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The same chart as in the previous post but now with GDP and Average Earnings since 1968. - both at current prices, and both courtesy of the Economic History Network.

Did I see correctly the other night in a news report that there are approximately $61,000,000,000,000 of these "Credit Default Swap" instruments out there?

At the end of September the market capitalization of every listed company on the planet amounted to just two thirds of that, and in total, including all state and corporate bonds and other loan instruments the total of financial instruments in issue comes to less than the $61 trillion in swaps out there.

Isn't that bonkers? Doesn't that suggest that every loan, equity issued company or bond issue is completely, fully insured and then some? How does that work then? It seems that there's been a bit of mutual self-gratification going on in these heady dealing rooms. If our money is going to help unwind such ridiculous positions it's frankly outrageous.

When are we going to see the City of London police entering offices in Canary Wharf and carting off senior traders then instead of Brown and Blair fawning over the wreckage trying to rescue something from this deep pile of crap whilst hoping we won't notice that this year's Christmas bonuses are being taken out of our money?

With just a week to go before the freshers arrive to find POTUS in one's hall of residence. Which well known person would be your choice to share a flat with? A couple of years ago now there were rumours that Ms Knightley would be coming here to Brookes. Needless to say so far as I am aware it never happened. I'd rather spend nights down the bar with Mr Sheen though any day!

Obviously anyone who thinks they know anything about economics will be mourning (to a greater or lesser extent anyway) the death of one of the twentieth century's greatest economists. Milton Friedman. So significant was he that I once thought they had named Milton Keynes after him and John Maynard! Come to think of it, with its fusion of central planning but with one of the country's first Cathedrals of the Almighty Consumer at its heart, MK is a strange coincidental fusion of the two men's ideas anyway!

I pity economists sometimes (though I say that through gritted teeth of course). For Milton Friedman's memory will forever be tainted by his association with Thatcherism and Reaganomics. Not in the usual sense of how he must have been the malevolent force behind them but in how little of his liberal vision they actually grasped. And how little of what they did grasp they actually implemented successfully. For the Europe that they so enthusiastically at first participated in was built as a protectionist's nirvana. The constant changing of which monetary aggregate to target was testament to how hopelessly they understood his view of stable money. For it should be remembered that he was just as critical of the contraction of money that he conclusively proved gave rise to the Great Depression, and, in the late eighties the Japanese slump, as he was of the loose money that created inflationary bubbles in the seventies and hangs over us now.

Now, I don't know whether the Freedom Association, which probably did as much as anyone to promote his ideas to Thatcher, were of as social conservative a bent as she, but she and her government failed completely to grasp the essential other side of the Freedom to Choose that he espoused. I cannot conceive of them taking on board his ideas on legalizing drugs - the criminalization of which was the greatest state subsidy to and protection for organized crime, he said. And the conservative vested interests then as well as now fail to understand his support for Land Value Tax. Whilst not a Georgist, in the sense that he did not believe the government should take all of the land value in tax, like Adam Smith he regarded taxes on such externalities as the fairest and least distortionary form of tax.

There can be no economic freedom without the personal freedoms that allow us all to choose individually how we will live our lives and the resources we need to do it. There can be no level playing field by making life easier for corporations but not for people. And there can be no free trade without that level playing field. That was why stable money was so important, as a level playing field, and that was why personal freedoms were and are so important and complimentary, for us all to compete with our own unique specialisms on that level playing field. Without the whole package the free market that many have imagined just cannot exist. And the greatest obstacle to it is political power.

It's only really in the past few years that I have begun to be able to isolate economists in my own mind from the context of the political movements that adopted their scholarship in some form or another. Adam Smith is another, hijacked by the "right" with all the connotations that has, whom I now find that if one can divorce them from the image of their latter day political tub-thumpers, speaks a lot of sense to someone trying to find an economics of the liberal centre. Even Keynes is another, hero of the opposite political camp, adopted by pseudo socialists and vilified by the right as a result. Together with Friedman, all three of these men have this reputational problem that their names are now routinely taken in vain when describing much bigger, more muddled, and often selective and twisted political implementations of the seeds of sense they planted.

I can't help thinking that if humanity needs a visitation from the afterlife, if such there be, then it ought to be a delegation of these economists who, now reunited, can compare the notes from their "great experiments" and find that middle road, and more importantly, the way to sell it to people!