Wednesday, January 23, 2008

What am I going to do?

"I have no idea what's going on and I have no idea what to do next, so could I please retire now and pick up my state pension?"
Mervyn King's socialist board of money control, a.k.a. the Bank of England, is currently spinning so fast I think his glasses are going to fall off. No wonder he's looking pensive. Just take a look at the following stories:

Mervyn King issues inflation alert

Of course, the standard trick here is to raise interest rates (i.e. stop creating money out of thin air, at least for a short interlude). But then there's this:

Fed's panic rate cut ups pressure on BoE

And here, Mervyn hints that he's going to cut interest rates (i.e. start creating yet more money out of thin air), thereby fuelling the inflation he's warning about in the earlier story.

Just as they did in the 1970s, the Keynesians have lost the plot and they simply have no idea what to do next. Their only solution to putting out the fire is to pour on more petrol, but they know this will burn down the house. When will they learn? But seeing as you look like a nice enough chap, Mervyn, despite being a central banker, I have some advice:
You may be unable to get through this mighty work before Gordon retires you, but at least in your sunny dotage home by the sea you'll finally realise what you've been doing wrong all of these years.

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