=> The Bank was right to cut rates
I wish I knew what Edmund is smoking, because if he's got any spare, I'd like to have some. Obviously, Maturin Towers refused to let this utter nonsense go by without comment:
EnglishJack February 06, 2009 08:10 AM GMT
As a Keynesian shill, Edmund, I would have thought you would have avoided talking about Japan. They went into their financial slump with one of the best savings rates in the world and only really borrowed from themselves, with Japanese citizens buying up the bulk of the Japanese Government Bonds used to prop up zombie Japanese banks.
When we finally get down to zero percent, we will be using the same methodology as the foolish Japanese government (i.e. government bond sales to prop up zombie banks, quantitative easing, and zero percent interest rates), but we have no savings and all of our bonds are being bought by foreigners.
The prognosis for this country therefore will be much worse than it was for Japan, not better, as you seem to be suggesting. With an effective negative interest rate (with M4 at 16.6% and the base rate at 1%) there is no point anybody in this country saving at all, in terms of pound sterling. They really ought to turn all of their spare cash into real physical goods, to prevent the dilution of their wealth.
Buying gold or silver, or any other durable commodity, is probably the best course of action for most savers. They should certainly get out of the pound. With a MINUS 15.45% interest rate, (M4+base rate) anyone holding their savings in pounds is going to be wiped out, especially once the Bank of England start helicoptering fiat paper directly into the veins.
I think most sensible people will realise this, and spend their cash as fast as they can get it, on whatever physical goods are available, especially the monetary metals. Fortunately, for most people who do this, the central banks will try to massage down gold and silver prices, to try to hide what they are doing on the quantitative easing side, until they eventually run completely out of metal, when the government will then try to seize it all back again. So if any of your readers do decide to buy gold or silver, especially gold, I suggest that they either hold it outside of this country, or take physical delivery and store it where no government agents will be able to find it. If this government keeps going with its horrific Keynesian plan to destroy everybody's savings, we are heading towards a full crack-up boom, rather than a gently-massaged recovery. We will then see punitive interest rates which may go high enough to spark outright rebellion, or hyperinflation, leading to price controls, shortages, and martial law. If we are lucky, we can put a stop to this nonsense now and 'only' have five to ten years of stagflation. But the course of action you are proposing, Edmund, is going to destroy this country. You won't have been taught about any of this on your Keynesian economics degree, where you learned about mathematical modelling rather than how people behave. I would therefore suggest that if you want to stop embarrassing yourself even more, by having Liam Halligan and Iain Martin laughing at you, you go to Mises.org and find out what is really going on.
I recommend you search for "A Theory of Money and Credit" (L.v.Mises), "Austrian Theory of the Trade Cycle" (L.v.Mises et al), "The Causes of the Economic Crisis" (L.v.Mises), "Money, Bank Credit, and Economic Cycles" (J.H. de Soto), "The Mystery of Banking" (M.N.Rothbard), "America's Great Depression" (M.N.Rothbard), and "What Has the Government Done to Our Money?" (M.N.Rothbard).
All of these books are available either to buy or download freely as high-quality online PDFs. If you go to my blog site and look down the right-hand side, I have links to them all.
I seriously recommend that you start reading them. Then you may be able to refute them at your leisure. Good luck. No other Keynesian has.