If Only the Tories Understood How Free Market Economics Works

Moggsy
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This government has a problem with its ‘magic money tree’ defence of Conservatism: it doesn’t live by it

‘I don’t think I’m quite as Austrian as you are,’ a Tory minister said to me the other day. And I knew then that the party is doomed. It wasn’t what he said so much as the way that he said it: in the fond, amused, each-to-his-own tone you might use to dismiss a friend’s enthusiasm for Morris dancing or Napoleonic re-enactment or dogging…

But personally, I think free market economics (of the Austrian or any other classical liberal school) is far too important to be left to wonks, think-tankers and out-there right-wing commentators. So did Margaret Thatcher. ‘Hayek’s powerful Road to Serfdom left a permanent mark on my own political character, making me a long-term optimist for free enterprise and liberty,’ she said. And so did Ronald Reagan. Asked which philosophical thinker or writers had influenced his conduct as a leader, he replied: ‘I have read the economic views of von Mises and Hayek.’

Read the rest in the Spectator.

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Radio Free Delingpole XVI: Buying Britain’s gold back

June 30, 2012

Today’s Radio Free Delingpole is dedicated to one of my new obsessions: gold. Partly I’m interested in it for the same reason Gollum was in the ring – because it’s shiny and precious and makes me feel like I can control all Middle Earth. But mainly it’s because I think our global economic policies are steering us inexorably towards monetary collapse. Gold, historically, has a proved a useful store of value in times of inflation or hyperinflation. I see no reason why this shouldn’t happen again WTSHTF (as we Austrian-survivalist-anarcho-capitalist types like to call the coming event).

Which is yet another reason, of course, why we should all so viscerally loathe Gordon Brown – and never ever forgive him for what he did to our gold reserves. Not only did he sell them off at a pittance –  395 tonnes of the stuff at a rock bottom $275 an ounce – but he actually got even less than he could have done by “butchering the trade.” This is the City phrase for telegraphing your sale in advance. In other words, if you announce to the world that you’re going to sell large quantities of your gold reserves – as Gordon did – gold holders will naturally sell off their own reserves beforehand, anticipating the inevitable price drop. As I detail in this Spectator article, what this also meant is that Britain has dropped way down the league of gold-owning nations.

The Chinese are surreptitiously building up their reserves; so too are basket cases like Venezuela. Britain, however, now languishes at a mere 17th in the international bullion-owning league table. And when it comes to gold holdings per capita we don’t even make the top 20. (The Swiss come top with – in 2011 figures – $6,000 worth of gold per person; the Lebanese are next; then the Germans. Britain has the lowest per capita holding in the EU).

This is why I think it’s such a totally brilliant idea that my friends Ralph, Jan and Will from the Real Asset Company are campaigning for us to Buy Britain’s Gold Back. Well, obviously, being a company where you can buy gold bullion that’s just the sort of thing they would say. And if you are going to buy gold, let me warn you right now, it’s not a one-way bet: I bought a thousand quid’s worth last year on the understanding that by this time the world’s economy would collapse and my bullion would be worth at least double. Instead, the world economy didn’t collapse and my shiny precious is now worth less than one thousand quid.

Nonetheless,  for what my ignorant amateur’s opinion is worth, I do agree with those who argue that gold (currently priced around the $1500 dollar mark) is going to hit $2,000 an ounce before it hits $1000 an ounce. Partly, this will be because of the inflationary effects of Quantitative Easing (of which, insanely, our government for one is planning more). Partly, it will be because of intriguing – and under-reported – policy shifts like the US Federal Reserve’s proposals to have gold bullion declared a “zero-risk-weighted” asset (currently it has a 50 per cent risk-weighting), making it less likely that in future capital-impaired banks will feel the need to dump their gold holdings.

Anyway, you can take or leave this stuff, as you will. I’m not trying to turn you all into goldbugs. In fact I hope you don’t become goldbugs because you’ll only end up weird and obsessive and shunned by people at parties. But if you want to read further, I do recommend the excellent Cobden Centre (“for honest money and social progress”) or Bogpaper.com (“Getting you out of the s**t since 2012”) or, if you really want to freak yourself out and live every day like it’s the last before the world ends, there’s the monumentally depressing Zero Hedge.

Related posts:

  1. Radio Free Delingpole: Popes and Puppies
  2. Radio Free Delingpole 40: Dirty Pictures
  3. Radio Free Delingpole XIV: Fracking, Thrones and Ninjas
  4. Radio Free Delingpole: Stupid Liberal Things

One thought on “Radio Free Delingpole XVI: buying Britain’s gold back”

  1. Alois Klein says:6th July 2012 at 10:32 amJames
    Read watermelons-need more like you to spread the truth

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Why Money-Printing Is like ‘Global Wwarming’

Sceptical of printing money

Yeah, that’ll work…

Here’s a must-read post by Aussie blogger Jo Nova – and it’s not on her usual topic climate change. The title says it all: The Ground Zero of Global Corruption: it starts with The Currency.

It’s like this. The governments and their central banks make as much free money from thin-air through fractional reserve banking and other methods as they can get away with — it benefits those who “spend that new money first”. They spend it at current prices, and pay it back later, after inflation has decreased its value. The people who pay the difference are those who saved and held money while its purchasing power fell. Speculators grow rich, while retirees and savers get poorer.

In a free market this would quickly lead to inflation, and people would rush to the only currencies the government can’t inflate (or “print” for free)  — they’d buy and hold gold or silver and keep their purchasing power. Remember, gold and silver are the currencies that evolved in the marketplace over the last 5,000 years and are not directly under the control of government. (And “so?” you say?). The point is, if the prices of gold and silver rise fast, people would abandon bonds and get into metals instead, thus correcting the situation by making the printing and speculating game vastly less attractive while saving and production became more attractive. Essentially, people dump the government money and go for the competitor, which means the government (and or Fed) has to increase the interest rate and pay more for its money, and nobody wants that: God forbid that Governments or Banks should pay people a fair rate for borrowing “their” money.

Bonds and “treasuries” (US Treasury Bonds) are fancy words for loans to the government. But if no one wants to buy them, then the government has trouble raising funds for its massive pork barreling vote-buying schemes, and the investment bankers pay higher interest payments which takes all the fun out of Grossly Huge and Obscene Mergers, the SubPrime Parties and the High Frequency Festivals.

I had a similar awakening a few months back when I went to see Detlev Schlichter talk to a small group of (somewhat terrified) MPs about his book Paper Money Collapse in a meeting organised by the Cobden Centre. Here is Schlichter explaining why Ben Bernanke’s, George Osborne’s and the European Central Bank’s money printing experiment will only prolong the depression.

Economies are not growing because of the massive imbalances that have accumulated as a result of years and decades of cheap credit. A cleansing correction  – in balance sheets, state budgets and debt levels – is urgently needed. Present policy doesn’t allow it. So the economy won’t grow.

He’s right, of course. But how do I know? I’m not, after all, an economist any more than I am a climate scientist, so why do I feel that I am qualified to comment? Why, for that matter, does Jo Nova?

I riff on this theme quite a lot in Watermelons – or Killing The Earth To Save It (Connor Court), as it’s called in the Australian edition, which I shall be shortly visiting Oz to publicise. You should read it. There’s a great section in which my old Kathy-Bates-in-Misery admirer Blobby is invoked and where I liken myself to the Robert Redford character in Three Days of The Condor (“He reads”). Anyway, all is explained there, so I’m damned if I’m going to give myself RSI regurgitating all the best bits here. Suffice to say, yes I am an Interpreter of Interpretations. It’s what I do and do well. I should have a card printed, one day.

But why should climate sceptics also be sceptical of money-printing, fiat currency, fractional reserve banking and gold and silver market manipulation? It’s a question Jo has pondered too.

If you wonder how corruption in climate science could be connected, look no further than Climate Money. Without the printing presses running flat out at the Fed, which politicians would have had the luxury of glorious schemes to control the weather? How could they hand out grants to send, say, aquariums on tour to warn of impending storms? Underneath it all, if large financial institutions were not looking forward to a brand-spanking-new $2 Trillion market to trade carbon, who would have found millions to install 70 foot Carbon-Clocks, 50 page science reports and to donate and push into “green” education campaigns? Funny money makes for funny decisions. Shame no one is laughing.

If real people had to earn real money, investment bankers would need to make real decisions, scientists would have to find real evidence, and politicians would have to come up with real reasons.

Exactly, Jo. Welcome to the Austrian School – the only economic education worth having right now.

Related posts:

  1. Millionaire Chris Huhne finds new ways to waste your money
  2. UN reveals its master plan for destruction of global economy
  3. ‘Global warming’: time to get angry
  4. ‘Global warming? What global warming?’ says High Priest of Gaia Religion

One thought on “Why money-printing is like ‘global warming’”

  1. Philip Neal says:23rd March 2012 at 9:23 pmWhat you say here may well be right, but as one free market, less government conservative to another I appeal to you not to make a big issue of questions which divide our side. In Watermelons you rightly argue that the Green ideology isn’t really about science at all, that the heart of it consists of economic fallacy about limits to growth, the nature of scarcity and the relationship between wealth and knowledge. You will do much better to focus on areas where the Left is hopelessly wrong rather than arguing about exactly which free market school – Austrians, monetarists etc – has the exact truth. Also, there are right wing cranks aplenty with fringe views about central banks, gold and so on: propagandists on the other side would like nothing better than to tar you with that brush. You are a polemicist and one of the best in the trade. Please concentrate on attacking the enemy.

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