The Rulers of Ponyville

Fashion is different from custom, or rather is a particular species of it. That is not the fashion which everypony wears, but which those wear who are of a high rank, or character. The graceful, the easy, and commanding manners of the great, joined to the usual richness and magnificence of their dress, give a grace to the very form which they happen to bestow upon it. As long as they continue to use this form, it is connected in our imaginations with the idea of something that is genteel and magnificent, and though in itself it should be indifferent, it seems, on account of this relation, to have something about it that is genteel and magnificent too. As soon as they drop it, it loses all the grace, which it had appeared to possess before, and being now used only by the inferior ranks of ponies, seems to have something of their meanness and awkwardness.

—Adele Smith

**Dear Princess Celestia,

Happy Tuesday! How are you? I am having lots of fun at Monday-week with my friends since we are not too busy saving the world right now. Except I’m not, because the Flim Flam brother showed up, and they are ruining everything with their money and dumb pamphlets and being wrong about everything. Oh, and I think they are using rap music to control everypony and make them hate you so a phoenix egg will hatch a zombie and make everypony bad at economics forever. Just thought you should know.

How are the newest cohort of fillies doing? How I miss being your student. I hope you are managing without an assistant. Remember, I made duplicates of all your files, one set organized alphabetically, and the other set chronologically, and I was working on a third set to organize categorically before you banished me to Ponyville.

“Banished?” Spike said. His pen hovered above the parchment, ready to write.

Twilight hesitated. “Oh, I must have Nightmare Moon on my mind. Make that ‘sent,’ please. Heh heh.” She winced and rubbed her neck uncomfortably.

I still remember your entire schedule for the rest of the year, since I organized it after all. Don’t forget you have the big meeting with the gryphons tomorrow! And I was planning to have that report on oat prices done by Friday before you banished me—

“Sent?” Spike said.

“Ha ha, whoops! Silly me!”

“You need more sleep, Twilight.”

—sent me to Ponyville. Did you still want it? I will complete it and send to you regardless, of course but I can classify it as a priority if you need it. Either way, you’re supposed to announce a decision about the money supply next Monday. Everything you need is in a special folder on my top drawer. Oh, I know it’s inefficient, but I hope no pony has taken my office!

If you ever need help with the Bank or things at Canterlot…or anything at all, it doesn’t even have to be the end of the world, please don’t hesitate to call on me. Um.

“Um?” Spike said.

“Don’t write down things like that!

Ummmmmmmm

“Spike!”

“You’re not saying anything! I want to go to bed, Twilight.”

Twilight tried to focus. Why was this so hard? Where was the magic to float the heavy weight in her heart onto the page?

“Spike, where are the writing spells?”

“I’m really tired. Does it need to be perfect?”

“Yes!”

Spike’s head thumped against the table. “Fine. Try under ‘W.’”

Twilight returned an hour later and poked Spike awake.

I miss you very much and would like to see you again. Your faithful student, Twilight Sparkle.

“Done?” Spike groaned.

“Done.”

Apple Bloom clung to Sweetie Belle’s leg. Scootaloo clutched the flashlight. No pony breathed.

There were the shadows of hoofs visible through the crack under the door. Apple Bloom couldn’t look away. She could feel Sweetie Belle shaking.

“Y’all better not stay up too late,” Applejack said. “Not if you want to be up early for Tuesday.”

“W-We won’t,” Apple Bloom squeaked. “Good night!”

“Night.” Applejack’s hoofs disappeared from the doorway. They listened intently until the sounds of her hooves disappeared with the creaking of her bedroom door.

Apple Bloom exhaled. “That was too close, y’all. Keynesian socialists lurk around every corner.”

Sweetie Belle collapsed, breathing hard. “I can’t keep doing this. I just can’t!”

“It hasn’t even been one day!” Scootaloo whispered. “Now are you two going to chicken out already? We can’t advance the cause of freedom if we aren’t willing to risk something for it.”

She turned the flashlight back on, shining it first on Sweetie Belle’s face, then Apple Bloom. Within the soft walls of the blanket covering them, propped up with a stick from the orchards, the light reflected everywhere like the glow-in-the-dark apples Apple Bloom had taken off her walls long ago. She wasn’t a foal anymore.

“The truth is like the light of a, of a phoenix,” Scootaloo said, inventing wildly. “It’ll shine for us, but we gotta be brave. We gotta have the courage to stand up for what’s right.”

Apple Bloom’s gaze dropped to the scatter of books and papers on the floor around them. All from the Flim Flam brothers, all for free.

“What should we read first?” Sweetie Belle said. The words hung in the stale air.

“Lift the end of the blanket,” Scootaloo said. “So stifling in here.”

“When we’ve run out,” Apple Bloom said. “Until then….” She grabbed a heavy book and dropped it in the center.

Pony Action, by Ludmilla von Mises.

“Let’s read.”

The night was silent then, except for the occasional rustle of paper as a page was turned, and, every thirty seconds or so,

“Wuzzat word mean?”

Tuesday came, a day of new celebrations. Twilight couldn’t believe how the town square had changed overnight. Violet seemed to be the dominant motif, and in the early morning candles lit on every stall did the lazy sun’s work. Twilight thought they were a fire hazard.

A theme had been substituted for the menagerie from Monday. Twilight tried to understand how it was supposed to greet the baby phoenix, or how it could have descended from something that was.  Instead of the delicious oat-and-honey treats from Monday, the stalls were serving some kind of boiled wheat with fruit. It didn’t seem to have quite the same air of festivity that fried and sticky-sweet food from yesterday did. And why was there a statue covered in plain white cloth in the middle of the square? Twilight wanted to peek at what was underneath, but two ponies were guarding it.

“Did you want to take a turn, Miss Sparkle?”

“It’s madame economist to you. What’s under the cloth?”

“Best not to look, ma’am. Did you want to take a turn guarding it? It’s lots of fun.”

“When are you going to uncover it?”

The guards looked faintly embarrassed. “It’ll uncover itself on the day of the resurrection, ma’am. That’s what they say, anyway. Darned if I know what it’s supposed to me. But it’s faced pointing toward the One Bank for that very reason.”

“What reason? It’s a statue. Statues can’t come back to life.”

“In the long run, ma’am. That’s what they say. But I’m just a guard; what do I know?”

Grumbling about irrationality and old superstitions, Twilight went in search of a distraction while she waited for the Flim Flam brothers to appear. She passed an arrangement of nine water pots holding violet flowers and found a group of fillies arranging candy “bones” into flowers, petals vanishing into sly mouths whenever the mares in charge looked away. Twilight remembered what she had read of the Tuesday.

Supposedly the theme was fire, but the older books said flame. Flame being superficial, of course. It was only the shape of things, not the substance.

Tuesday was the day of showing the phoenix how to be a firebird. So why did it feel so somber?

Spike didn’t come to the festival until it was nearly noon. He looked tired, rubbing his stiff cheeks.

“Did Princess Celestia send a letter yet?” Twilight said. “I know she’s busy today, but….” Spike shook his head. Twilight turned her attention to the stage, grimacing like she expected something gruesome to appear out a trapdoor any moment.

Indeed, at noon precisely, the Flim Flam brothers took center stage, wearing their Sugar Canes and Hay Ech costumes—just a mustache under Flam’s snout. Twilight contemplated their destruction.

“Good Tuesday, everypony!” they said, their voices magically amplified by the microphones. Twilight thought about messing with them and decided against it. She would win this battle fair and square, or, failing that, with overwhelming force. “How is everypony’s Monday-week going so far?” This was met by semi-enthusiastic cheers.

“It sounds like the good ponies of Ponyville need some excitement this Tuesday!” Sugar Canes said.

“Yes, Mr. Canes, they want something to shake things up. They don’t want this to be just another Monday-week!”

“That’s exactly right, Mr. Ech, and I think the Ponyvillites here are smart enough to know exactly what they want.”

“A weeklong economics-themed rap battle?”

“A weeklong economics-themed rap battle! Exactly, my dear Ech, but it’s not enough, is it? Just a normal weeklong economics-themed rap battle isn’t enough to get these ponies stomping their hoofs. They want a prize. A grand prize, something suitable for the winner of the most exciting thing to hit Ponyville since funnel cake.”

“Something fabulous, extravagant, and fitting for this fabricant.“

“I think I read your mind, Mr. Ech. Are you thinking…?”

A note of musicality had entered their voices. Twilight prepared herself for something dumb.

“Indeed I am, Mr. Canes. The one, the only—“

“To be taken boldly—“

“A fire for the future—“

“Or a plague needing sutures—“

“We, Mr. Canes and Mr. Ech—“

“Ventured into the bowels of Heck—“

“And retrieved for you fine ponies—“

“And like our books, costing no monies—“

“This amazing, wonderful, super-fine—“

“Splendiferously not-supine—“

“Beautiful fiery extraordinary—“

They came together for the last line of their absurd song.

“Baby phoenix egg!”

That’s what it was.

“You have to give me that.”

“No, we don’t.”

“According to the Discovery of Magical Creature Eggs During an Ancient Mystical Ritual The Original Meaning of Which Has Been Forgotten Act of 1600, you have to turn that egg over to Princess Celestia. As her representative, I’ll take it off your hoofs.”

Flim and Flam stopped walking away from the stage, the egg carefully tucked away in a sack levitating between them. They turned and looked at her. “That’s a law?”

“It’s from the Celestial Sunset Provision,” Twilight said smartly. “They’re a set of special rules Princess Celestia created to deal with unusual but potentially troubling situations. There’s the Just Tell Me What the Crown Really Is Covenant of 1587, for example. It means that Princess Celestia promises to give the benefit of the doubt to people with really far-fetched stories about coming from different dimensions to retrieve magical artifacts, especially if they seem confused about how to use their hoofs.”

“And does the act say anything about giving the egg to Princess Celestia’s ‘representative?’ Or a time frame for delivering it?”

Twilight coughed. “It says, and I quote, ‘And not messeth about, for when I finde out there will be a lump-sum redistribution of displeasure from me unto thou, with an emphasis on the lumps, thou hearest?’”

“How…foresighted of her.”

“It goes on to mention that the sun is particularly upset by clever reasoning, and ye—sorry, you don’t want to find out what that means. Trust me, ye really don’t.”

“But this is Monday-week, a week of creation. It would not do for the princess to interfere until Sunday, we think.” Flim and Flam looked at each other. “Yes, this should be good enough. Thank you for the warning, madame economist, but we intend to persist.”

“I already sent Princess Celestia a letter. She knows what you’re up to.”

“Let us know when she replies.”

“I-I will!” Twilight shouted as the twins trotted off. “You’ll rue the day you crossed the ruler of Ponyville!”

“What’d you say about a ruler of Ponyville?” a bright voice asked.

Twilight jumped. “Pinkie Pie! I didn’t see you there.”

“Did you see any creepy green fog like the manifestation of your competitive spirit perverted into a force for disharmony?” Pinkie Pie leaned close into Twilight’s face like she was examining her through a microscope.

“I…I didn’t, actually.”

“Why do you want that phoenix egg so badly, anyway?”

“Well, um, I don’t have a magical pet like the rest of you, unless you count Spike, but he’s more like an assistant-slash-younger brother. And Princess Celestia has a phoenix, so I thought…I thought, well—“

“Gotcha! No need to say anything more. I’ll win that phoenix egg for you and free our friends from the dark magic that possesses their souls!”

Twilight held up a hoof helplessly as Pinkie Pie galloped away.

An amplified voice distracted her.

“Hem, hem,” the elegant voice said. “Hem—ah, this is perfect.”

Twilight looked up at the stage. A beautiful white Unicorn with her purple mane coiffed like the coils of a snake was strutting in front of the microphone.

“Look upon me, Ponyville, for I am De La Fashion!”

The dresses weren’t selling.

Rarity walked through the Hall of Dresses, really a long closet, but it was secluded and filled with the rustling of cloth as if the ghosts of lost dreams had come here to rest, and Rarity was darned if she wasn’t going to think of it as the Hall of Dresses.

And the dresses weren’t selling.

Twilight Sparkle, that most curious of ponies, had said that if a dress wasn’t selling it meant the price was too high. Rarity was not one to ignore the advice of a friend, and so, after a fair amount of internal back-and-forth and a quick session of dry heaves in the bathroom, she, with both eyes shut tight, had taken a marker in the blue glow of her magic, crossed out the price on a dress that had been sitting on the rack for months and wrote a smaller price underneath. Then she had retreated to her room for three hours with her cat, a gallon of chocolate ice cream, and a dozen new dresses she wanted to try on. Sweetie Belle knocked at the door once when Rarity’s wails drowned even the frightened cat’s, and Rarity had snapped at her to go work in the basement.

Then a frenzy came upon her. Rarity flung her door, announced to the store by the shrill trumpet of a yowling cat trapped in her petticoat. Armed with horn and marker Rarity burst into the Hall of Dresses. There, watched by a frightened parasprite peeping out from behind a curtain, she began to cut prices, her marker slashing across the price tags like lightning bolts across her sanity.

Twenty percent off. Forty percent off. Special summer sale buy now store is closing everything must go sixty percent off seventy-five eighty buy two get one free ATTENTION ALL CUSTOMERS THE MANAGEMENT HAS JUST ANNOUNCED A NEW SALE ON ALL DRESSES DROP EVERYTHING AND SHOP.

Then it ended as suddenly as it began. Rarity sank to her knees, sobbing for the equineity of it all.

Pinkie Pie burst into the room. “Rarity, are you in thrall to dark magicks?”

Rarity rolled her eyes. “No, Pinkie. I’m perfectly normal.” It came out congested.

“Okay, well, if you see anything eldritch, let me know!”

Pinkie Pie left. Rarity dropped her head into her hoofs. She just wanted to be sad without anything ridiculous happening for once. No evil Alicorns, no paranoid semi-intelligent forest, just herself in a room full of dresses sold at half price.

Somehow or another time had passed. Rarity picked herself up and went in search of Sweetie Belle. But she was gone. The basement was cold and empty. And Rarity waited there, until something like sleep must have happened, because it was morning then, a mourning of faded flames. Everypony just called it Tuesday.

There was no time to weep for her beautiful dresses. The orders hadn’t come in.

Rarity was on the phone in an instant.

“Buy my dresses!” she screamed at the pony unfortunate enough to pick up.

“…Who is this?”

“I…am…Rarity!”

“You have reached the office of Fleur Dis Lee, fashion supermodel and philanthropist. How can I help you?”

“Buy my dresses!”

“Uh…Fleur Dis Lee has agreed to an exclusive deal with Suri Polomare’s latest line—“

Rarity slammed the phone on the receiver. She picked it up again and pressed redial.

“…Yes?”

“Buy my dresses anyway!”

“We’re sorry, but everypony has been affected by the Great Succession, and Fleur Dis Lee will not be buying any new dresses until after the showcase at the Grand Galloping—“

Rarity slammed the phone down again. A moment later it began to ring.

It was a supplier, asking why the dresses were losing money.

“But I haven’t sold any!” Rarity said.

“You seem to be losing money on them anyway. Could…could you stop them doing that, please?”

“I…I need to make a new dress! Send me the fabrics! I want the finest silk! I will make something worthy of the Gala!“

“We can’t send you anything, ma’am. We’re going broke.”

“But…but how is that possible?”

“Dresses aren’t selling.”

“But I lowered the prices!”

“Yes, that seems to be the problem.”

“Then I’ll raise the prices back again. Everything will be good as new!”

“You can’t do that, ma’am. Right now your low prices are the only thing keeping you in business.”

“But you said I was losing money on every dress that I’m selling! Which is none, by the way.”

“Yes, ma’am. It’s a little confusing for us too.”

Rarity slammed the phone onto the receiver. It bounced off and clattered on the floor. Buzzzz, went the phone, and fuzzzz, went Rarity’s brain. Meeaaarll, went the cat as it finally clawed through the fabric of Rarity’s dress and dashed to safety.

A week ago Rarity would have gazed helplessly into the pit of despair. But this Rarity was a Rarity who had read The General Theory of Employment, Interest, and Money by Lady Joanna Maynard Keynes. And this Rarity had a pretty good idea of what was going on.

What was going on was expectations, and how one simple act had depressed them.

Expectations of the future were formed on the basis not of rational foresight (thought Rarity) but on aphorism, catechism, and cliche. And one such known, immutable fact about the world was that Rarity never lowered her prices.

Then, in a matter of minutes or hours—she honestly couldn’t remember—she had. All of them.

What was everypony to make of that? A change of heart? The return of the draconequus seemed more likely. Or…

There were rumors that Nightmare Moon had escaped that day when the Elements of Equilibrium had been united against her. There were rumors that Princess Celestia could not bring herself to strike the final blow against her sister, and so the dark mare had gotten away. Now she hid in the shadows during the day, and at night she took to the skies once more, looking for economies to depress, aggregate demands to suppress.

Mere stories to scare fillies, to keep them indoors at night. Of course. Of course. And yet…Rarity lowering her prices? Suddenly legends seemed plausible.

There was only one possible explanation. Rarity hadn’t lowered her prices out of choice. She lowered them out of necessity. And by the transitive property anything strong enough to force Rarity to lower her prices could force anypony else to do the same. In other words, whatever had happened must have been enough to precipitate a fall in the general price level.

No pony could say if it was fall in the general price level that forced Rarity to lower her prices, or if Rarity’s act of lowering her prices caused the general price level to fall. Her choice sent an impulse through the economy, a shock to expectations, and firms, well, firms had no choice but to lower their prices as well. And by lowering their prices, their income. And by lowering their income, their spending. And by lowering their spending, their demand for goods and services. And by lowering their demand for goods and services, other firms were forced to lower their prices. And by lowering their prices….

So the demand shock was transmitted throughout the economy. Whether anything had even changed no pony could say for certain. One moment the economy was healthy, the next moment on the verge of collapse, and it all had something to do with expectations.

Surely this is all temporary. Surely the economy would be back on its hoofs shortly. An entrepreneur will get an idea, investment will pick up, prices will rise and employment will follow, after a lag of course. All the entrepreneur needs is someone willing to lend them money, at a suitable rate of interest of course. At an interest rate, say, higher than zero. But if the interest rate is determined by the expectation of profitable opportunities in the future such that it becomes valuable to have money in the future rather than spend it all now, then the question of the rate of interest must be the question of the state of long-term expectations.

Perhaps ponies do not expect much of themselves. Rarity would not be surprised by it.

But wait, is there hope after all? The lower the interest rate on borrowed money, the more profitable the investment. Yes, the discount rate that would make the present value of the lifetime expected returns just sufficient to justify the cost of supplying the capital in the first place—shall we call it the marginal efficiency of capital? Yes, if the marginal efficiency of capital is greater than zero, then investment will be profitable if interest rates are zero—the expected return will exceed the interest needing to be repaid.

Unfortunately, the expected return on future capital is also determined by the expectation of profitable opportunities in the future.

(So what do we learn about interest rates as a guide? Nothing…yet.)

So where’d the money go, anyway? Ponies still have it, but they aren’t spending it. They aren’t saving it, either. They’re just…holding it. When they cannot demand goods, and they cannot demand investment, ponies can at least demand liquidity, that their money be held as the one asset that might be expected to retain its value: the bits themselves. So long as ponies have nothing to spend on and nothing to invest because they cannot spend and cannot invest because they cannot work because ponies have nothing to spend on and nothing to invest…so long as that dreadful chain binds the legs of Equestria, that liquidity is trapped. Pump the banks full of it, and it shall sit there until the equilibrium is broken and restored anew by some other means.

And so the Princess, shall we call on her might? The One Bank, what shall it do? The Princess wears it and turns invisible!

What are ponies doing during all this? For many of them, quite little. They have been laid off, you see, being unwilling to take a cut to their nominal wages, and so they see them slashed to zero instead.

Okay, okay, you say, holding up your hoofs. The economy might be stuck in the doldrums, unable to invest without consumption and unable to consume without investment, but markets still work. If a price is too high to sell the full quantity of goods, the price will fall. There can’t be an high-unemployment equilibrium…right?

Maybe. If competition were perfect, you might have a better point. But in fact it is entirely possible that while quantity may not allocate resources like prices do, it certainly may ration them just as well! In other words, prices may fall and the quantity of labor employed rises, but it is not required. Prices may stay where they are, the unemployment rate rising to compensate, and this too is an equilibrium as long as all that liquidity is trapped.

In the economy the long-run equilibrium is the ultimate, indefatigable attractor, with profit the black hole at the center of the brilliant catallaxy, prices lit up everywhere like the great swirl of stars and fulfilling much the same function in terms of information. What Keynes saw is that this attractor is not necessarily strong enough to pull the economy out of its sluggardly orbit.

Are ponies doomed to sleep forever? No…but like the earth follows its star, ponies too need something, something like a star in the daylight. Well, what did you think that line meant, anyway? And isn’t that just the sun?

Rarity got to her hoofs. She threw back her head.

“No! I will not give in to despair! I am still the most fabulous Unicorn in the existence of Unicorns! Forget Sur Polomare, she’s a hack! At the Gala Fleur Dis Lee will see only me, myself, and I!”

Rarity threw open the doors of the Carousel Boutique. It was Tuesday, and Ponyville was aflame with violet.  The sun streamed in as Rarity stepped out.

“I understand,” Rarity said to the sky. “The Flim Flam brothers want to have a macroeconomics-themed rap battle determined by popular vote? Well! I, De La Fashion, shall win this beauty contest and take my place as the rightful ruler of Ponyville! With the power of Keynes!”

De La Fashion eyed her fiefdom with disdain. She stood upon the stage, the heart of her court, with queenly grace. She considered her subjects. And made her bid for greatness.

Rarity aka "De La Fashion" performing

"Old Keynes and New Clothes"

This is dedicated to all my ponies

Diagnosed with a bad case of that classical upbringing

And took the classes and expelled the bad gasses

That passes for passive analyses inspired by old fashions

Your college, your professors, no matter which type

All the same type of clown holding the economy down

I never missed a chance to move ahead of things

Keynes on the mic, beat on the upswing

The economy too if you listen to me sing

Oui, oui, big fashion mare’s hoofing in town

Comment allez-vous, allez-vous

I got the dresses to make ya shine

at the gala where we’ll fight the power

And retire to Valhalla

Where Suri Polomare will the the solo mare

Serving us mead in our evening wear

Economics was always my destiny

My mother was a Keynes and Marshall taught to me

All the secrets of the friendship science

Funded by Pigou though I showed defiance

I became famous at the treaty of Versailles

Wrote a big book telling them why

Those reparations would cause frustration,

Bringing inflation and abdication

Leaving the economy up to predation

And leading all of Europe to a confrontation

When the consequences of the peace have run their duration

Give my best to the rest of the conquered Alsatians

Who can be beautiful

Who can be classy

Who can be stylish

Who can be fancy

Who can make it rain for the whole economy?

Joanna Keynes and her monetary philosophy!

Ego trip….

I’m sick of economists blaming workers

I’m sick of talking bout unions, sick of bankers

Sick of special cases, sick of ugly clothes

Sick of long run promises and short-run woes

Sick of talking bout velocity like its stable

Sick of talking bout Say’s like it’s reliable

Old-fashioned morality making the whole economy collapse

Stakes is high and I don’t have time

For ponies who think spending is a crime

Stakes is high, confidence is low

Telling ponies the economy will grow

In the long run when things are settled

Ain’t just useless, it gets me nettled

Cuz whatever you might have learned from Pigou

Fact of the matter is none of it’s true

Everypony’s saying

What to do when the economy is collapsing

They don’t know that Fashion don’t go for that

Liquidizing is pro-cyclical

Can’t lower wages or things’ll get biblical

How does the economy really work?

And how can we keep it from going berserk?

A general theory is what we need

So the economy can be freed

From the constraints of animal spirits

It all has to do with investment and consumption

Imperfect competition? Get outta here with that reduction!

Yo, I’m never singing the blues but finding the clues to maintain

Aggregate demand, and I been blessed to reign supreme over the cream

Of the crop of economists—but don’t call me vain

I’m a perfect mare and I’m holding the clue

to making macroeconomic dreams come true

I find the central bank setting interest rates

Trying to find the goal but the depression won’t abate

Monetary policy’s weaker than a PoloGown

Fiscal policy’s the only game in town

Econoponies trusted what they learned

Ended up losing everything they’d earned

So quick to blame unions, workers and protectionism

But the depression discredited -ism after -ism

It was hard to find others around to point my hoofs at

Which made me realize the truth

The biggest suppressor could be the amount of spending in the economy

Realizing it it hit me like Celestia’s hoofs

Get consumption up, and investment rises too

Ponies still think that it’s wrong to spend

But if you find god she’ll pay you to be confident

Well I feel the world around me

Ponies being down, bringing others down

Cuz ponies make up their minds, where they wanna be

Based on the other ponies that they see

So if you want to get investment up

You gotta spend to get consumption out of its rut

With fiscal policy you can decide where the economy goes…

…Like playing with a cat on a string….

Yeah….

Travelinnnnnnnnnn at the speed of the multiplier

Hey yo fillies

"What’s up!" the eager fillies said.

Remember when gold used to be dope?

"Yeah!"

I owned a pocketful of bling

Thank Celestia that’s over now!

Can’t believe I used to be for Benjamin-

a Strong and all that I believed in my Treatise on money

Thought the Bank was the Mother Goose with the faberge eggs

But now the monetary seems like the dregs

Of the important parts of the economy

À bon chat, à bon rat

Pardonnez-moi je appelle un chat un chat

I live in the moment, that’s nothing to run from

Ponies change their consumption depending on their income

When incomes fall then consumption falls

And when consumption falls then income falls

I call this spiral Hurricane Investment-shy

And this whole process is crowned

By a little something called the zero lower bound

Interest rates reach a minimum

When lending money yields a negative sum

So government’s gotta take the world on its shoulders

Cause when Atlas shrugs the economy just smolders

That multiplier is the magic number

After the first flash of spending then comes the thunder

If it’s greater than one then another one gets spent too and it’s going through

The economy. These colors don’t run but the banks sure do.

I’ve found that it’s not wise

To leave the economy untended

On my oath I swear

Savings is the source of real growth right here

What's savings? Nothing but investment

That's just the assessment of the pony with the vestments

It’s the paradox of thrift

Making the economy drift

Away from that long-run equilibrium

And though I face opprobrium

I'll say it: UNEMPLOYMENT DOES NOT FIX ITSELF!

De La Fashion patted her mane. Twilight Sparkle's mouth hung open, and she thought it might never close again.

Who stole, who stole, who stole the money from the economy?

Now you got the message

What to do in a recession

The crisis I predicted

When spending is restricted

Hicks stole my words of fame

But I'll take the blame

For everything done in the name of Keynes

The haters gonna hate but I made it big

Hicks did the translating while I rocked the gigs

I brought a revolution to the science of friendship

All by myself but I should mention mares like Hansen

Who brought to the masses

My message of action against collapses

Though I’m the master I try to stay real balanced

Like my main mare Patinkin who’s so demanded

And Samuelson, who can forget that pony?

The neoclassical synthesis deserves its own story

So I did it, I won against the misers

Sit back and watch as the sun rises

I broke through and that’s the breakadawn

Now mirror, mirror, on the wall

Who is the prettiest one of all?

Can it be velocity?

Or do we liquidate it all?

Sit with me and read my book

This general theory’s off the hook

And if you found the exposition dry

Then just remember that it’s all down to C and G and I

It’s just C and G and I

It’s just C and G and I

It’s just C and G and I

De La Fashion tossed her hair. "That's how it's done, darlings."