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John Mills thinks we’re not destroying our future fast enough…

April 17th, 2012 | Posted by admin in Uncategorized

I just found this pathetic article about why the UK needs to devalue by 25% to help us all…

http://www.civitas.org.uk/wordpress/2012/04/13/strong-pound-still-hurting-britain/
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I posted the following as a comment over there. But in case it doesn’t pass moderation I’ve pasted it below. Well, it saves repeating myself…

Firstly, I can’t believe the blurb for the book says “Since the 1970s, free-market orthodoxy has dominated British monetary policy”.

You have got to be kidding me! Free market monetary policy!? Central banking, fiat currency, legal tender laws and deposit insurance are diametrically opposed to free markets. John Mills seems to think that the BofE is targeting inflation – how quaint and ridiculous. The BofE and the fractional reserve banking system are the inflation; they created and encouraged the moral hazard and the mispricing of risk that has destroyed the economy and he wants more of it…

Leaving the moral issue to one side for a brief minute, currency devaluations can only work when a handful of countries need growth. The whole world is looking for growth now – competitive devaluations are now a race to the bottom. We debase our currency so other countries do the same in an effort to steal growth from each other. The resulting currency war is a terrible result. We are a country that imports more than we export – debasing our currency will hurt us more than help us.

Now, here is the really important bit – the idea is morally repugnant. Firstly, what gives anyone the right to destroy the value of our savings via inflation and devaluation? Why are we so apathetic about the usurpation of this power. I venture it’s ignorance and that needs to change. Since we import most of the raw materials for what we manufacture what he’s actually saying is he wants wages to drop and rather than wages drop in nominal terms he wants it to happen dishonestly via inflation – thanks to what Keynes called the public’s “money illusion” – so he can more easily sell abroad for the 5 minutes it takes until our customers do the same and restore the previous equilibrium.

So here’s the thing… I could accept that policy if the UK were to drop capital gains tax on gold so I can protect my savings. I’d be 100% out of sterling faster than you can say “gold standard” and so would every saver in Britain – you know – the people who actually provide the capital for entrepreneurs. That would provide his 25% drop far more efficiently than any monetary policy could. Then when wages drop nominally at least I am in a position to negotiate with my employer without losing the purchasing power of what I’ve managed to save in my working life. No doubt lower real wages would increase employment but you know what – you could achieve that by getting rid of the minimum wage and allowing free markets to bring the supply and demand for labour into equilibrium.

What John Mills is recommending is theft – plain and simple. Inflationism isn’t new – his argument is the same tired old mantra from Keynesians and Monetarists – it’s been going on for 1000s of years in one form or another. And you know what? The government is already doing its best to steal savings via negative real interest rates or what is called “financial repression”. It’s the only way they can pay the debt without defaulting honestly so what’s his problem exactly? Are they not doing it fast enough!? Hey, why stop at 25% – if it works so well why not go further. How did it work out for the 3500 paper currencies in history that no longer exist? Argentina, Zimbabwe, Hungary, the Weimar Republic – they couldn’t export fast enough when their currency went down the toilet could they?. It’s a totally fallacious argument.

Once again, we punish the people who did the right things, and reward the people who did the wrong things. History shows that countries can have strong currencies, high wages and still be competitive – but you know what?… it requires a healthy dose of free market capitalism, and we’ve not had any of that for decades…

Either he doesn’t understand how free markets work and why fiat currency and fractional reserve banking are sucking the lifeblood out of the economy and the people who comprise it or he’s knowingly advocating theft on a national scale.

“Challenges conventional thinking” – give me a break – his is the epitome of conventional thinking. He’s an apologist for irredeemable fiduciary media and like most think tanks – they think inside the box and aim to legitimise policy with a managed debate.

Disgusting…

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