sold the schools, the railways, she sold the houses, the gas and electricity. She even sold some hospitals and other pieces from the public health system. Bad Fairy Thatcher said this made her very upset but what could she do? “There is no alternative!”, she said. That very night, however, in her secret party at The Big Bank, Bad Fairy Thatcher and her evil minions laughed and laughed while typing themselves up some more numbers and more money.
Soon the people forgot all about Elf Number One and his special Keyboard. They forgot all about their good and loving King, and that they ever lived in a country where they didn’t have to pay for schools and hospitals. They forgot that people didn’t have to be poor and they even started getting used to the beggars on the street.
They were very, very sad. What had gone wrong? All the nice things they were once provided, they now had to pay for out of their own pockets. And when they ran out, they had to borrow some from the evil minions on the top end of town.
Then one day, many years later, a little girl named Stephanie was walking to school. She noticed that there were many homeless people, but also many empty houses. She saw that many were hungry, but there was plenty of food in the shops. She saw there were holes in the road, but plenty of stone and tools, and people who knew how to use the tools and also needed a job.
When she arrived at school she asked her teacher about this. Her teacher replied: “There’s not enough money to pay for it.”
“But,” Stephanie said, “that can’t be right. We don’t build houses with money. We don’t fill holes with money. We don’t eat money.”
Her teacher said, “But we have to find the money to pay for these things. There’s only so much to go around! If people are poor, I guess it’s because they don’t work hard enough.”
Stephanie thought about this. She knew plenty of people who worked very hard, but they didn’t have as much money as Bad Fairy Thatcher and her evil minion friends on the top end of town. Stephanie knew something was very wrong but she couldn’t quite put her finger on it.
“Can’t we just make more money?,” she asked. “Where does it come from?”
“I don’t remember,” said her teacher.
Stephanie decided to find out. Word spread across the land about Stephanie, and soon she received a mysterious message. It told her of a faraway place called The Post of Keynes. The Post of Keynes had many wise people, and it was said they knew the answers that Stephanie was seeking. She traveled there to talk to them.
The wise people from The Post of Keynes told Stephanie all about the great and loving King. They told her all about The Big Bank and its special computer and special Keyboard. And they told her about the King‘s wisest and most trusted advisor, Elf Number One. Then they told her about the terrible spell Bad Fairy Thatcher cast across the land and how it made the people forget how good it could be. Finally, they told Stephanie about how Bad Fairy Thatcher secretly used the Keyboard every night with her evil minions but every morning told the people how the Keyboard was hidden away forever.
Stephanie got very, very angry. She decided to learn everything she could, and write it all down in a book. She called the book The Deficit Myth and she made sure to write it in a way that everyone could understand what she learned from the wise people at The Post of Keynes.
Some claimed the book to be magic. But it was not. It was special though, because as soon as someone read final page, they suddenly remembered how it used to be. When they closed the book, Bad Fairy Thatcher’s spell was broken. It no longer worked!
The people now remembered, and they went to wake the King. They gave him a copy of Stephanie‘s book, and told him to read it right away. As soon as he finished the last page, he sent his royal guards to banish Bad Fairy Thatcher and her evil minions forever. The guards then searched for Elf Number One and returned him home, back to his special Keyboard at the special computer at The Big Bank.
Although it took some time, day after day, Elf Number One typed in all the numbers necessary to fix the terrible problems caused by Bad Fairy Thatcher. The King and all his people used the new money to hire lots more carpenters, builders, and others, to mend the roads and repair the roofs of the schools and hospitals. The beggars even began to disappear, because they were given homes to live in.
Things soon returned the way they were. The good and loving King once again ruled over the land. Everyone had a nice home to live in and healthy food to eat. All the children could go to school and college to learn, and there was a publicly-funded health service for everyone to use whenever they needed it.
…and they all lived happily ever after.
The end. 💖
Or is it?
One day a little while after Bad Fairy Thatcher and her evil minions were banished from the land, The King visited The Big Bank to see Elf Number One.
Elf Number One was very happy to see the King, and the King was very pleased to see Elf Number One. The King congratulated him on the good work he had done.
“Thank you sire”, said Elf Number One, “Now I would like you to meet Elf Number Two”.
Elf Number Two very shyly stepped forward and curtsied. The King greeted her most warmly and with a big smile of surprise asked: “And what is it you do in The Big Bank, Elf Number Two?”
“I work with Elf Number One, sire, but I have a different job altogether,” Elf Number Two said. “Elf Number One works on the money creating computer, sire, and I work on the money destroying computer”.
The King looked perplexed.
“We have a computer that destroys money?” he gasped, his eyes wide with disbelief.
“Yes, sire,” said Elf Number Two, “and I think we may have a problem…”
To be continued… 💖
Appendix: How this story came to be
Malcolm read Stephanie’s book and tweeted this:
He was tickled when Stephanie responded and screenshot it into a post on Facebook. His wife, Janice, wrote a comment on that post, which Malcolm then made into a post by itself on the Modern Money Scotland group:
That post was then shared to the Facebook group called Intro to MMT — Modern Monetary Theory (that I am currently an administrator for) by Robin Altman. I saw Robin’s post and was inspired to flesh it out. After a few rounds of back and forth between me in the US and Malcolm and Janice in Scotland, it came to be. (Not unlike the money from the numbers from Elf Number One’s special Keyboard – because we wanted it to.)