Modern capitalism, at its core, relies on the public's trust of fiat money and the sanctity of contract. QE is seriously undermining both those cardinal concepts. We're not supposed to call QE "money printing" because money printing is the last refuge of declining economic empires and banana republics. It also amounts to state-sponsored theft. And against that, yes Professor Congdon, I declare an "implicit prejudice".Read it all and read it carefully.
Lost and Found
5 hours ago
1 comment:
Good comments too, such as this one:
Liam, your criticism of QE money-printing is sound. However, you acquiesce in the underlying problem when you agree "the best arrangement is for the state to manage the quantity of money", which virtually guarantees currency debasement as an easy government strategy.
You reject what you call "crude metallic-backed monetary regimes". Yes we all noticed that emotive word "crude". Somehow using that "crude" form of money, in the 600 years (yes 6 centuries) before Britain fully adopted fiat currency, the average annual rate of inflation was less than 0.3%. Since then it has averaged 4.2%.
Britain's greatest economic success and improvement in standards of living occurred using a "metallic-backed monetary regime", while its economy has withered under fiat currency.
I have yet to see any supposed economist demonstrate how the country has been made better off over the last century with fiat currency and the state managing the quantity of money. Instead we get nonsense like a gold standard would "depend too much on the accidents of mining technology and geological discovery". Somehow that was not a problem in the past.
In reality, the only "problem" with "crude metallic-backed monetary regimes" is that they do not allow politicians, bureaucrats and their supportive "economists" to fiddle with the currency and interest rates, creating and magnifying booms and busts, and surreptitiously and systematically (as you rightly point out) stealing from savers.
Incidentally, the consequence of the latter is the diversion of savings into government sponsored consumption, preventing its availability for productivity-building investment, so the economy is progressively weakened and it is then impossible for any except the government-connected, privileged few (which includes "bankers") to have any sort of comfortable retirement.
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Nobody alive today remembers when gold, silver and copper as money were a matter of course. 'Dollar' referred to a specific weight of silver, and the founders of the US felt so strongly about it that they wrote hard currency into the Constitution.
Best to start transitioning to sound money now before economic reality does it for us.
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