The man\’s quite wonderful.
Removing the stimulus will involve pain; lower growth, higher unemployment and political unpopularity. But policy-makers don’t like lower growth, higher unemployment and political unpopularity. They enacted the stimulus in the first place to avoid it! At what point will they decide they do want lower growth, higher unemployment and political unpopularity?
Given the choice, they won’t, ever. So it will be imposed on them (and therefore us) by a suddenly less generous bond market via a government funding crisis.
That\’s a comment from Societe Generale. Essentially, politicians would like never to have to make either spending cuts or tax rises because to do so creates political unpopularity. OK, this isn\’t the most refined example of an exegesis of public choice theory but it\’s fair enough for all that.
And what will force choices upon the politicians? The running out of money to borrow in a less generous bond market. Note that all this takes is people being unwilling to purchase bonds at the prices that the government would like to sell them (ie, they\’d like a higher interest coupon attached than the govt would like to attach). If the government can\’t roll over old debt nor issue new debt to cover new deficits then interest to be paid on the debt rises and eventually (at some point, maybe close in time and maybe far away) all the govt income is being spent on interest on the bonds and the whole structure collapses. Of course, before that actually happens (although there are governments which have gone down that way) there\’s a change of behaviour forced upon the govt by the realisation that they cannot keep borrowing at anything like sensible prices. Retrench or trigger either a complete collapse of their borrowing capability or trigger a massive hyperinflation by attempting to finance the deficits by printing money.
Note that this doesn\’t require any power grab by bankers, doesn\’t require even collusion. All it requires is that, \”umm, you know, UK PLC isn\’t offering me enough money to take the risk of future inflation. Naah. I\’ll stick it in France PLC instead.\”
Now Ritchie\’s reaction:
So there we have it: banker’s attitude to democracy is stuff electorates, we’ll get what we want by imposition.
Have no doubt about it – the fight with bankers is about who rules. And the antidemocratic elites of finance (for that is what they are – in banking, accountancy and the legal profession) want to rule. Democracy is not for them. And they’ll precipitate a crisis in it to get what they want.
Aren\’t you happy that someone with such a clear eyed and rational view of The City and government debt is advising the TUC on their suggestions for both tax policy and City regulation?
This is also good:
The Masters of the Universe are clueless. All they know they want is the power to continue to purloin assets for their own benefit at cost to the rest of it. So long as they can do that, by capturing our savings, our pension funds, our bank accounts and our tax revenues for their own benefit, then they’re happy. If they can’t, they’ll impose their demands on us.
But the politicians still listen to them – so granting them power. And the time has come for bankers to lose that power. They have to loose the power to create money, the power to dictate markets, the power to impose policy, the power to ravish economies.
Connect that with the above and the most important phrase is \”the power to dictate markets\” when in fact what is meant is the power of markets to dictate to politicians. Markets of course simply being us voting with our cash: that is, Ritchie\’s not in favour of us, by the simple act of deciding what we do with our own property, being able to tell politicians that their latest bright idea is in fact a pile of shite.
Which of course is why he advocates capital controls: none of us should be allowed to take our money out of the ambit of British politicians. For it\’s not really ours at all: no, no, how simplistic, it\’s society\’s, to be used as society, distilled through the wisdom of those like Ritchie, determines.
He\’s also praised Anne Pettifor\’s idea that the government should just pass a law saying that banks have to lend to the government at very low interest rates. Yup, that\’s another one. We should get less for our savings because Gordon Brown is fiscally incontinent.
There\’s a phrase to describe this sort of policy: \”financial repression\”. And it\’s just as bad as any other form of government repression.
Now, aren\’t you really glad he\’s advising the TUC?