In my maiden speech in the Commons, I explained how central banks and easy money produce the economic dislocations which result in the business cycle.
As the economics posts on this site attest, I have consistently defended the view that our economic difficulties are rooted in the chronically inflationary system of fiat money with which society has been saddled since the end of the Bretton Woods agreement in 1971. I’m glad employment, GDP growth and other indicators are positive but I remain of the view that a recovery built on “monetary activism” and “credit easing” is on built on sand.
I believe the turmoil we have seen around the world in the last few days are tremors which indicate the dislocations which monetary policy has sown. The collapse in commodity prices, for example, indicates profound past entrepreneurial error of a systematic nature which is consistent with the view that monetary policy has deeply disrupted markets. Anyone following the news can see how important central bank pronouncements and even rumours have become to the world’s capital markets.
These are not problems of the free market but of central banking.
Most importantly, the perverse effects of monetary policy are felt by people in Wycombe. Writing to thank me for leading a debate on money creation and society, one lady in Wycombe said:
Why is my house valued higher than its worth? Why do crashes keep happening every 8 years? Who owns the money supply and how does it relate to gold? Why haven’t I had cost of living pay rise for 7 years yet the CEO has just bought a pacific island? Why do quarterly targets keep going up at work and what is the end game of this model? Why has there been a transfer of public tax to private banks landing me and every one else with debt per head and yet they are laughing in our face? What is the likelihood of my pension actually being there when I retire? How did my father afford a house and support his family on one salary, yet I work twice as hard, I earn more than him yet can’t afford a holiday ? etc etc
Monetary policy has become, as Hayek wrote, “a grave menace to society”. It is a pervasive and poorly understood menace which affects everyone, globally.
That’s why, this weekend, I am attending the Jackson Hole Summit organised by the American Principles Project to challenge the ideas of the world’s central bankers meeting nearby on the same weekend. I am speaking around 21:00 BST Friday.
As the organisers have written in an email:
The Jackson Hole Summit is designed to challenge the policies of the Federal Reserve System and to hold the Federal Reserve accountable for the impact of today’s monetary policy on the nation’s economy.
Monetary Policy, once referred to as “The Currency Debate,” has evolved into a complex science that appears incomprehensible to the majority of Americans. This should not be the case. Money is the measure of one’s earnings and savings.
Money measures an individual’s earning potential in the marketplace and serves as a means of storage of the reward of those who work and save. Money is private property that must be above manipulation by unelected or even elected officials. When money can be diminished in value by the policy decisions of bureaucrats, perhaps with a political agenda, it is equivalent to confiscation of one’s private property.
Today’s monetary policies have undermined the value of savings and the buying power of American wages. Working families are caught in a vice grip of stagnant wages and a rising cost of living. Savers are being punished as Federal Reserve policies make a mockery of thrift.
When an individual cannot safeguard the value of their life’s work, the fruit of their labor, from the whims of politics, they can never be free to pursue the American Dream. Today’s Federal Reserve System policies threaten this fundamental right.
The goal of the American Principles Project Jackson Hole Summit is to return the “Currency Debate” into the public arena and to educate Americans on the impact of the the Federal Reserve System’s “discretionary” policies on the economy – and our liberty.
You can watch live here.