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Are We In The Largest Bubble in History? – An Austrian School Analysis by Steve Baker MP & Max Rangeley

It is often discussed how central banks saved the world economy following the 2008 Global Financial Crisis. In reality, monetary policy has created an even larger bubble than that which burst in 2008. But the trend has now been going on for a generation – from the 1980s onwards, every recession has been met by creating an even larger debt bubble. This has been done by cutting interest rates to “stimulate” the economy out of recession, but when they are […]

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Keynes, Carney and the corruption of capitalism

We’ve come a long way since the Bank of England’s Andy Haldane pointed out that they had “intentionally blown the biggest government bond bubble in history” and that it constituted the biggest risk to financial stability. Yesterday, in his Sky News interview, the Bank’s Governor Mark Carney said that the housing market was the biggest risk to financial stability. Selected headlines from the recent press continue the story: U.K. House Prices Rise to Record High in April – “U.K. house prices hit […]

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Haldane: Bond bubble is the biggest threat to financial stability

Via City A.M., Bank official: Bond bubble is the biggest threat to financial stability | City A.M.. OUTSPOKEN Bank of England official Andrew Haldane warned yesterday that the bursting of a bond bubble is the biggest threat to the world’s financial stability. Haldane, the Bank’s executive director of financial stability, told the Treasury Select Committee that central banks’ massive asset-buying programmes have created significant risks. “If I were to single out what for me would be the biggest risk to global […]

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The madness of contemporary economists

The Bank of England is considering negative interest rates to “stimulate” the economy, together with more QE. It’s one thing to pay a bank for safe-keeping and other services, another for the central bank to manipulate the credit markets as a whole. It is explicitly a policy of expropriating savers, of which there is much to be said on another occasion. Allister Heath provides sensible comment here. What the Bank of England is trying to do is restart the money creation process […]

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Good and bad economic news

Today, we learn, Europe’s leaders are poised this morning to cut the European Union’s budget for the first time in its 56 year history following a major victory for David Cameron. Great news and congratulations to the Prime Minister and the negotiating team. Let’s hope MEPs don’t block it. On the other hand, In his first public appearance in the UK, Mark Carney, the current Governor of the Bank of Canada, said Britain might benefit from a commitment to keep […]

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If the Treasury Committee rejects the new Governor, the House must have a binding say

I’m not excited about the appointment of a new Governor of the Bank of England. The money power is one too pervasive and too dreadful to be trusted to an individual or a committee: the prospects of tens of millions of people ought not to depend on the talents and character of an individual or a small group. With Richard Cobden, I believe managing the currency and interest rates is an impossible task. That’s a minority view these days but […]

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A confession from the Governor?

In his Cardiff speech last night, Sir Mervyn King admitted the Bank of England’s short term policies “appear diametrically opposed to those needed in the long term.”Sir Mervyn still believes that ulta-low interest rates have prevented the recession becoming a depression. However he confessed that such low interest rates prevent bad investments from the boom years unwinding and prop up failing firms surviving on cheap credit, thus postponing the recovery. I could point out that I have been saying this for years. Although that […]

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Leverage and the Bank of England

In his speech yesterday, potential Governor of the Bank of England Paul Tucker discussed moral hazard, agency problems, short-termism and the “manifestly false” assumptions of risk models. I almost feel prophetic. He also said: When credit markets become overly exuberant, not only do the balance sheets of lenders become stretched, cheap credit leads borrowers to become over indebted, raising the probability of default. When defaults eventually pick up, a general awakening occurs, triggering mass deleveraging. So close to the monetary […]

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The drive to resume credit expansion and recent growth in private employment

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Last night’s news coverage of the Bank of England’s prediction of no growth in 2012 was wearily predictable. There were calls for one last rate cut, more “monetary accommodation” and then turning to the Chancellor for more government spending. We can’t borrow and print our way to prosperity. That’s how we got into this mess: credit was too easy so we had a massive boom which created a poisonous illusion. The bust was inevitable. The great economist Ludwig von Mises […]

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For The Spectator Coffee House – Why tolerate central banking?

“Did you encourage them to make up the made up thing to their own advantage?” That’s how one Twitter correspondent paraphrased a question to the Deputy Governor of the Bank.  The LIBOR scandal has exposed the institutions and culture of the City to popular scrutiny as never before.  The population is reacting with justified incredulity to the absurdity it is finding. Read the rest of my article here.

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