Sir Mervyn King, the Governor of the Bank of England, declared this week that “this is the most serious financial crisis we’ve seen.” Therefore, he said, the Bank of England will expand the money supply by another ₤75 billion. That’s all he knows: Print more money, and this will somehow keep the economy working. Keep the delusion of prosperity by creating more money out of thin air. The old socialist Keynesian garbage that got us into this mess. With only one little twist to it this time: “We need to curb our domestic spending, but other countries, like Germany, China, Japan, need to expand their domestic spending.” In other words, Sir Mervyn says, the more the world spends, the better the world economy will be.
It is unclear how exactly Sir Mervyn got appointed to govern the Bank of England. There is nothing in his resume that can lead one to suppose that he knows what money is and how the financial markets and the economy operate. Sir Mervyn first got his name known in 1981 when he was one of the 364 economists who signed a letter to The Times condemning the budget of Sir Geoffrey Howe, Chancellor of the Exchequer in the cabinet of Baroness Thatcher. Sir Geoffrey had proposed a budget that defied the reigning Keynesian consensus at the time and returned the budget of the United Kingdom to low spending, low deficits, low regulations, and sound money. The 364 alleged “economists” declared that Sir Geoffrey’s Budget had “no basis in economic theory or supporting evidence.” All that was needed, according to them, was printing more money. They called it “de-stimulatory,” i.e. it had no “stimulus” for the economy. They predicted no recovery under such budget, only further recession.
They were humiliated by what happened afterwards. The recovery started almost immediately after the letter was published. Long-term interest rates in the UK fell, and the private sector revived. The unemployment remained high – the only argument left for the Keynesians to use – but that unemployment was only in those sectors that were still governmment-owned or under union regulations. When a couple of years later the government of Baroness Thatcher started the privatization process and de-unionized most of the industries, unemployment figures suddenly dropped almost overnight. The economic recovery wasn’t quick for the government faced much political opposition in its efforts to return England to sound conservative economic policies. But by the end of the 1980s the United Kingdom had revived and it was again a world economic leader. By comparison, France and Germany who at the time were still following the old Keynesian socialist policies, were left behind. And Sir Mervyn King was proved wrong, as were all the Keynesian economists that signed that stupid letter in 1981.
Nothing in his life after 1981 gives any signs of him being exceptionally smart or knowledgeable about the way money and the economy works. His only “achievement” was that he taught economics at the London School of Economics, an institution that was setup by the British Fabian Society with the express purpose to be the economic propaganda machine for the Fabian Society. He never deviated from his task of promoting Keynesianism. May be this is what earned him the governorship of the Bank of England.
Now Sir Mervyn is telling us that we need to expand the money supply to avoid a recession. It has worked in the past, he says. When has it worked, he doesn’t say. As far as his own experience is concerned – and I mean the 1980s – it is the opposite that works, conservative economic policies based on low spending and sound money. But socialists never learn from history.
Rumors have it that while teaching at MIT in Boston, Sir Mervyn shared an office with someone named Ben Bernanke. That’s ironic. Both Bernanke and Sir Mervyn are the perfect examples of what Fabian socialism’s ideal for central bankers is: highly-tenured, low-intelligence mediocrities who blindly follow socialist propaganda and never have a clue of what really is going on in the economy. And all they know as a “stimulus” for the economy is “print more money.” At the end of the day, socialism is running out of brain power.
And the question for American conservatives is this: Can they identify their own Sir Geoffrey Howe who will return America to its true conservative principles of low spending, low regulations, sound money, and minimum Federal Government? And will they vote for him?