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By Pete Moore On February 2nd, 2012 at 8:06 pm

Many people will think of the gold standard as a relic of a bygone era, something as old-fashioned as bow-ties and stuffed animals. (My caveat: To me, that’s not an insult.) Grant, when we met, argued the reverse. He says paper currencies and our current monetary system are the ones that are out of date.

“The anachronism is today’s system,” he says. We have a “command and control, top down” system whereby the Federal Reserve imposes an interest rate on society. The Fed, in other words, tells us what the price of money should be. It is, Grant says, oddly at odds with the modern age. “We live in a world of collaborative social networks” of the Internet and Facebook, of Wikipedia instead of the old World Book, and so on. And yet when it comes to the price of money, we wait for a committee that sits in private to tell us what it should be.

This, he argues, is the cause of so many of our ills. The Fed has moved from “central banking” to “central planning,” fueling bubbles, encouraging risks, and generally upsetting the equilibrium of the economy.

Back of the net.

That’s Jim Grant, publisher of Grant’s Interest Rate Observer. President-elect Paul will appoint him to head up the Federal Reserve ahead of it being abolished, if Americans do the obvious, necessary and urgent thing of giving him the gig. What if they don’t choose him? That doesn’t bear thinking about.


By David Vance On February 1st, 2012 at 8:55 pm

No, No, No! 

The Institute for Fiscal Studies has urged the Government to consider a £20bn fiscal stimulus in the event of the eurozone break-up, saying a possible plan B should be outlined in the Budget.

That is EXACTLY what we do not need WHEN the Eurozone breaks up. Once again some people insist that you can spend your way out of recession when in fact it is the spending that weakens the economy in the first instance. The recipe to keep UK fortunes on the up once the Euro goes down is so simple that only a politician could miss it;

1. Cut personal taxes and allow people to keep more off their own cash.

2. Cut Corporation Taxes so business can invest in growth.

3. Reduce the State sector at all costs, cut Welfare, shrink Government interference in as many areas as possible. Foreign Aid needs to be cut and Quangos need axed.

4.  Accept that economic growth is the product of a motivated and free economy and not within the remit of ANY Government. The role of Government is to help create the conditions to enable enterprise to grow.


By David Vance On January 22nd, 2012 at 6:48 pm

Perhaps the most hollow debate going on in modern politics is the cri de coeur from those on the political debate for the urgent need for “growth”. Those like UK Labour leader Ed Miliband talk glibly of the need for Government to change policy and instead of austerity “go for growth”. This is presented by the media as if it were a valid choice  – but of course it isn’t.

What is being retailed as “growth” by the Left is actually a euphemism for more government control, more government spending. In other words their SOLUTION to our economic woes is to repeat what CAUSED the problems in the first place!!!

We need to cut debt because we spent too much money during the Labour years causing a PROFOUND structural imbalance that was sending us towards the rocks. Furthermore when the Left talk about this imagined “growth” where exactly is it coming from? Are there employers out there who are holding back from growing their business? Really? And why is that? Have they wilfully chosen to reduce profits? Why?

It strikes me that the Left see that the “growth” of which they speak as being a growth in State expenditure, of the proliferation of more State non-jobs, of a disconnect between supply and demand which they circumnavigate by just splashing our cash.


By Pete Moore On December 21st, 2011 at 9:45 pm

Fitch has announced that “it may follow Standard & Poor’s lead and downgrade America from its AAA rating.” According to The Telegraph, it is an attack on the country’s high and rising government debt burden. With a $15 trillion+ debt and annual deficits now running at $1.5 trillion, time has just run out. The Fitch statement adds that “By postponing the difficult decisions on tax and spending until after the forthcoming Congressional and Presidential elections, the scale and pace of required deficit reduction will consequently be greater.”

Almost all candidates for the presidency promise even more spending, continued deficits and ever greater debts. Only one man has a definite and radical plan to reduce spending and debt. The choice is clear …


By Pete Moore On December 20th, 2011 at 9:21 pm

Moody’s has called out Chancellor George Osborne on his con. ‘Austerity’ has been the great lie at the heart of this government since May 2010. Gordon Brown was a fiscal incontinent, goes the propaganda, whose economic mess the government has to clean up. Gordon Brown was all that, but what is George Osborne then, since the supposed conservative Chancellor has increased spending still? The government this year is borrowing and spending more than Labour ever did. It will borrow and spend more next year and yet more the year after. Another Osborne con is his line that without this non-existent austerity the government would be paying the same interest rates on its debts as Greece. This is not true. We’d be paying the same interest rates as Greece if we had the euro. This is because our economy is in just as chronic a state. That we have retained our AAA rating is simply because the Bank of England can print up what the government needs as a lender of last resort. Yet even with this backstop the game is up. The markets know the con, Moody’s sees the deterioration in our economy and has issued a warning. This is good. Actual, real austerity is necessary. The sooner it is enforced on the government the better.


By Pete Moore On November 29th, 2011 at 3:12 pm

The heart sinks on days like these. On the occasion of Economic Commissar George Osborne delivering his glorious economic plan to the Commons, you just know that the usual suspects will be all over the media touting the myth of government spending; that being, ‘cutting spending too quickly will remove money from the economy’.

Putting aside that government borrowing and spending is rising, Ed Balls repeated this fallacy in the Commons, Alistair Darling has just repeated it on Sky News, Left Wing blogger Sunny Hundal said it this morning on BBC 5 Live and no doubt it can be found elsewhere. (Someone please introduce them to Say’s Law).

The myth of government spending turns reality on its head. It is government spending which removes capital from the economy. For the government to spend anything it must first be taken from someone’s pocket, i.e. removed from the economy in an act of government consumption and destruction of wealth. “Ah”, someone will say, “but Pete, what government spends goes into someone’s pocket.” The answer to which is that the act of consumption/destruction, and the removal of the capital from the economy, has already happened.

It therefore cannot be spent or saved and invested according to the wishes of the person who was deprived of it. It means that price signals, to producers, of natural economic demand are shut off and potential production is denied. Government spending does not allow such signals to be given. More spending is not economic growth, it is destruction of precious capital by the bureaucracy. The myth has its roots in the fallacy that consumption leads to production. As I said, this turns reality on its head. It is production which leads to consumption, the latter is a function of the former. If we want more consumption we can only do so by first having more production.

The myth is also an irrational argument. The quickest and simplest ‘boost’ to the economy is simply to cut taxes. Leave the money in our pockets instead of sending it around government tubes and making up fairy tales about how this puts money into the economic.


By David Vance On November 21st, 2011 at 9:53 am

Now then, what can go wrong with THIS idea?

First-time buyers trying to raise a deposit to get a foot on the housing ladder are to receive a helping hand from taxpayers. The Coalition is today expected to start a scheme to underwrite mortgages worth hundreds of millions of pounds for new homes.

It’s as if Government has absolutely no memory, no ability to realise that it is replicating the follies of previous Governments. This sort of meddling in the property market will clearly end in tears and yet Cameron and his pals think it the very height of their enlightenment. As Pete Moore said the other day …bangs head on desk. They are stupid beyond believe. I note that Ed Balls, he who advised Gordon Brown during those years when the property bubble monstrously inflated, think the idea of underwriting mortgages is “a step in the right direction” but that Government should be dramatically INCREASING the amount it underwrites in this regard. Unbelievable.


By Pete Moore On November 19th, 2011 at 7:01 pm

Do you remember when it was a bad idea for government to manipulate housing markets, to encourage lending and to back mortgage securities via agencies which lost hundreds of billion of dollars? That bit of market distortion didn’t end too well, did it?

The prime minister is also expected to back plans, supported by the Confederation of British Industry, for a government-backed mortgage indemnity scheme for first-time buyers […]

Under the mortgage indemnity scheme the government would cover the risk for the lender, which should enable first-time buyers to take out larger mortgages relative to the value of the home.


We’re going to do it here.


By Pete Moore On November 17th, 2011 at 11:59 am

Remember when Northern Rock was going to make a profit for the taxpayer? The government has sold it to Virgin Money for a loss.

BBC business editor Robert Peston said taxpayers had injected £1.4bn into Northern Rock plc.

He added that in addition to the immediate £747m the government will get back following the completion of the sale, there is the potential for the Treasury to receive a further £280m over the next few years.

“So on paper, taxpayers end up with a loss of somewhere between £400m and £650m,” said our business editor.

The Ghost of Gordon Past comes back to haunt. He’d probably describe this as a ‘negative profit’. It’s alright, it’s only other people’s money. Oh no it’s not, it’s our money, half a billion quid of it which the government’s just blown. That’s the ‘good’ Northern Rock. We’re still saddled with the ‘bad’ Northern Rock, £21 billion of bad debt and all.


By Pete Moore On November 2nd, 2011 at 6:21 pm

The ‘Federal’ Reserve has announced ‘that economic growth strengthened somewhat in the third quarter’, therefore there’ll be no more QE. Strewth, they can’t recognise a manipulated, inflationary economy even when they cause it.

Further, they announce that ‘the Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further’. (Price) inflation will settle? Really?

The Fedsters have the money supply up at ramming speed. If they think price rises will settle down they’re in for a surprise.