As Murray Rothbard predicted back in 1963, what Gordon wanted, an "easy credit" policy to shore up his consumptive government spending, Gordon has received. That is, an interest rate as close to zero as he can get away with to aid his non-productive consumption and a pathetic attempt to help push the current recession's effects out into the long grass beyond the next general election, i.e. the deliberate creation of a depression. His thralls in the (Ha!) "independent" Bank of England today gave him the first tranche of his desire to get down to Japanese-style interest rates.Hang onto your hats, sports fans, because the Bank of England base rate may have gone down by a gargantuan 1.5% today, to the lowest rate since 1955, at 3%, but that still means there is 3% left to go! And what will they do when even 0% interest rates fail to revive the dying body of the UK economy? How about negative interest rates! (Which is of course what we have, because round my way, and judging by my bills, my personal price inflation rate is running at around 10-15%, and has been for some time. It really is time to short money, and fly into real values. We'll be bartering before they've finished. We may even all start using a spontaneously arising commodity money!)
I've been banging on about this so long now I don't want to burden you with any more invective. I will just leave you with the thought that what we ought to be doing right now, contrary to all of this orthodox Keynesian "wisdom" from the tax-fed class, is to be increasing interest rates to help encourage savers, to shut down non-productive consumption, and to liquidate the numerous asset bubbles and bad managements allowed to inflate under the easy credit of the last decade. Even better, would be for nobody to do anything at all, and to allow the free market to set its own freely floating interest rate, based upon the market of individual time preferences, and using a commodity money unable to be manipulated by any central planning board commissars.
If you want to know any more, please, please, please do yourself a favour and read the first few chapters of Uncle Murray's "America's Great Depression". There is a beautifully produced PDF of this magnificent book, here:
=> http://mises.org/rothbard/agd.pdf
This crystal-clear exposition is as fine a piece of economic writing as you will ever see. You must read it, if you want to come out of the other side of this depression with your sanity intact. I will stop the propaganda now. Just read the book.
I will, however, leave you with just one thought. The cause of the credit crunch was the creation of an enormous asset bubble, via the machinations of the world's central banks under the direction of the U.S. Federal Reserve, creating trillions of dollars of credit out of thin air via the use of artificially low interest rates.
To think that the solution to all of this is to once again lower interest rates and print currency from thin air, until we drown in the stuff, is to have locked out the very synapses of your brain (unless of course you are an immoral debtor and you want your debts liquidated by this process). We are being sleepwalked into utter disaster and we must do everything we can to stop these imbeciles destroying our lives, our pensions, and our businesses, and then laughing all the way to their tax-guaranteed index-linked government pensions, as the rest of us downtrodden serfs are left gasping in the gutter.
Do you have a private pension? Are you relying on it for your old age? It's time for you to come up with a different plan because this pension, as it stands, is going to be absolutely worthless.
By the way, for what it's worth, this central planning board interest rate cut isn't really going to help. It may mask things for a few days, even perhaps for a few weeks, or even possibly a few months, but does a heroin addict really benefit from a pumped-in injection of diamorphine, even if pumped in by a man in a white coat? It is too late for these palliative measures. Stagflation is now the very best we can expect. And if this interest rate shredding keeps going, after this cash injection fails, even hyperinflation comes into the frame.
Welcome to the long run future of the Keynesians. C'est arrivé.
2 comments:
Do you think there is anything an individual should be doing, from an Austrian perspective, to help themselves in these times? In reality the government is not going to listen to reason (even if there is anyone to listen to!) and so one has to start from the current situation and make the best of it. I don't know what the best of it is though really, hoarding gold perhaps? Either that or tinned food!
This is tricky.
I suppose "Keep your job" is the best advice. Do whatever you can to help your employer, by offering excellence of service at an excellent price to enable them to survive, so that they can keep paying you, to enable YOU to survive.
Get as much physical gold into your possession as you can afford (though given the difficulties of currently getting gold coins, this is also tricky).
Try to remove yourself from taxation as much as possible (though do this safely). Do what you can in your "own" country, but this may entail a move to Dubai or Singapore, to get yourself into an extreme low-tax economy, which should weather the storm better than most.
This probably means learn Arabic, or even Mandarin! :-)
Short term: Keep your job. Do what you can to stay valuable to your employer (if self-employed, to your clients).
Medium term: Think of entrepreneurial cash flows which survive during recessions. Move into these areas. Avoid as much tax and regulation as possible. If possible, move to live within an ultra-low tax jurisdiction.
Long term: Use gold to preserve your wealth. Gold is a terrible investment in many ways, because it usually offers no cash flow. But it is the best way of preserving wealth. Silver is good too, though not so portable.
For the soul: Just keep pumping out the libertarian message. The essential one is that there are two classes. There are the tax consumers and the tax payers. Make sure people know this, and educate people about how the "tax" that public sector workers pay is a fiction. Once the vast majority realise that they are in the exploited class and that they are being ripped off by the exploitative class, all sorts of things will happen. Keep educated. Read Murray Rothbard. All of Murray Rothbard. And finally, help the Mises Institute do all it can to propel Misesian professors into the world of academia. We will finally win, when we capture the ideological heart lands within the world's major universities. After we have achieved that, the rest will merely be a matter of time.
Alas, this "ideological" victory could take a very long time! ;-)
Just survive. Keep talking. Keep people aware of what these criminals are doing to us, treating us as slaves and footstools to rest their feet upon.
But just survive. Do whatever it takes. Within the moral code of liberty.
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