October 16th, 2011

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.


  1. 1
    Billy Bowden is the greatest umpire ever ! says:

    And parliament!


    • 3
      RED ED - SON OF BROWN says:

      Calm down !! Gordon abolished Boom and Bust in 1997.


    • 5
      Spider Kelly says:

      Governments always have and always will inflate their way out of debt. It’s not rocket science, it’s what always happens.

      The wise virgin will be buying up land and housing as fast as she can.


      • 149
        john in cheshire says:

        GF, if you are truly an Austrian Economics supporter, then perhaps you should acknowledge the existence of the Cobden Center website, which is all about Austrian Economics. Also, ZeroHedge website for same reasons.


      • 169
        Anonymous says:

        And putting up grills and buying chemical fire extinguishers (similar effect to a shotgun at close range and does not require police permission) to protect their home and shops during the next round of riots and looting as the message gets through to the proles that HMG has bought into Wiemar Republic economics.

        So who is our Oswald Mosley figure?

        And without a P.G. Wodehouse to debag him (Sir Roderick Spode and his Black Shorts) will we succumb to National Socialism after the middle classes have lost their savings?


        • 267
          Bridey says:

          At least we’ll be growing British Vegetables for the health of British Knees. As for the middle classes, well I’ve never liked their prejudices on the whole. They’ll soon find their ‘Leader’ if history tell us anything about their fear of losing ‘their’ property.


    • 64
      Here and Now says:

      Doesn’t really matter though does it… I mean, “The revolution should be starting in Kings Cross station”… “No, it should start at Euston” really doesn’t cut it… it’s like some kind of weird Monty Python sketch. Who cares where it starts, all that matters is that it DOES start. The really interesting question, is “where is it going?”

      Well, that’s partly up to you. At the end of the day, most of the readers of this blog have more in common with lefties than they think – alcohol, weed, shared musical tastes (Guido ;-), plenty more besides.

      Important thing to remember is that it’s about the 99%.


    • 128
      Gooey Blob says:

      I couldn’t agree more, Guido. The MPC have completely and utterly failed to keep inflation in check, and instead of concentrating on inflation targets are now wilfully boosting inflation with no intention of hitting their targets. Their forecasts are increasingly ridiculous, and there can be not one single individual of sound mind who believes their medium-term forecast of inflation returning to 2%. While the markets regard the MPC forecasts as a laughing stock, it isn’t funny for those of us in the real world. RPI has been over 5% for a long time now, and it is hurting people.

      The MPC’s ill-considered policies are making the situation worse. It is time to replace the lot of them.


      • 170
        Anonymous says:

        Part of inflation is VAT increase and other indirect taxes. Most of the past inflation is due to increasing wages and growth in jobs in UK, we haven’t got these. There is no internal inflation, inflation we have is imported and increased taxes these cannot be controlled by Bank of England.


        • 186
          Anonymous says:

          The same horseshit I see parroted on every lefty blog. Usually by some Krugman or chartalist wannabe whose understanding stretches to 10 minutes of browsing websites for confirmation-bias.

          The problem, unfortunately, is that it’s complete bollocks. Inflation is always and everywhere a monetary phenomenon. Protect the value of the currency and this ‘imported’ inflation will magically go away.

          The real reason this won’t happen is not because we are unable to control inflation. It’s because we’re deliberately UNWILLING to do so. Maintaining the value of the currency will see those who over-leveraged, malinvested or committed fraud finally face the truth – and its hideous consequences. It won’t be pretty, but as per Von Mises quote above, it WILL happen, as we cannot move on until we deleverage and restore integrity to the system. The inflationary path will take us to the same ending, but will impoverish EVERYONE in the process, rather than just the over-indebted and dishonest.

          I’ll say it again just to be clear, maintain sound money or EVERYONE is impoverished, not just savers. Even those who have inflation hedges, such as gold, will still have to accept payment for their future labour in devalued currency. The added bonus of sound money is that it’s also the easiest way to extract us from the jaws of the blood-sucking zombie banks, as they’ll have to eat their losses along with everyone else and find their true value – ZERO.

          Anyway, I seriously doubt we’ll take the honest path. So I’ll stay in gold and travel to earn in whichever currencies manage to survive the bloodbath. There’ll be a lot of pain before this decades out, 100% guaranteed.


    • 147
      Iloathlefties says:

      This is all about a sneaky way to reduce all our living standards and Government liabilities, paying it through the reduction in value of peoples savings, earnings and pensions. Stealthy slimey bastards who still have RPI pensions (MP’s and Bank of England!) themselves of course


    • 226
      Up sh1t creek says:

      Don’t worry, George Osborne is on the case. He will let the crooked bankers get away with defrauding the taxpayers in the greatest theft in the history of planet Earth.

      Let’s not forget that Osborne and Mervyn King are in on the scam to steal from the prudent to give to the feckless and crooked.


  2. 2
    Billy Bowden is the greatest umpire ever ! says:

    Just one question Guido (If you dont mind?)

    Can anyone point to any document/reserch that shows printing money is or has been a sucsess?


    • 6
      Great Granddad says:

      Nobody can and nobody ever will.


    • 19
      counterfeiter says:

      As long as you’re careful and don’t go splashing it about. I haven’t done too bad over the years.


    • 22
      no longer anonymous says:


      One of the key insights of the Austrian School is the impact that printing money has on an economy’s capital structure and the distortions that it creates. Mises himself didn’t have much to say about capital theory but Hayek, Lachman and modern-day Austrians do. There’s a good, albeit simplified, example here:



      • 25
        no longer anonymous says:

        To clarify the above, printing money can sometimes work in the short term insofar as it staves off a recession but it only delays the inevitable correction.


        • 28
          Billy Bowden is the greatest umpire ever ! says:

          thanks for that :-)


          • Disliker of Bankers says:

            The “money” went onto the bank balance sheets and strangely got stuck there – wasn’t it intended for small business to make jobs for all the public servants being made unemployed?
            B(w)ankers? Lovely people!


          • Engineer says:

            Gummint to banks, “Strengthen your balance sheets and lend to small businesses.”

            Banks to Gummint, “Which do you want us to do first?”

            Gummint to banks, “Both.”

            Another problem is that prior to 2008 the banks were lending to almost anybody. Small businesses were pushing away banks wanting to lend. Consequently, many loans were made that were not really financially secure enough. Now, it’s harder to find solid businesses, so lending has dropped – there’s also the human factor of overcorrecting after making cock-ups previously.


          • Nonny Mouse says:

            AA/Saga have debt of £6.6 billion, they paid £700 million in interest payment alone last year. Most retailers are carrying huge debts.


          • The Paragnostic says:

            “most retailers are carrying huge debts”

            Trouble is, those debts are secured against property which isn’t worth anything like as much as was assumed when the loans were given, so that money isn’t really there – it exists only as red ink on balance sheets.


          • AC1 says:

            Hence lying about how high inflation is, till the “insider-class” (bondholders) are made whole again.


    • 47
      Numerate Nerd says:

      That’s two questions, not 1.


    • 80
      Jamie Dimon says:

      Yes – see my bank statement


  3. 4
    no longer anonymous says:

    Interestingly even on some sections of the Left there’s a growing interest in genuinely free markets as an antidote to state-capitalism – http://radgeek.com/gt/2011/10/14/markets-not-capitalism-1st-ed/


  4. 10
    Sue Denim says:

    Don’t say “simples”! It makes you sound like a moron.

    Otherwise, I totally agree with you.


    • 20
      compare the simpletons.com says:

      Totally agree, this blog has had it’s low points, but WTF?


    • 62
      Oldrightie says:

      Meerkova is terribly hurt by such racist remarks!


    • 90
      A bear says:

      I am in full agreement with our host’s incisive analysis. BTW, do you know where I shit?


    • 239
      get da poynt says:

      Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples Simples


  5. 11
    The Paragnostic says:

    While the US housing bubble was fed by the central bankers, over here the bankers had willing co-conspirators in Brown and Blair who presided over a credit boom knowing that a property value boom would soak up the excess money, and knowing also that the resulting illusion of prosperity would allow them to expand the State in the way that they wanted.

    That the people were foolish enough (for the most part) to fall for such a scam, blissfully unaware that the increase in property values was apparent rather than real, and that people are still unwilling to accept that a readjustment in property values is necessary (be it by the underhand method of inflationary money-printing or by a good, honest crash) – this is the real failure.

    Surely we can not already have forgotten the devaluations of the 1970s, with Healey running cap in hand to the IMF? Time to make the rent seekers pay the price, and sooner rather than later.


    • 79
      Anonymous says:

      Thank you, now piss off.


    • 131

      The devaluation of Sterling was actually on 18 November 1967. It went from $2.80 to $2.40, a devaluation of 14.3%. Wilson claimed, “The pound in your pocket will not be devalued.” (Compare this disgrace to the 30% effective devaluation cause by Brown’s lack of prudence and weep.) The pound floated from August 1971 onwards, as the Bretton Woods bodge-up crumbled with the devaluation of the dollar (to pay for the Vietnam war), rendering the pound’s value a function of the market rather than a decision by government. Due to Labour’s financial ineptitude, it was forced to ask the IMF for a bail out in 1976 leading Callaghan to adopt stricter spending controls which lead to the Winter of Discontent and the election of the Conservatives under Margaret Thatcher.

      You are quite right to point out the property bubble but fiat money, and the rep.eat of all Labour’s mistakes, has also contributed to this clusterfuck that we find ourselves in.


      • 146
        The Paragnostic says:

        Mea culpa – I must be remembering the reruns of Wilson’s ‘pound in your pocket’ that they showed when Healey came back from the IMF.

        Fiat money is a problem, government overspending is a bigger problem, poorly regulated fractional reserve banking is even bigger, but the point is that all these problems would have been apparent much sooner if the property sector hadn’t soaked up the excess credit and given the impression that we were in a period of stable growth.

        I lay the blame squarely at the feet of the politicians – it was Blair and Brown who pushed for easy credit and light-touch regulation, it was Brown who increased public spending and borrowing beyond any conception of what was sustainable, but it was the people who kept voting the moral bankrüpts back into power while boasting about how much more their home was worth who are at the root of the problem.


        • 173

          But the expansion of credit that took place occurred with the backdrop that money did not have to be backed by gold – or anything for that matter. Quantitative Easing is only the last gasp in the process. The undiscovr’d country from whose bourn no central bank returns…

          I’m beginning to sound like Mr Ned.


          • The Paragnostic says:

            I’m beginning to think that Cobbett was right when he argued against paper money – money backed by nothing more than promises isn’t really wealth, and when it’s backed by nothing more than debt, we really are fucked.

            I’m amazed we’ve managed to survive for the last 200 years without it all imploding – but I do have some spare shares in my “Why, Ma?” wheelbarrow company that you can have at a discount…


          • Cobbett was a very early Libertarian and risked charges of sedition, just as we would have done if Jonah were still to be in charge (heaven help us!)


          • AC1 says:

            Money IS backed by the ability to pay taxes with it.

            Gold is backed by being Gold and costs wealth to store. It cannot be any more wise to trust the economy to miners of it than to trust central bankers with an interest in higher credit volumes.

            Fiat money is unfortunately the best option, we just have to move the credit market BACK from being a commons and back to a competitive market.


          • Follow the argument, AC1, but do not see an exact, or even close, equivalence between the ability of the state to raise taxes and the value of fungible assets, which retain their value against all currencies. In practical terms, it depends upon your view of the currencies involved. I fear more what might happen to the Pound that what might happen to the Euro (although I am insulated to a greater extent from both). There is still a propensity to work hard in Germany, Netherlands, Austria, northern Italy, Scandinavia which is not as apparent in the UK which has an over-inflated dependency culture.


  6. 13
    Antisthenes says:

    “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.”

    Nobody is listening, those that have control over such things that is.

    Of course you have the “occupiers” now who are demanding that the cuts be stopped and the borrowing, money printing and wealth creation be stopped as well. From politicians through the central banks to the man on the street, the zombie fruit cakes are running amok. What next? Mass suicide. The rational among us be afraid, very afraid.


    • 36
      Fruitbat says:

      How very true. These EU nutters will do ANYTHING that they think may save their little baby. It is their world, their everything, and they will ruin economies, pension pots etc, and when the dust settles, things will be very different, but sadly in a very bad way.


      • 118
        Rat's arse says:

        Feckin heck! I am so depressed now.
        It’s enough to make you want to go home and k*ll your nearest relative.

        Thanks a bunch Guido!


        • 145
          Antisthenes says:

          In your case suicide would for society be a very attractive option. It would be a mercy killing.


          • Rat's arse says:

            Oh Antisthenes, you are such a charmer. Your mother must be extremely proud of you; either that or she thinks you are a complete and utter bag of shite – the latter I think!


      • 248
        Susie says:

        This reminds me of the mad two weeks Diana died… everyone was astonished if you said you didn’t give a shit. I feel exactly the same about the €uro. I’d like one of them to explain exactly what would be so bad if it became a footnote in history.

        Would the cashpoints not work for a couple of months? Would there be no food in the shops? No petrol? Would there be rationing? Would we have to assemble at some soup kitchen once a day? Or what?


        • 287
          oddly helpful says:

          In a consequence-free environment, the initiators of the crisis risk only promotion according to the Peter Principle, or Beatification by their acolytes.


  7. 13
    Lord Carrington's binoculars says:

    We’re freebasing on bailouts, when we should be rebasing…


  8. 15
    is cling film the most annoying invention ever? says:

    But apart from all that, things aren’t too bad?


  9. 16
    Tory traitors says:

    That Nadhim Zarawi MP certainly made a tit of himself on the Politics Show.
    Why do the Tories continue to blow it over Europe?
    Are they simply too fucking dumb to catch the mood of the nation?

    All Farage had to do was sit back and let the fool dig the hole deeper and deeper and deeper.


    • 27
      Fruitbat says:

      Yes, that was very sad to see Farage having the real Tory view and a so called ‘real Tory’ sounding like a Lib Dumb!

      Earlier in the report they had Hesketh saying that the EU is hardwired into our political system, and the politicos can’t even think about not being part of it. If that is a supposed TORY that I have just heard, then they will never, ever get my vote again….


      • 98
        Iloathlefties says:

        The problem for the current Conservative Party is that they are run by two left wingers, Cameron and Osborne. People have woken up to this and the more they bleat about how good the EU is we traditional Tory voters realise their crass dishonesty and hypocracy. I think UKIP will surge in the polls due to this.
        I for one will not be voting Tory again until such time as we leave the EU, revoke the Human Rights Act, immigration to zero with repatriation and NO Foreign Aid!


  10. 17
    Anonymous says:

    If only Joseph Kennedy were alive he would know what to do, ha ha Remeber remember, 23 October


  11. 21
    tinks says:

    Interesting post Guido, it’s one thing trying to inflate away the debt. It’s another leaving behind the people who are not protected from this. Didn’t this funny money end up in commodities?

    Having failed to regulate, when the central bankers began to print money and bail out the banks, the question came to mind, where would it end, when would it stop?

    Good to see people waking up, and asking questions. Getting the correct answer is another matter.



    • 24
      Jerry Attrick says:

      We haven’t got inflation. Inflation is when wages are chasing prices. At the moment what we have is price rises. Wages are static or falling.


      • 38

        A unique definition of inflation.


      • 83
        Marc Faber says:

        You’ve been listening to the BBC too much. Inflation by its proper definition, is the increase in the supply of money. Increasing prices is a symptom of that. We do have inflation, and sooner or later we will have a big increase in the velocity of money.


        • 155
          Dustin Credible says:

          Surely we have stagflation


        • 206
          AC1 says:

          Nothing wrong with the increased velocity of money….

          The reason is WHY they are changing their currency into goods is not because they want the goods, but because they don’t want the cash.

          Currencies “job” is to be a temporally stable medium for temporal exchange (temporal barter, you sell goods when they are worth most and buy goods when you need them most)


    • 203
      AC1 says:

      >it’s one thing trying to inflate away the debt

      Debt is ONLY inflated away by WAGE inflation. We see no sign of wage inflation.


  12. 23
    Anonymous says:

    This strategy for keeping the corpse alive is Marxism through the back door, a bit like getting a surprise visit from Chris Bryant.


  13. 26
    East India Company wallah says:

    Inflating away government debts was always on the cards from the moment those debts were run up hosing cash at wasters n wankers in Labours vain attempt to seize control for the state of “the commanding heights of the economy”.No point complaining,it has to be done.
    What is imperative is that the public sector have their pay frozen for at least three years so the taxpayer doesnt end up chasing the horizon with devalued spending power trying to pay down increasing debt


    • 244
      Joshua Tetley & Son says:

      “”What is imperative is that the public sector have their pay frozen for at least three years so the taxpayer doesnt end up chasing the horizon””

      Easy said if you are not in receiptof a public sector pay cheque !!


  14. 29
    Wreckless_Eric says:

    Is not the argument that all Capalist ventures are doomed to inflationary Boom periods followed by Cataract-like busts a proof of Markism?


  15. 30
    Jingouk says:

    Take a walk around a market town in the Shires on a Monday night at half past eight and what do you see? Blazing lights illuminating completely deserted streets.

    There is an excess of capacity in the economy – some of it as dead as Python’s Parrot.

    If you stand in a jungle – nature’s market – the overwhelming impression of the self-sustaining environment is not one of growth and vigour but of decay and rotting vegetation.

    Both the Republicans and Labour turned the credit taps on and left them running for short-term election-fixing. We have to deal with this mess. Although the brakes have been applied we will still roll into a crash. The coalition has wasted valuable time in not applying the brakes harder still.

    They should be bolder and force the medicine faster. They are playing into Labour’s hands by letting this fear which is sending families into self-preservation mode and killing consumer demand drag on to the next election.

    Excess capacity that is being kept alive by QE. Why?


    • 33
    • 111
      It's all quiet in "The Close" tonight says:

      “Take a walk around a market town in the Shires on a Monday night at half past eight and what do you see? Blazing lights illuminating completely deserted streets ”

      In fairness there’s very little to do outside of the main cities after 5pm in most “Market Towns in the Shires”..this has always been the case even in the “boom times” as everywhere shuts and there’s no public transport after 6pm…..


      • 136
        The Paragnostic says:

        To be fair, under a proper regime, the lights wouldn’t be put on if there’s nobody on the streets.

        Ted Heath had it about right with the 3 day week and power cuts…

        (ducks to avoid the inevitable remarks from people who just don’t get sarcasm).


      • 179
        I ain't a townie says:

        No it has not! These towns still have pubs, clubs and indian/chinese restaurants. It’s called ‘having no money’ or just enough for a Saturday night out maybe Friday too.

        The lawless streets of five years ago drove most people off them and as they don’t feel safe – who goes out at night Sunday to Thursday?

        Many shire towns thrived at night hence all the pubs they had – fewer now and some still refurbing and reopening.

        Let smokers have smokers-only pubs and service demand would jump.


        • 278
          Happy Hours says:

          I’m not sure of which Shires you talk but in my Shire I wouldn’t go into town in an evening if you paid me. Not even to look at the dim tarts with skimpy short dresses on. I fear the honking, drug-addled, fist-swinging morons who lust after the skimpies.


  16. 32
    Bin Laden says:

    Bang on and Bernanke & King (MPs and top Civil Servants) need their pensions cumulatively inversely proportional to price inflation: CPI +5%pa = PENSION -5% that year!!

    Banks have, most probably, “negative equity” should loans on property be ‘marked to market’ but with residential property maybe twice sustainable value, this means a very large dollop of capital having to be invested in banks by their shareholders or Government- Dexia latest example. In japan property seems about a quarter of its value in 1990.

    Any sensible bank would raise their mortgage rates to lose those mortgages it saw as vulnerable to the other less sensible banks…….


  17. 34
    Billy Bowden is the greatest umpire ever ! says:

    so what you are saying Guido (correct me if wrong), its all Clintons fault?


  18. 35
    Tickle Duster says:


    Ex-Governor George says Bank deliberately fuelled consumer boom

    By Jane Padgham

    Wednesday, 21 March 2007

    The Bank of England deliberately stoked the consumer boom that has led to record house prices and personal debt in order to avert a recession, the former Bank Governor Eddie George admitted yesterday.

    Lord George said he and his colleagues on the Monetary Policy Committee “did not have much of a choice” as they battled to prevent the UK being dragged into a worldwide economic slump by slashing interest rates. And he said his legacy to the current MPC was to “sort out” the problems he had caused.

    Lord George, who headed the Bank for a decade from 1993, revealed to MPs on the Treasury Select Committee that he knew the approach was not sustainable. “In the environment of global economic weakness at the beginning of this decade… external demand was declining and related to that, business investment was declining,” he said. “We only had two alternative ways of sustaining demand and keeping the economy moving forward – one was public spending and the other was consumption.

    “We knew that we were having to stimulate consumer spending. We knew we had pushed it up to levels which couldn’t possibly be sustained into the medium and long term. But for the time being, if we had not done that, the UK economy would have gone into recession just as the United States did.”

    He said he was “very conscious” that stimulating consumer demand could give rise to problems in the future. “My legacy to the MPC, if you like, has been ‘sort that out’,” he said. Under Lord George’s governorship, rates were slashed from 6 per cent in 2001 to 3.5 per cent in 2003, pushing house price inflation above 25 per cent and high street spending growth to its highest since the late-Eighties boom.

    In a wide-ranging discussion on the first 10 years of the MPC, Lord George also rejected suggestions that the MPC should target specific concerns such as soaring house prices, arguing that it was vital to take the broader picture of the economy.


    • 89
      Marc Faber says:

      Eddie George, what a prick. The recession was needed to rebalance the economy. By not allowing it to happen, and interfering in the free market process, he created even bigger in-balances that went bang in 2008. Then again instead of allowing things to take the natural course, they have interfered again with more ‘stimulus’ – interest rate reductions and money printing – they are setting up the mother of all crashes.

      They should remove his title and throw the bastard in gaol.


  19. 39
    MI5 says:

    Damn right Guido

    BTW The Austrian School have ALWAYS been right


  20. 40
    Mad, Bad & Dangerous Gordon McRuin ( member in absentia ) says:


    • 113
      The Man who broke the bank... says:

      The further away we get from the Brown(and Blair)years the more delusional Brown appears to have been and the more catastrophic the decisons made and the hubris displayed…and to think the media/pundits used to laud Brown as an economic genius…you couldn’t make it up !!!


      • 279
        Greatness before me says:

        Met someone once who shared the platform with G Broon at a conference on economics, and declared him to be a genius.

        Perhaps that’s the issue: all measure of wool is pulled over all sorts of eyes and no one in Guvmint or Banking or wherever wants to remove the strands and actually look. Much more fun to say they are right and keep taking the penion-protected cash hand-outs.


    • 199
      Nogbad the Bad says:

      He was sort of right.

      It was boom, boom, boom, bust, bust. Now it’s bust-boost-boom-boomst-stub-moob. Or something like that.


  21. 41
    McChannaman says:

    There is a balance to be found between allowing lots of banks to fail and causing societal chaos in the short term, and propping everything up so that the total size of the depression gets worse and worse, but its negative effects are slowed down and spread out over a longer time.

    Bit of a conflict between the state and the economy, eh.


    • 211
      AC1 says:

      Just force “Debt for Equity swap” on bank bondholders, inflating the number of shares, instead of general inflation.


  22. 44
    Raving Loon says:

    If you deliberately set out to sabotage the economy, you would probably not have successed (or is it failed?) as much as governments and central bankers. They are actively taking resources away from the productive and prudent and giving it to the feckless. The problem is in part Keynesianism, but it is in a wider sense government action not contrained by law, fiat currency, and central economic planning.


  23. 46
    Great Granddad says:

    The collapse, after building up over a period of forty years, happened three years ago.

    The banks had been allowed, with government applause, to create money at a rate never seen before. The banks had to ‘lend’ the money that they created regardless of the availability of suitable borrowers, and they ‘lent’ if by the lorry load. The borrowers spent the money and it is GONE.

    Farewell, money – it was nice to know you. R.I.P.

    Our parliamentarians are too dim, too uneducated, too inexperienced in anything remotely useful, to understand that the money which has been spent cannot be recovered. They and a zillion commentators think that there is a solution if they can only find it. We have been in financial collapse for three years or so and all that we have done, or could have done, has been to stave off public realisation. Talk of slow growth, recession, recovery, bail out, are all meaningless. You can’t bail out a boat that no longer has a bottom.


    • 50
      albacore says:

      Alternatively, our parliamentarians know exactly what they’re doing and are succeeding at it like nobody’s business.


      • 167
        ex-Con says:

        Albacore, I think you may be right. The calamitous fall in public standards and the increase in political graft and corruption happened very quickly (in historical terms); at a time when pols were beginning to see the looming financial mess. What we are witnessing is the crushing of the middle classes, and a return to neo-medieval bi-cameral social structures ie a small number of incredibly wealthy robber barons lording it over a lumpenproletariat. Most pols are more interested in self-interest than the interests of their constituents; Mandelson, Cameron, Ashton, Fox and the rest of the right-hon shysters are busy feathering their nests because – when the crunch comes – they are desperate to be among the haves than the have-nots.


    • 280
      Won't you come Bill Bailout? says:

      I tend to agree with ancient parent here. It is entirely possible the banks and the people at the top and the rest of the shambling loons have not the slightest idea what they are doing. They tinker by making speeches, issues orders and fiddling statistics, but they have no idea how we got here and even less how we can get out of the mess.

      Bottomless boat? More like they have an idea there ought to be a boat if they knew where to look.


  24. 49
    Billy Bowden is the world's greatest umpire! says:

    My next door neighbour just knocked on my door.

    She said, “Do you know anything about the knickers that were on my washing line this morning?”

    I said, “Yeah. Pink, size 12, bought from M&S, made in China and they have a huge cum stain on front.”

    “No they don’t you fucking pervert!” she screamed.

    “Do you wanna bet?” I said.


  25. 51
    I don't need no doctor says:

    Why don’t we all just print our own money. Problem solved!


  26. 53
    I don't need no doctor says:

    What Guido didn’t tell you re Chris Huhne’s alledged 3 pointer.
    Apparently in the UK 300,000 people a year get a friend to take 3 points for them for motoring offences (Saturday’s Telegraph motoring section). The police do charge some with perverting the course of law, but not all.


  27. 55
    annette curton says:

    T.S Eliot sat in the backseat of a London Taxi, cab driver turns around and says “get ‘em all in here, just had Somerset Maugham sat where you are, some say he is the finest philosopher of our time”,
    Eliot: “well, yes, Some say”,
    Taxi driver: So I said “what’s it all about then Somerset?, life the universe and everything”, aside to T.S : “Believe it or not the Birk hadn’t got a fucking clue”.


  28. 56
    Ramrod says:

    This is a bailout of the politcal establishment. Gordon Brown, George Osborne, Mervyn King and the others are all safe in their jobs with golden pensions ready for their early retirement.

    People who have worked hard and saved are being robbed by politicians and banks. There’s no other way of putting it.


  29. 57
    abelard says:

    you have the wrong target…it isn’t central bankers who pressured the banks to make cheap loans to the impecunious…
    it isn’t central banks who forced the incompetent to borrow beyond their ability to repay and control their own debts…
    it isn’t central bankers who run the government cartel schools which don’t teach basic economics…it isn’t central bankers who try to by votes with borrowed money…
    it isn’t even the central bankers who make far eastern cultures save to the extent that money gets cheap in a globalized economy…

    meanwhile printing money does not ‘keep interest rates’ low, the market does that by supply and demand….printing money forces interest rates up…not down…as lenders seek compensation for the inevitable ensuing inflationary effects

    i get a mite peeved by the whining at central bankers who then do the best they can to help the country to make painful adjustments


    • 65
      Skeptical? Moi? says:

      Thank you dad, the cheque’s in the post.


      • 85
        Disliker of Bankers says:

        Is the Learned Chancellor’s special pleading for the London market being adversly affected by a pan- European tax on dealings a bit rich?


        • 139
          The Paragnostic says:

          Not really – more dealings are done in London than in other European capitals, so the effect on the UK economy as the stockbrokers, bankers et al move their business outside the Tobin tax zone will be far greater.

          If you think the defecit under Brown was bad – just wait till the financial sector is no longer paying huge amounts to the Treasury.

          Pip, pip!


    • 75
      Anonymous says:

      Fucking hilarious.


  30. 60
    Anonymous says:

    You needn’t worry about bankers being blamed, Guido. The whole lot of them can expect to be slaughtered along with the all the liblabcons and their parasites after regime change. Yummy.


    • 67
      Tessa Tickles says:

      Whilst this ‘slaughtering’ plan is not without merit (I have, in fact, coincidentally been fantasising about it all morning), I do hope it’s done in a controlled environment; we don’t want all those LibLabCon bodily fluids getting into the water table and poisoning all the fish.


  31. 61
    Gordon Brown says:

    The IMF wouldn’t have me, so I have decided to apply to the EMF.


    • 68
      Tessa Tickles says:

      Forget EMF, I think Gordon should join KLF, the group that put a million quid in a big pile and set it all on fire.

      That’s got to be Gordon’s favourite group.


    • 88
      albacore says:

      20,000 volts should do it, Gordon. Make it 50,000, just to be sure, and with plenty of amperage in reserve.
      Don’t be stingy with the Vaseline. You’ll feel the difference. Briefly.


    • 283
      Thirty quid a week says:

      I couldn’t get EMA either


  32. 63
    Anonymous says:

    Everythings OK!Dave says so!Isn’t he just wonderful.


    • 76
      Tessa Tickles says:

      No. No he isn’t. But at least as SS Great Britain disappears under the seas of de*bt, we can all be proud that – thanks to Dave – India’s going to put a man on the moon at our expense.


      • 121
        Witney First Foot in Mouth says:

        Look….how do you expect “Dave” to hold up his head around the dinner tables of Notting Hill and Chipping Norton if he cuts overseas Aid to poor third world countries ?? It’s our duty as human beings to ensure that India has a properly funded space programme


        • 240
          Joshua Tetley & Son says:

          “”It’s our duty as human beings to ensure that India has a properly funded space programme””

          And indeed Al Quaida are adequately funded through the UK – Pakistani school book £800M programme !!!


    • 164
      Anonymous says:

      Charity begins abroard.From Brussels to India and around the world daves generosity with borrowed and taxpayer cash knows no bounds.


  33. 66
    Mick Hills says:

    The whole problem is being made into a false argument. Get this-if Ragan and the rest of the cowboy right had left the Glass Steigal act in place this would not have happened. Never mind about cause and effect and this that and the other. Just bring greedy capitalists under contro;and stop muddying the waters with bollocks arguments and excuses.


    • 70
      Engineer says:

      How did the greedy capitalists force governments to borrow and spend beyond their means? That’s wholly the fault of politicians and civil services, surely?


    • 134
      Alex says:

      Umm…Reagan did leave Glass-Steagall in place. It was the Clinton administration that repealed it.


    • 138
      Common Sense says:

      I notice how a few left wing morons such as yourself are starting to throw around the words ‘Glass-Steagall Act’ in the past few days, when such talk wasn’t heard before. Could it be, said left wing moron, has read such a phrase from the Guardian or heard it from the idiots on Wall Street protesting and then think you actually know what the fuck you’re talking about? I think so… Try thinking for yourself sunshine instead of letting someone else do it for you. Central bankers fingerprints are all over this mess!


    • 175
      A High Court Judge says:

      It was the Democrats (Rubin and Clinton) who abolished Glass Steigal FFS


    • 290
      oddly helpful says:

      Why bring Reagan into it? – Clinton signed the repeal legislation on November 12, 1999.


  34. 69
    RichYork says:

    Turkeys and Christmas.

    You really think Sarkozy will allow the crisis to come to a head before the French elections?


  35. 71
    Billy Bowden is the greatest umpire ever ! says:


  36. 73
    My name is Bollox says:

    Now Mr George Osbourne we all as young men enjoy fille de bon temps and alas when we grow up some of these girls as Madam Lagard has become turn out to be femme avec de l’argent gratuit so please put away our nation’s wallets and credit cards and give not another of Her Majesty’s pennies to the IMF.
    As its the Lords day I’m been polite.


  37. 87
    Engineer says:

    I seem to recall in my background reading learning somewhere that the average rate of inflation in the UK (can’t remember by which criteria inflation was measured) was about 6%. I suppose if the BoE aims to keep inflation at or about that level, they could say that they’re not exceeding historical averages.

    Of course, the corollory to that is that interest rates are currently historically low, so the effects of that inflation on the prudent are worse than previous times at 6%.

    I’m not sure that central bankers are the sole villains of the piece; too many governments have run deficits and accumulated sovereign debt for too long, so they too must take their share of the blame.

    The only long-term answer is to eliminate deficits and then reduce debt, but inflating it away hurts the innocent. It doesn’t punish the guilty, consequently, the same mistakes will be made again, thus compounding the problem.


  38. 92
    Billy Bowden is the world's greatest umpire! says:

    Updated instruction from Guido Fawkes

    Occupy the World

    This is our world. These are our lives. Everything we do now is for our future and the future of generations to come. Stand up. Make a difference. It is time for change. We can do this and we must. Unite in solidarity


  39. 96
    Lloyd (t.s.b.) George says:


    Greatest way ever invented of reducing debt.


  40. 97
    Anonymous says:

    …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. Simple.

    But when the vast bulk of said something comprises credit which is simultaneously contracting, the precise point at which there IS an aggregate aggregate increase becomes problematical


  41. 100
    Tony Blair says:

    Hi proles. In case you’re wondering, all my calls for an invasion of i ran are purely from a concern for global safety and has nothing to do with wanting to line my pockets with even more lovely cash. What is important is.


  42. 109
    Anonymous says:

    What’s Jesus doing in the London protest, who invited HIM ??? ( lest my TVs got blurred vision’s )


    • 114
      That Protest...the questions that need answering says:

      What I want to know is…how do they stop their tents from blowing away in the wind ?


    • 292
      John Bellingham says:

      Brian Cohen aka Jesus is walking around with a sign saying “Why do you think I threw out the Moneylenders?”. That shows that he hasn’t read the gospels as the original actor “Chastised the Moneychangers”


  43. 110
    genghiz the kahn says:

    Printing money, allowing inflation to erode the value of savings, punishing the prudent, the old and the vulnerable on fixed incomes, whilst watching the value of state debts fall.

    Low interest rates, punish savers, benefit those with high debt servicing costs – HMG for example – looks like a conspiracy to defraud.


  44. 116
    Billytitimus says:

    I would just like to inform all the readers that I am now three months pregnant with Guido’s bumchild. All donations gratefully received as long as it’s cash.


  45. 119
    Handycock, No1 Trougher in Parliament says:

    All my pensions as an MP, County Councillor and Councillor are index linked as is my Wife’s as a Councillor. So we are alright them. Sod you lot.


  46. 122
    selfimportant says:

    This Ludwig says “that it is inevitable” that these economies will fail and all this other rubbish, without thinking that cuts can make a difference, and the debts be paid. If the UK was tough enough to stop wasting money on endless health care, and make people take responsibility (or not) for their lives through insurance premiums, then very soon you have a “rebalancing” of the economy, and plenty of people waiting around for real jobs, as the unemployment benefit has to be cut too – those whinging socialists will soon vote for a real government that lets private industry employ them by keeping taxes low. So basically Ludwig was wrong, words like “inevitable” should not be used in this sort of politics, rather in the same way that solutions should not be final.


    • 194
      Anonymous says:

      No – he’s right. Look at the figures, this deficit CANNOT be resolved without creating the sort of economic conditions that would make the great depression look like a Mediterranean holiday.

      The politicos will therefore choose option 2 – inflation. They’ll still fail, but with this option they make sure everyone gets taken down, not just the debtors and welfare scroungers. Kiss the middle-class goodbye!


      • 224
        AC1 says:

        The middle-class has been largely gone for decades. How many can afford a full-time helper around the house? Admittedly they are needed a lot less, BUT government extorted all the money that used to be spent employing these.

        We have a large Upper working class, working class and a massive under-class.

        Those few in the middle classes do however seem to also spawn the tantrum-throwing neotenised protestor with the entitlement complex.


  47. 123
    Jack says:

    Your analysis is excellent Guido

    But banking deregulation also fuelled the fires

    And there is a basic point, which all good Adam Smith supporters must face and deal with, which is

    There was the massive sale of fraudulent (“toxic”) assets with AA ratings by in,vestments banks in New York and London (hence the multi-billion case beinng brought by the US Government against 17 US and European banks for fraud of which you are aware


    And all the managers of these firms have collectively walked off with billions in bonuses

    Thanks to the lawyers !


  48. 135
    An ugly, meddling, scrounging munter on a motorbike in Edinburgh, who is fuck all use to anyone. says:

    We are now having to suffer the effects of Labour’s something for nothing fiscal errors.


  49. 143

    I wish to propose a new index to which public sector pensions can be linked. The amount by which state expenditure exceeds 30% of GNP should be deducted as a percentage from the current entitlement. This should happen progressively each year until this figure is reached.


  50. 148
    Armchair_Economist says:

    Guido – so far as economics is concerned, you’re a flat earther.

    Most money is created as credit/debt by banks.


    The problem is that the commercial banks created too much money in the boom, a portion of which then effectively vanished from circulation during the Credit Crunch. Unfortunately the debts remain and many of them have been socialised.

    QE was supposed to remedy that. ( http://en.wikipedia.org/wiki/Money_creation#Money_multiplier) It hasn’t, partly because the commercial banks don’t behave as normal in a liquidity trap. Increasing the monetary base, doesn’t automatically increase the money supply. But the central banks can’t do more. This crisis could be solved by fiscal policy, eg if QE money were spent on public works instead of being given directly to the banks.

    Historically, hyperinflation has only occurred when there has been a shortage of goods, as in Post WWI Germany, and naughties Zimbabwe.


  51. 150
    not a machine says:

    Ludwig von mises quote is pretty good and I go along with Dan Hannah in that we havent had proper capitalism for some time .

    Blanche Flower made an interesting comment about that you cant really talk about macro economics unless you have already understood micro economics , in my view it has been the complete disregard for micro economics that has brought about the problems we are currently enduring .
    The ruin did not end boom and bust , he merely did a macro finance trick of rebundling it , to create an aggregate that appeared solvent on the books.

    Credit was perhaps needed as soon as manufactured goods started being mass produced , If you have a job , credit enables the banks to offer some security to new markets and business . Credit enabled many companies to sucess , motor vehicles , white goods etc , it was anchored in other people having new jobs to supply goods to those in work .
    the credit card is a little different , in that it gave you credit to spend on whatever you wanted , many of these things were not as anchored in UK manufacturing in part because under labour , goods were imported to lower inflation , from places with cheaper labour costs . same goes for things like holidays you spend your credit overseas .
    The realtionship of credit is one that works when you buy goods contained within the currency (and hopefully good banking) , as it enables goods manufactured withing that currency to thrive and so jobs and so stability. If your ecnomy is stable you can then run services , which should only borrow for planned and costed capital projects and have carefull management cost.
    Goverments should not borrow for anything more than building or infastructure replacement that is what is so wrong about what labour did , they turned goverment borrowing from honest credit , to dishonest credit card funding all sorts of things , in a way that was not visible such as PFI .
    throw in the loss of many basic manufacturing jobs and you can see that whilst the ruin may have triumphed over inflation , he was actually destabilising the economy .

    of course they now say and blame things like the bankers for doing so much business in basically bad credit , but isnt there a paralel truth , that the labour government and the bankers were complict in overseeing the damage to the manufcaturing sector , whilst going along with the euro corpratitst fascist concept . I mean what do germany and france import , how do they see inflation , do they import more manufactured goods than the ruin set up for us ???
    Germany may also tell us somthing about retail , it likes its small shops still , does germany employ more people in retail as % of working population than we do ?? so basically then under labour manufacturing was ruined , retail was made into a low employment model , follwed by even cheaper evil fabian model of E business needing even fewer jobs , and then the ruin opens the credit taps onto all those who dont have a stable enough job to afford the credit card over consumer goods credit , and changes the foundations of public sector borrowing . mmmmm they governed us alright , sold our futures to the euro and its debts .


  52. 151
    Austin Maxi says:

    I thought Ozborne promised to match labour spending, not beat it.


  53. 152
    Moley. says:

    Barroso, (one of the EU Presidents) wants Bankers to be held criminally responsible for losses made by negligence. (The criminal law already covers fraud).

    It’s a good idea; but it does not go far enough.

    Negligent politicians who throw away a couple of trillion Euro propping up a financial system with deep structural flaws should be held criminally responsible too.

    Our politicians are behaving like addicted gamblers, throwing more and more money away in the hope of recouping their losses. Those responsible should be made to pay the price and lose the pensions and assets that they have stolen from tax payers.


  54. 153
    MI5 says:

    Great analysis as far as it goes, Guido,

    But capitalism can only be defended if there is the Rule of Law

    Otherwise it ir merely a question of who has the most powerful machine gun !

    The Rule of Law has broken down in New York and the City of London

    As many co-conspirators have noticed

    If this cannot be sorted, there is no defence for the current banking system


    • 157
      Jack says:

      Russia since the collapse of Communism is a perfect example of what nhappens when there is no Rule of Law

      Funny “Oligarchs” suddenly appear with BILLIONS

      After thousands are murdered in the streets of Moscow in gang wars, the former KGB and its old members triumph

      It is astonishing that apparently these people are accepted as successful “capitalists”

      They are merely a flagrant example of the non-existence of the Rule of Law as any international expert will certify

      The generalised corruption in the UK is catching up….


    • 158
      Jack says:


      Must be the fucking bent lawyers again !

      Good luck Guido


  55. 154
    All gold Terry says:

    When Dave said in February last year that the next scandal to hit British politics would be the lobbying industry, little did he know that Liam Fox would prove him right.


  56. 156
    Oswald Kirk says:

    Money is merely a variety of tokens given in exchange for energy used in work.
    Until this is recognised by all the foolish will continue to to destroy society and the wise will suffer. Newton’s second law relating to the conservation of energy states that “Energy can neither be created not destroyed” i.e. it can only be converted from one form to another.


    • 225
      AC1 says:

      wrong. Money’s a complex combination of time * market-productivity.

      Market productivity is your ability to meet a market demand.


  57. 160
    Bought and bent City solitors says:

    All oligarchs made their money honestly


    That is they pay me millions



    • 161
      A High Court Judge says:

      And you make sure no one questions the source of their funds as well by threats of defamation actions

      You are not only bent but gangsters !


  58. 163
    cuntrywatch says:

    Can I just say that I think the BBCs ‘AutumnWatch’ is bollocks. The overpaid presenters treat everybody like children and are patronising and stupid and should be shot.

    thank you


    • 171
      an impartial viewer says:

      To the BBC we are the little people who need to be informed, educated and entertained whether we like it or not.


      • 264
        Chloe Sal Gerbeeba says:

        The BBC’s methods were studied by the Yanks for possible use in psychological warfare but rejected as being inhumane.


    • 174
      Infuriated of West Mids says:

      I agree. Although, if you could see fit to pardon Michalea Strachan, I would greatly appreciate it.

      It’s just that ever since she showed me how to make a bird box on kids’ TV 20 years ago, I’ve wanted to have a look at her own “bird box”. And her pair of Great Tits.

      (It’s OK – I brought my own coat).


  59. 165
    Flatcap Army says:

    Anyone with an iPod is highly recommended to listen to the podcast series “Intro to Austrian Economics” available through the iTunes store for free


  60. 166
    57 varieties of bullshit says:

    London protester: “We know families that are counting the baked beans on their children’s plates”

    Well, with one of the highest obesity rates in Europe, if not on the fucking planet, they must be counting fucking tins and not individual beans. Does this stupid cow expect us to believe this bollocks?



    • 172
      Benny Fitz-Clements says:

      I was the one slouching behind Swampy.


    • 176
      I don't need no doctor says:

      Still have their tattoos and piercing though. We are all fed on bullsh it. Everyone has their own agenda.


    • 181
      nell says:

      And we are expected to believe that they can count are we?


    • 220
      To be fair says:

      To be fair there probably are families driven into such poverty, Heroin and Crack cocaine can be such bastards once they get their claws into you.


    • 228
      AC1 says:

      If that’s true, they should have thought “Can I afford to have kids?” before “I’m pregnant!”


      • 293
        oddly helpful says:

        The list of perverse incentives within the UK’s welfare system that have grown up since its inception in 1946 boggle belief; I spent much of the weekend explaining to my 76 year-old father that it effectively encourages single parents to produce children and rewards them with upgraded council accommodation.

        He remembered Beveridge targeting squalor, want, idleness and disease and could not believe that it had drifted so far off target in the intervening sixty-five years. For shame…


    • 266
      human being says:

      Cockwaffle like this and the eu cocksuckage are why you tory girls will never taste true unfettered power again. You are more repellant than even peter hain and ken livibngson whipped inbto one.

      Check yoself b4 yo wreck yoself. Dickwad.


  61. 178
    nell says:

    Mervyn King says inflation isn’t a problem.

    I don’t suppose it is to him on his vastly inflated salary.

    But if you’re a pensioner on a fixed income the weekly shopping bill in tesco’s, with food prices spiralling, is becoming a nightmare.


  62. 180
    nell says:

    mervking says inflation isn’t a problem.

    I don’t suppose it is to him on his vastsalary.

    But if you’re a pensioner on a fixed income the weekly shopping bill in tesco’s, with food prices spiralling, is becoming a struggle.


  63. 182
    nell says:


    I don’t mean to be mean but why do 300 demonstrators on the steps of stpaul’s think they are going to make any impact on govt policy when more than a million demonstrators against the ir aq war failed to stop bliar?

    And when one of their kind says today with monday morning looming ” I’m planning to stay indefinitely ” – my mind starts asking are these people workers with jobs or are they, anyway, living off the state?


    • 251
      Susie says:

      “I’m going to protest the City to death… you’ll see!”

      The ones with the real power will be those large black gentlemen who run crack dens — they have the guns.


    • 257
      smoggie says:

      Or could thousand upon thousands of green-wellied Countryside Alliance marchers stop the ban againts hunting with dogs?

      No, vermin still lurk in the fields stealing young lambs and chickens while urban foxes eat unattended baby children.


  64. 183
    Pilly says:


    It means They’re All Hunts and you will be seeing it all over Westminster soon.


  65. 185

    Neither a lender nor a non-borrower be.

    Do not leave money on deposit. Only keep what you need to pay the bills.

    Borrow heavily and pay back with tomorrow’s depreciated money.

    If you borrow enough, then if you cannot afford to repay, they will rescue you.

    This should remain good advice for several decades.


    • 191
      Ed Balls, Shallow Chancer says:

      It’s my neo-classical endogenous growth theory !

      Gordon planted Money Trees in the gardens of 10 Downing St and just kept doling it out to Liebour voters.


    • 196
      The Paragnostic says:

      Goes against my Methodist upbringing to borrow, Cat.

      So I shall just spend what I earn as fast as I earn it, hiding the odd bit away in fungible assets just as our forebears did.

      Have to make sure I remember where I buried it though – perhaps I can use squirrel tail to mark the spots?


    • 208
      annette curton says:

      Macro management takes a vastly different approach in life to that of micro management, if I asked my Bank manager for extended unlimited credit on the grounds that I was out of funds, boracic lint etc. legal proceedings would immediately be taken against me to re-possess the house and all my possessions, I would be thrown out on the street on my arse faster than you could say quantitative easing.


    • 209
      albacore says:

      If my beady old memory serves me right, lines in the same speech went something like: “To thine own self be true. Thou canst not then be false to any man”.
      Well, I reckon we’ve had a bellyful of seeing, without even the pretence of a cover-up, what our politicians are made of.
      On the other hand, it was fashionable, even when I was a kid, to take the piss out of Polonius.


    • 242
      Bill S says:

      But it ain’t a biblical thing. It a thespian thing.

      Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry. This above all: to thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man.


  66. 193
    Goldilocks says:

    Guido is absolutely correct. They are protesting against the wrong target.

    Ever since learning on this site that the BoE pension fund was invested in Inflation Proofed Bonds, I have managed our finances accordingly. It’s been most useful.

    But how disgusting that these corrupt politians and central bankers can steal a Nation’s wealth with impunity because the sheeple do not understand percentages or compound interest.


    • 212
      The 99% says:

      Ya wot?

      I just want me free money and more money for schools and hospitals and other good fings the BBC tells me about. Five quid is worth five quid, innit.

      Wotcha mean, “Zimbabwe”? Is that near East Angular?


  67. 201
    In Gold We Trust says:

    Debasing the Currency used to be punishable by Death, or in mitigating circumstances both hands were removed.

    I suppose this is less easy to enforce now, considering yuman rites etc.

    But this is what the protesters should call for.


  68. 205
    Disgusted of Neasden says:

    Guido: your economic analysis is good. However, is it politically acceptable to allow banks “to big to fail” to do so?

    Back in pre-WW2 days, there were more retail banks, thus each with a smaller market share, and the majority of the population didn’t have bank accounts. The failure of one bank would therefore hit a relatively small section of the population (electorate). Nowadays, almost everybody has a bank account, and were RBS/NatWest to go bust, 25% of the electorate would be left cashless (especially if all your savings are in the same bank).

    Prior to the Northern Rock crash, the government was undertaking to guarantee retail deposits up to £50K. Where was that going to come from? It could have come from direct taxation – everybody having their bank balances reduced by 75%, say – or, what we have now, gradual erosion by way of inflation, until the real value of the banks’ assets matches the paper value.

    If anybody out there has money for a research project, I would like to explore the hypothesis that we are putting TOO MUCH money into pension funds and savings for retirement – more than can be sensibly invested in productive industry – and the system would be better with higher state pensions financed from taxation, and less private pensions. Outside the “first world”, most elderly people are, and were historically, supported from current income by their family.


    • 230
      AC1 says:

      Not really.

      Governments can safely print depositors owed money, as the Bond-defaults are deflationary.


  69. 214
    The insanity of the Left says:

    Had to laugh at the sheer hypocricy of the BBC on watching Andrew Marr and the unelected rent a Gob Helena Kennedy making much of The Atlantic Bridge group.
    Apparantly such Associations are bad and anti democratic and very very shadowy.
    In the next breath they had Peter Gabriel on waxing lyrical about a Group of very important people who are known as The Elders FFS , yet thats ok cause they are left wing so such associations are allowed. They did all this without any sense of irony.


  70. 231
    Thom says:

    So with this said Guido will you be joining me on this escapade?

    Facebook page here.


  71. 233
    Anonymous says:

    Over the years people in the UK, individually but especially through the agency of government, have been consuming more than they have been producing. Balance of payments deficits chart the trend. More of the same is not an option. There is therefore no point in attacking policies that reduce consumption without putting forward policies that will have an equivalent financial effect on the production side of the equation. Reducing production by throwing sand into the engine only makes matters worse.

    Two further points, if I may: firstly, government involvement, not only in China (possibly the greatest generator of imbalances as of now) but also in many ostensibly free market economies is so great that there are probably no purely “capitalist” solutions to present problems (though movement towards “capitalism” might help); and, secondly, from the quotation, it seems that the risk of putting off the evil day lies in a “final and total catastrophe of the currency system involved “, which, depending on the currency system involved and on how it were to be replaced, might not necessarily be a regarded by everyone as a general catastrophe, or even as an “evil day” at all.


  72. 234
    grobdj says:

    Stockbrokers pointing the finger at the central bankers? Do they really think they are part of a free market? For the last twenty years at least, any profit on shares has been siphoned from the market on a daily basis, which is why the FTSE has not risen in real terms, and why our pension funds do not grow.

    The stock market should be closed for 5 months , then opened for 1 month for transfers. This is the only way the average Joe will ever see any value from holding a share.


  73. 235
    Wrath's Child says:

    Protestors kiss my ass. It’s 99% for me, 1% for you!
    Bwha ha ha ha ha ha ha ha ha ha ha ha ha………………..


    • 253
      not a machine says:

      bit disengenous assuming 99% would like to live under a socialist system , when you have to pay for corruptions


  74. 252
    not a machine says:

    Funny old world , not so long ago people were marching on the berlin wall to liberate people from the evils of communism , now they want to march on the Berlin bankers on the evils of debt totally missing its been the socialists running the economy .

    Tommorow they plan to march on the stock exchange , might as well make a stance that more unicorns and magic money trees should be planted , what has Labour being teching them all these years , that ecnomics ought to be more like glastonbury , where listen to some great tunes , do some sex and drugs as leisure is tax payer funded . real world of house owning , having a family , looking after local services budgets , where did all that go ? oh thats right they labelled it bad toryism .

    we have trippy dreamy advert view of life , yeah lets march on stock exchange as having a job sucks , people should be you know free like mann and partyin all da time , and its my right as de has been livin it large in a corrupt system . bloody hell they want see how corrupt the wonk socialist systems work , The whole morailty of money and work and freedom has been utterly trashed under Labour .


  75. 254
    Peter The Angel Gabriel says:

    “Once I was the credit to my credit card; spend what I haven’t got, it wasn’t hard”

    You were right mate, ‘cept the ” Big one” wasn’t an earthquake……


  76. 258
    Ian says:

    Guido, take more water with it.


  77. 259
    filipinomonkey says:

    I think you will find the US housing boom was Bill Clinton’s little baby. Concerned that afro americans were less likely to own their own homes than white americans the rules were relaxed and Fanny Mae and Freddie Mac were ordered to lend more to them. Increased demand then caused house price inflation and then came even more lending on the basis well it will be worth 20% more in a year anyway so it doesn’t matter if there’s no income.

    Thats what you get when you try to be “fair”


    • 284
      Built on sand says:

      Clinton’s demorats drove the American housing crisis in the name of greater ‘equality’

      Oh well, we are all going to be equally poor soon.


  78. 261
    Billy Bowden is the greatest umpire ever ! says:

    R.I.P Dan Wheldon


  79. 265
    albacore says:

    It doesn’t get any better than this:



  80. 268
    Billy Bowden is the greatest umpire ever ! says:

    How many readers reckon this mornings cartoon will be funny?


  81. 269
    Great Britain says:

    The BBC version of economics insists that tax or borrow and spend will “stimulate” the economy.

    This is arrant nonesense in an economy that imports everything and in which 50% of employees work for the State and produce nothing tradable.

    Any borrowing or taxing will benefit only the economies of Germany and Japan.


  82. 271
    Huhne watch says:

    Huhne just had a new arsehole ripped for him in interview with Eammon Holmes on Sky News and is now getting yet another one ripped by the viewers texts!


  83. 275
    Nigerian Prince says:

    Send me your inflated pounds and dollars. I have a business opportunity that cannot fail. My company has won the contract to put a roof on the parthenon, acropolis and to rebuild the Greek banking system. EU investors are flooding in now. DO NOT DELAY.

    PO Box: 987654321 {if no reply, ring bell]

    No time wasters please.


  84. 276
    I hate Blue Labour says:

    Can we now acknowledge that our PM and chancellor are clueless, over-privileged children, completely out of their depth?

    Looks like the electorate knew this too, which is why Cameron couldn’t beat the most universally hated PM in living memory outright.


  85. 286
    Still laughing says:

    Got to love it when Guido (although the graduate level economics suggests Cole had a hand) trys to be all academic. The Austrian School radical – really? Hayek won a Nobel prize for God sake, but yes Guido you are being ever so contraire. Quoting demogogues Dan and Douglas as radicals -there are no words. “Capitalism is widely understood as a profit and loss system, through trial and error in free markets we find an optimal allocation of resources”. That sentence alone stands out for it’s notworthy inanity. You talk of economics at the level of Skinner and his lab rats. Why would trial and error ever lead to an optimal allocation? and for whom would this be an optimal allocation for?


    • 295
      Gooey Blob says:

      Guido is evidently more of an academic than you are.

      The third person singular form of try is tries. God sake should read God’s sake. Notworthy should be noteworthy and the preceding word should not have an apostrophe. Sentences begin with a capital letter and never with a conjunction.


  86. 288
    Displaced Brummie says:

    God forbid that the gangs of losers aka useful idiots would go after the right targets…


  87. 294
    There are many more of us than there are of them says:

    Just to make you all feel better – a subprime property company in my building has spilled the beans on where the next £75billion of QE is going. RBS-backed ShawBrook bank has just opened its doors to ‘SME’ lending with a big wad of taxpayer’s cash guaranteed.

    According to said subprime property company, the SMEs in question are pretty much all BTL ‘investors’.

    The subprime company has been really struggling to get mortgage approvals for their feckless and f*ckwitted clients recently (mostly because they have no money and loads of existing debt) but are finding that ShawBrook is amenable to looking the other way when it comes to proof of income etc.

    So, Merv and the UK elite have once again created a back-door way of robbing the tax-paying poor to maintain the value of their hyper-inflated property portfolio and BTL rental income. Thanks a bunch.


  88. 297
    Paddles says:

    So, if we’re to occupy the Bank Of England, why did Guido show us a picture of the Royal Exchange building?

    And why did the several hundred potty-mouthed commentators not spot the mistake?


  89. 298
    Dave666 says:

    Remember Save Energy

    Check the Party your MP is in.
    Switch if they are Labour , Liberal or Conservative
    Insulate yourselves by voting the corrupt triumverate Out and keep them out.


  90. 299
    andyfrith2 says:

    Let’s abolish the Bank of England – it’s clearly doing more harm than good



  91. 300
    V says:

    Keynes is to blame for most of western societies ills.


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