Quote of the Day

R H Tawney wrote…

“Bankruptcies of governments have, on the whole, done less harm to mankind than their ability to raise loans.”

Occupy the Bank of England
Inflation Helps Central Bankers, Hurts Us All

The “Occupy the London Stock Exchange” and “Occupy Wall Street” crowd have got the wrong target. Living standards are being deliberately and systematically undermined by central bankers not stockbrokers. The London protestors should head over to the Bank of England and their friends in NYC should head for DC. Inflation at 5% is robbing rich and poor alike of our earning power.

In consistently predicting this inflationary mess Guido would happily claim sagacity, but it is pretty basic economics that if the supply of something rises, unless demand increases, the value of it goes down. If you print more money, you get inflation. Simples.

Ben Bernanke and Mervyn King say inflation isn’t a problem, in fact the Bank of England’s official position is that deflation is the danger. The Chancellor says he agrees with the governor. George Osborne also claims he is a “monetary activist”, though since monetary policy is in the hands of the nominally independent Bank of England it is hard to understand how his activism can take effect. He also claims to be a “fiscal conservative” who, when not putting up taxes, spends and borrows more than Gordon Brown. Mervyn King is alright, his pension is inflation protected.

In the think-tanks and on the financial pages the likes of Allister Heath, Dan Hannan, the MPs Douglas Carswell and Steve Baker, as well as yours truly, are all sympathetic to a radical school of economics that is attracting growing interest. The father of this school was an Austrian economics professor, Ludwig von Mises, as the credit crisis deepens his books are selling better, in particular Human Actionin which he warns

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Capitalism is widely understood as a profit and loss system, through trial and error in free markets we find a more optimal allocation of resources. If central banks deliberately provide cheap and easy credit the creative destruction that is part and parcel of capitalism ceases. The losses and errors are not destroyed, instead they are bailed out until an incredible €2 trillion €uro bailout is the consequence.

Banks under-priced risk because interest rates were too low for too long. The US housing bubble owes its existence to central bankers, the recklessness of investment banks was encouraged by the Fed rescuing investors in Long Term Capital because it was “too big too fail”. The credit crisis of the West is now, finally, approaching “too big to bail” territory. The catastrophe will be greater the longer we try to head off economic reality with short-term bailouts which make things worse in the long-run.

OZBOT VERSUS ANDROGENOID OZBOT VERSUS ANDROGENOID
“Fat Cats For EU” “Fat Cats For EU”
“CHEATED” LIBDEM PICTURED CAMPAIGNING ON BATTLE BUS “CHEATED” LIBDEM PICTURED CAMPAIGNING ON BATTLE BUS
CHRISTINE HAMILTON HIRED ON THE PUBLIC PAYROLL CHRISTINE HAMILTON HIRED ON THE PUBLIC PAYROLL
CONSERVATIVES IN: SPOT THE DIFFERENCE CONSERVATIVES IN: SPOT THE DIFFERENCE
HULL UNIVERSITY THIRD TO DISAFFILIATE FROM NUS HULL UNIVERSITY THIRD TO DISAFFILIATE FROM NUS
CAMERON’S AIRFARE FABLE CAMERON’S AIRFARE FABLE
TELEGRAPH BLOODBATH: NEW JOBS CULL UNDERWAY TELEGRAPH BLOODBATH: NEW JOBS CULL UNDERWAY
CCHQ FREEZE MPS AND ASSOCIATIONS OUT OF VOTE SOURCE CCHQ FREEZE MPS AND ASSOCIATIONS OUT OF VOTE SOURCE
OSBORNE MISSED BORROWING TARGET BY EVEN MORE THAN PREVIOUSLY THOUGHT OSBORNE MISSED BORROWING TARGET BY EVEN MORE THAN PREVIOUSLY THOUGHT
POLICE INVESTIGATING SHADOW MINISTER OVER ELECTION EXPENSES POLICE INVESTIGATING SHADOW MINISTER OVER ELECTION EXPENSES
TOOTING BY-ELECTION CAMPAIGN KICKS OFF IN BATTERSEA TOOTING BY-ELECTION CAMPAIGN KICKS OFF IN BATTERSEA
ELECTORAL COMMISSION ON JOCK-‘COPTER CAMPAIGN ELECTORAL COMMISSION ON JOCK-‘COPTER CAMPAIGN
STURGEON DUCKS CHOPPER QUESTION STURGEON DUCKS CHOPPER QUESTION
NUS CHIEF EXECUTIVE PAID FIVE TIMES AVERAGE GRADUATE NUS CHIEF EXECUTIVE PAID FIVE TIMES AVERAGE GRADUATE
CORBYN CLAPPED COMMIE LEADER FOR REFUSING TO TOAST THE QUEEN CORBYN CLAPPED COMMIE LEADER FOR REFUSING TO TOAST THE QUEEN
SNP CHOPPER NOT DECLARED PROPERLY SNP CHOPPER NOT DECLARED PROPERLY
SADIQ RAISES EU FLAG ABOVE CITY HALL SADIQ RAISES EU FLAG ABOVE CITY HALL
SAJ ‘PRIVATELY SAID HE WANTED TO LEAVE’ SAJ ‘PRIVATELY SAID HE WANTED TO LEAVE’
CRICK CRICK’D CRICK CRICK’D
EU WANTS CULTURAL QUOTAS ON NETFLIX AND AMAZON PRIME EU WANTS CULTURAL QUOTAS ON NETFLIX AND AMAZON PRIME
LIBDEM WHO COMPLAINED TO POLICE ABOUT TORY ELECTION FRAUD BROKE SPENDING RULES LIBDEM WHO COMPLAINED TO POLICE ABOUT TORY ELECTION FRAUD BROKE SPENDING RULES
LABOUR WON’T ALLOW CONFERENCE DELEGATES TO SELF-IDENTIFY LABOUR WON’T ALLOW CONFERENCE DELEGATES TO SELF-IDENTIFY
WORST BEATLES TRIBUTE BAND EVER WORST BEATLES TRIBUTE BAND EVER
CELEBRITY CONSUMER CHAMPION HITS BACK AT BSE CELEBRITY CONSUMER CHAMPION HITS BACK AT BSE
MOMENTUM REJOICE! ONLY 65% THINK CORBYN NOT READY TO BE PM MOMENTUM REJOICE! ONLY 65% THINK CORBYN NOT READY TO BE PM
TAXPAYER FUNDED ASH LOBBIED GOVERNMENT FOR PLAIN-PACKS TAXPAYER FUNDED ASH LOBBIED GOVERNMENT FOR PLAIN-PACKS
REMAIN’S GILLIAN DUFFY MOMENT REMAIN’S GILLIAN DUFFY MOMENT
NORTHERNERS MOCK “GRIM UP NORTH” BURNHAM NORTHERNERS MOCK “GRIM UP NORTH” BURNHAM
LONG-TERM RISE OF ANTI-POLITICS LONG-TERM RISE OF ANTI-POLITICS