Monday, March 09, 2009

Bootle has his cake and eats it

Mr Roger Bootle is perhaps the grand-daddy amongst all the Keynesian shills on the Torygraph, which makes him intelligent enough to get his retaliation in early, with a piece on quantitative easing.

The article basically says we need quantitative easing, but we need to be careful as to how we implement it.

In other words, if it works, Mr Bootle will claim that he was right about its philosophical implementation, and if it fails, Mr Bootle will claim that he was right about the dangers of its technical implementation.

Whatever happens, Mr Bootle will be right. Which is nice work if you can get it.

Maturin Towers response:

Jack Maturin on March 09, 2009 at 10:52 AM

Quantitative Easing is nothing but counterfeiting, and just as a small private counterfeiter wrecks a local economy, a large public counterfeiter can wreck an entire economy.

You may remember the classic BBC comedy, Private Schulz. In this excellent portrayal of a real plan, the Germans set out to destroy the British economy through the mass production of 'perfect' British currency.

The Bank of England is about to do exactly the same thing, with exactly the same results, only 60 years later.

This kind of Keynesian-inspired nonsense kept the Japanese economy in recession for many more years than it ought to have been in recession. In Zimbabwe, this Keynesian nonsense has turned the bread basket of Africa into the basket case of Africa.

The creation of credit from thin air does not represent real capital savings, just fictitious ones, as we all recognise when it is done by private people in shadowy basements. Trying to fool people into believing that these new paper tickets represent real savings will no longer work; we have all woken up to how these Keynesians are trying to fool us into behaving how they want to get themselves off a political hook. It won't work.

Just because this wealth-destructive behaviour is executed by a public body rather than a private one does not make it any less wealth-destructive. It is going to fool nobody, and we will pay the price through either stagflation (if we're lucky) or hyperinflation (if we're not).

We ought to rename Mervyn King to Private King.


Brett said...

You're correct.

Roger Bootle is trying to frame the terms of the debate, so that only Keynesians can win. Apparently even the failure of QE can only be an indication of its eventual success!

Bootle wrote in today's DT:

" If, after the three months which the Bank has set itself to complete its purchase of gilts, asset prices and lending are no higher, then the policy will not have worked and will not be going to work. So the Bank would have to increase the dose. The policy will work eventually..."

I also upbraided Ambrose Evans Pritchard for writing that hardly anyone saw the Great Depression coming, "even Keynes and Fisher" , when of course Hayek and Mises did predict it.

not an economist said...

Rogers is asked what he thinks about QE in a new interview on You Tube. He replies by simply saying that he got out of Sterling six months ago and he would advise the interviewer to do the same if he has any money left in it.

Its such a simple thing to say - no fancy argument - but to my mind it was one of the most effective parts of the interview.

Link is here (4 minutes in):

Jock Coats said...

Ineresting position from Bootle given the title of his book "Money for Nothing"...:)

Jack Maturin said...

"I also upbraided Ambrose Evans Pritchard for writing that hardly anyone saw the Great Depression coming, "even Keynes and Fisher" , when of course Hayek and Mises did predict it."

Nice work, Brett. It's always fun to slam-dunk Ambrose.

I think he is the most interesting of the Keynesian shill on the Torygraph, because you sense he wants to swing in an Austrian direction, but his thorough drenching in University Economics (i.e. Keynesian economics) keeps prventing him.

Do you have a link to the article?

Brett said...

Yes, deep down Ambrose knows the truth, but I think he senses that voicing it would place himself outside of "polite society" , so he sticks to the safer monetarist/Keynesian line.

I can forgive his timidity though, because his articles are always a good read.

Here's the link:

Jack Maturin said...

Nice work! :-)

Here's the relevant bits for everyone else:

Ambrose quote:

"Reading contemporary accounts, it is clear that hardly anybody not even Keynes or Fisher realised that the world was slipping into a depression during the first 18 months."

Heroic response:

"Your articles are always excellent, Ambrose. But please give Friedrich Hayek and Ludwig von Mises the credit they deserve since they did predict what Keynes and Fisher missed."

I'll bet Ambrose will even have got the point, and if we can help him enough, he may even EVENTUALLY come on board, unlike Edmund Conway, who will go down all guns blazing, while still praising the Devil Incarnate. (Though it is fun to see Edmund Conway get increasingly riled by his anti-Keynes commenters.)