Speaking in this video, Steve Baker makes a point that cannot be made too often:
It’s a crazy thing. In most price systems or most parts of the economy, people understand that it’s wrong to plan prices. So here we are, we’ve had chaos in the credit markets, and the credit markets are centrally planned by a cooperating international network of central banks, committees of planners, who deliberately alter the height of interest rates. And we don’t make the connection that central planning causes chaos. And it’s just a really simple thing, and it’s true in money and banking and it’s true in everything else.
Making our case on financial matters can get difficult, because it can quickly get bogged down in arcane detail. Talking about the interest rate as a politically imposed price works well, because the idea is so clear and so straightforward.
Baker has just been voted onto the Treasury Select Committee. I know very little of the inner workings of Britain’s Parliament, but those who know better about such things I tell me that this is a very big deal. The Guido Fawkes blog certainly thought this circumstance worth a passing mention. This man is making headway.
When I first heard the newly elected Baker talking about what he hoped to accomplish, he sometimes sounded like he thought that the Keynesian/Quantitative Easing door was so rotten that it might only need a few good kicks to be destroyed. Well, hope springs eternal and this door was and is very rotten indeed, but it is also very powerfully defended. Baker now talks like a man who is definitely in for the long fight. Good.
Though I would like to be proved wrong on this, I suspect that Steve Baker MP will significantly soften his stance on central banking, and in a few months will start talking about ‘the need for compromise’, and ‘the benefits of (very limited, of course!) targeting of this or that’.
I suspect that Rocco is correct. “Regulatory capture” runs both ways, as we’ve seen far too often with Federal Reserve Board members. This will be interesting to follow.
Quite so.
Saving is a sacrifice (a sacrifice of consumption) – those who save deserve to be paid for their sacrifice (putting off consumption to a later time) and for the risk they may never be paid back at all.
And how much the real savers are paid (the interest rate) should be decided by supply and demand – the supply of real savings and the demand for loans.
Government are not the only people who violate that (just as tax collectors are not the only people who take money in nasty ways – their are muggers and pirates and so on).
But as bad as the corrupt changers of charge ally are, their credit bubbles are dwarfed by those of the state.
Without such things as the Bank of England and the national debt, credit bubbles would be a London thing (they would not really harm people more than a day’s ride from the capital).
“But the Bank of England guards against the banks and other such”.
Oh my dear people you could not be more wrong.
The Bank of England has (from the start) been about pushing interest rates LOWER (first for the government – and later for others).
So the government could fiancé its wars and (later) the dissolute part of the population could finance their vice ridden lives – at the expense of the honest, hard working and thrifty. Although, in the end, even governments and their supporters among the degenerate part of the population suffer from the consequences of their own folly….
Admittedly some of the above may need updating from the various old sources I have nicked it from.
But I am sure that Steve Baker will put it in into modern language.
By the way….
If any one thinks that Martin W. (of the Financial Times) is sincere in his shock that 97% of “money” in this country (like most countries) is nothing but banker credit-bubble, then I have nice bridge to sell you.
Firstly the government (and Bank of England) have (in spite of their words) encouraged credit expansion every-step-of-the-way.
But also….
Martin W.s policy (of the government “meeting the needs of credit” – without banker credit bubbles) has already been tried – by that noble liberal progressive General Peron of Argentina.
The government (surprise-surprise) proved to be more irresponsible than the most depraved credit bubble banker – by a factor of several million percent.
“Though I would like to be proved wrong on this, I suspect that Steve Baker MP will significantly soften his stance on central banking, and in a few months will start talking about ‘the need for compromise’, and ‘the benefits of (very limited, of course!) targeting of this or that’.”
Looking at how likely a successful politician is to “go native” at some point, I cannot blame you for saying that. All I can say is if that does indeed happen, it will be a grim day because Steve Baker MP really has been almost peerless in his willingness to say the right things rather than the popular things. We can but hope against all probability that he is the exception to the rule.
VE Day the reward was massive debt. Boganstan cleared it’s War Debt in 1958 but at the end of the Transnational
Unpleasantness it’s Airforce and Navy were among the largest of the Allied powers and a million people were in uniform and it was only a nation of 7·5 million Effwits, what’s Europe’s excuse?
Regional – could you explain your last comment.
I am not being aggressive – I genuinely do not understand it.
For example, does Boganstan mean Pakistan? And what war debt? Pakistan did not exist before 1947 (inherited debt from British India?).
I think you are saying there is a link between National Debts and credit bubble banking – and there is a link.
But it is complicated.
Paul, Boganstan = Australia & New Zealand, based on this: http://en.wikipedia.org/wiki/Bogan