News & Analysis
Oh, EU ... Grow the Money Supply! (And Enshrine the Current Distortion Forever)
Global slump alert as world money contracts ... Growth of the world money supply has dropped to the lowest level since the financial crisis of 2008-2009, heralding a severe economic slowdown later this year unless authorites rapidly take action ... Real M1 for the G7 economies and leading E7 emerging powers peaked at 5.1pc in November and has since plunged to 1.6pc in Apri Photo: Getty Images The latest data show that the real M1 money supply – cash and overnight deposits – for China, the eurozone, Britain and the US has been contracting since the early Spring. Any further falls risk a full-blown global recession. – UK Telegraph/Ambrose Evans-Pritchard
Dominant Social Theme: The sky is falling, the Earth is dying, the money supply is shutting down.
Free-Market Analysis: We're getting a bit tired of perhaps the greatest mainstream journo, Ambrose Evans-Pritchard. He was quite good in predicting the possible death of the European Union or at least the euro. But he's undergone a considerable evolution in the past few months.
It started when he predicted (yes, we remember, Ambrose) that Spain would weather the Euro-downturn just fine – and without the problems Greece was having. We still don't understand what that was all about.
One of the good things about reading Evans-Pritchard is that he analyzes things through a monetary lens. But in that article, he suddenly started writing about industrial "fundamentals" – as if they mean anything in this day and age.
He sounded a bit like Bill Clinton proclaiming the "end of the business cycle." That always happens right before a crash. And sure enough, Spain crashed a few months later.
The crash continues – and with it Evans-Pritchard's increasingly hysterical morphing. He spends most of his allotment of white space these days sounding like a Keynesian on some kind of steroid. Every time he looks at a deflationary statistic all he seems to see is an underutilized printing press.
He is convinced that the current contraction of money is the worst thing since the Black Plague. To counteract it, he's taken to calling for a greater and more formidable European Union.
Et tu, Evans-Pritchard.
Or perhaps this was the plan all along. We're suspicious, as we have noted, about this entire "sovereign crisis." As it has gotten older and larger – and many additional remedies have been tried – we've started to feel as if the entire thing is a manipulation, a staged event.
And now even Evans-Pritchard has taken to calling for a larger and more powerful EU.
How exactly does that happen? A man who spends a good deal of his adult life in positions of journalistic power "afflicting the comfortable and comforting the afflicted" has now dedicated himself to supporting the European Leviathan.
Let us not forget this is a profoundly anti-democratic body, a bastion of incipient militarism, fascism and socialism (and any other anti-freedom -ism). The idea that peace can be purchased like butter – by the pound – is a nonsensical concept. The continent is not safer because it has encouraged political giganticism.
In fact, the EU with its Napoleonic Code (guilty until proven innocent), its plans for an invasive transfer tax, its new Euro-army and Euro-navy and its general affection for wiretapping, chip-implanting and retina scanning is an authoritarian accident waiting to happen.
The boot of the EU has not yet descended on the face of the average EU voter (with the exception of long-suffering citizens in some of the Southern PIGS) only because the Eurocrats do not have the requisite power yet.
They are hoping to have it soon, and Evans-Pritchard has changed from someone opposing that process to someone who is actively egging it on. He makes it clear that he is doing so only because the alternative – depression – is worse. But is it?
We'd argue parts of Europe are in depression now and that the way to get through it is to allow the distortions to unwind. It is central banking/monopoly fiat money that has caused the damage. Printing more of it won't help.
Evans-Pritchard is arguing for re-inflating the bubble that has collapsed. But we'd much rather see the entire facility of the EU fracture once and for all. Let national currencies return and local power blossom. The EU is a mighty scary beast, and why people like Evans-Pritchard are now endorsing its salvage is beyond us.
Conclusion: Let the current distorted economy burst apart. Let the pain be short and sharp – and then let its amelioration take hold. Why do top minds want to keep the misery in place? Makes little sense.