The Minsky moment in Mary Poppins

The views on saving versus investment expressed in Mary Poppins, released in 1964 when Hyman Minsky was in his prime intellectually, quite nicely presage the coming credit bubble leading up to the great financial crisis of 2008 onwards.  This is the story of a battle between the proponents of a welfare state, gross national happiness, fun and games, care for the elderly, humanity on the one hand, and investment, austerity, asceticism on the other, as represented by the two characters of the childrens' nanny, and the childrens' father.  The fiscally prudent state and the nanny state.  The children are us, the people.  

The key moment revolves around the question of what the boy should do with tuppence (that was set in 1910, which corresponds these days to less than two pounds adjusting for inflation).  Poppins advises him to 'feed the birds'.  Listen for yourself.  How could you refuse?

His father advises him to invest wisely.  But the characterisation of both choices leave it in no doubt where the film makers' hearts lie.  The old woman feeding the birds is a fine enough image of the recipient of social benefits.  The bank head complains that the result of feeding the birds is fat birds.  So there you have it.  We've been dealing with both of these opinions for quite some centuries, and both have validity.  Nothing's been decided or proved any way, the argument moves on.

Here's what the banker would do with the money.  Written down, who could complain?

If you invest your tuppence Wisely in the bank Safe and sound

Soon that tuppence, Safely invested in the bank, Will compound

And you'll achieve that sense of conquest as your affluence expands

In the hands of the directors Who invest as propriety demands

You see, Michael, you'll be part of

Railways through Africa Dams across the Nile Fleets of ocean greyhounds

Majestic, self-amortizing canals Plantations of ripening tea

All from tuppence, prudently Fruitfully, frugally invested

In the, to be specific, In the Dawes, Tomes

Mousely, Grubbs Fidelity Fiduciary Bank!

Now, Michael, 

When you deposit tuppence in a bank account

Soon you'll see That it blooms into credit of a generous amount

Semiannually And you'll achieve that sense of stature

As your influence expands To the high financial strata

That established credit now commands

You can purchase first and second trust deeds

Think of the foreclosures!

Bonds! Chattels! Dividends! Shares!

Bankruptcies! Debtor sales! Opportunities!

All manner of private enterprise! Shipyards! The mercantile!

Collieries! Tanneries! Incorporations! Amalgamations! Banks!

You see, Michael

Tuppence, patiently, cautiously trustingly invested

In the, to be specific, In the Dawes, Tomes Mousely, Grubbs

Fidelity Fiduciary Bank! 

That banker is making a decent case for a well diversified portfolio of investments.

The children refuse the investment offer and inadvertently trigger a spot of financial fragility (no doubt already there in the system) - namely a run on the bank.  Not the first time the people's spending and investment patterns trigger a financial crisis.  Not the first time - nor the last - we have difficulty judging how much to spend and how much to invest.