Monday, October 20, 2008

Ambrose Evans-Pritchard: Do our rulers know enough to avoid a 1930s replay?

Ambrose Evans-Pritchard article, here.

Maturin response:


Jack Maturin on October 20, 2008 at 09:28 AM

Do our rulers know enough to avoid a 1930s replay? Short answer: No. Long answer: So far they have done almost everything exactly wrong. The interesting question is why do they keep doing everything so exactly wrong?

Unlike most business page writers, Ambrose, you are at least brave enough to land punches on the governments, the regulators, and the central banks, that have deliberately caused this mess with their loose credit creation policies to soak up the short-term applause of the voters. So I congratulate you for that.

But what governments ought to have done here is absolutely nothing. The asset bubbles created by all of the central banks, but particularly by Greenspan with his ridiculously low Fed interest rates, need to burst. The Swedish Central Bank may give Central-Bank-Loving Paul Krugman a Nobel Prize in Economics, to try to hide this necessity, but it will do them no good.

Trying to prevent this recession, as governments feel compelled to do under voter pressure, will not stop these implosions, only delay them. The longer the implosions are delayed, the longer the recession will be.

It would have been better to take all the pain in one or two years, and get it over with.

But what we are seeing with fools like Darling, Cooper, and Brown, are deliberate actions to delay the pain of short, sharp, quick, and necessary recession, because they have to hold an election within two years.

In attempting to push off the worst effects for several years, to try to stage-manage some desperate election win, with occasional flowerings of hope where some scape-goat group will be blamed for the mess they have themselves created, they have turned this necessary recession into an unnecessary depression.

Tackling this recession needed braver actions and deeds. Anyone can spend everybody else's money. But the bravest action and deed here would have been to do absolutely nothing; to let Northern Rock go bust, to let Bradford and Bingley go bust, and to let HBOS go bust.

The cards could then have fallen on the table where they would, to then get picked up by the survivors.

But the short-term horizon of all politicians has encouraged them to go for short-term patches which have looked good in next day's newspapers, but which have created inevitable and terrible long-term consequences.

This is why governments keep getting these things exactly wrong, why they got it exactly wrong in the 1930s, and why they are getting it exactly wrong now.

And forget Galbraith. The only book Ben Bernanke and Mervyn King need to read on this is "America's Great Depression" by Murray Rothbard, and the only web sites they need to visit are the Mises Institute and Lew Rockwell web sites. Everything else is just statist lies, propaganda, and stupidity.

This is also why the short-term patches aren't working. In the thirties, the only people who knew what was happening were the isolated and obscure professor and student pair of Ludwig von Mises and Friedrich von Hayek.

Now the markets are reading the Mises Institute web site each day. They now know almost instantly why each government intervention will fail. I am only half-joking when I say that I expect this web site to get banned, probably under counter-terrorism laws.

I hope you continue to be brave enough to keep pointing these faults of the state out to the British people, Ambrose, despite the governmental pressure that you will no doubt be subjected to, if you do.

So best of British luck to you.

JJ on October 20, 2008 at 10:07 AM

Jack Maturin - It's a shame that your views on this have no voice in British politics or in the British MSM. We need a Lew Rockwell or Peter Schiff in Britain spelling things out loud and clear. I would suggest that more than 90% of the population do not even know that there is an alternative route out of this mess.

Jack Maturin on October 20, 2008 at 11:07 AM

JJ - Jeff Randall sometimes comes close to being a British Peter Schiff.

So take note Telegraph business writers, especially Edmund Conway and Roger Bootle! If you want to get Jeff Randall's pay cheque - and don't pretend you don't - start cloning Peter Schiff instead of Paul Krugman.

If you want a fiscal comparison, just examine what cloning David Letterman did to Jonathan Ross's pay cheque! $-)

Peter the Rock on October 20, 2008 at 12:22 PM

Jack Maturin
on October 20, 2008
at 09:28 AM
AND
David Goldsby
on October 20, 2008
at 11:20 AM

Good one you guys, seems you have the measure of it. I can only agree that Austrian economics makes the greatest sense. However, maybe we need to consider not just the economic theory, but the political animal that drives it, and that includes the cabal of banksters who are politically driven too in so far as they will do anything to maintain the current fiat system. History teaches that there is not one example of a successful fiat currency system, they all end in hyperinflation and systemic collapse. I do believe that we are facing this end whatever the masters do. I am not alone in this view. The answer eventually will be in gold because it is the only currency which does not have a counterparty. There was a great article on Market Oracle about this:
http://www.marketoracle.co.uk/Article6860.html

Jack Maturin on October 20, 2008 at 01:11 PM

Peter the Rock - "However, maybe we need to consider not just the economic theory, but the political animal that drives it, and that includes the cabal of banksters who are politically driven too in so far as they will do anything to maintain the current fiat system."

For the fullest analysis of this, Peter, the only book you need read is "Money, Bank Credit, and Economic Cycles" by Jes�s Huerta de Soto.

The hardcopy book is best, but you can read the entire thing online for free, via the following fully-indexed PDF link:

=> http://mises.org/books/desoto.pdf

That might be a bit of a monster to start with, so for an easier start, you could try Murray Rothbard's following books, all of which explain the numerous symbiotic links between the gangsters and the banksters:

"The Mystery of Banking"
=> http://mises.org/Books/mysteryofbanking.pdf

"What Has the Government Done to Our Money"
=> http://www.mises.org/books/whathasgovernmentdone.pdf

"The Case Against the Fed"
=> http://mises.org/books/fed.pdf

That should be enough to keep you going. Essentially, just read Rothbard and you won't go far wrong. Though of course, that's not what 99% of other economists would say, all of whom have been brainwashed in the Central Banking School of Keynes.

All Keynesians should try reading the books above, and then attempting to refute them. Good luck. I did. I failed. And had to become an Austrian as a result. Most just ignore Austrianism and hope it will go away, so they can keep picking up their salaries paid to them for holding orthodox Keynesian views.

Most of Rothbard's prolific life's works can be found online, here:

=> http://mises.org/literature.aspx?action=author&Id=299

David on October 20, 2008 at 02:26 PM

Well said Jack Maturin 9.28.

Why is the imperative nowadays to do something, anything, just to appear to have some control?

This lot and their economic advisers have done more than enough damage over the past 11 years to last us into the next generation and beyond.

Cut taxes, but leave the recession to unwind the damage done by the last eleven years of mismanagement, and hope to avoid further damage.

Jack Maturin on October 20, 2008 at 02:55 PM

David on October 20, 2008 at 02:26 PM

"This lot and their economic advisers have done more than enough damage over the past 11 years to last us into the next generation and beyond."

That was merely an hors d'oeuvre. Wait until the stagflation they have been creating with their recent stupid government interventions really starts to kick in.

We ain't seen nothing yet.

But picking up Richard Vine's point, at least "Quantum of Solace" is coming out soon to take our minds of this continuing government idiocy.

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