Sir Mervyn is the king of a broken Bank of England ... Sir Mervyn King chose to evoke Depression era Britain on Wednesday night in his 9pm radio broadcast to the nation. Sir Mervyn King is wrong to imply the Bank of England had no policy tools to intervene in our crisis effectively Photo: Reuters He dredged up radio clips of Montague Norman, a former Bank of England Governor, and President Franklin Roosevelt to illustrate his Today Programme Lecture in front of an invited audience, albeit no journalists allowed – always a sign someone knows they're on a sticky wicket. Anyway, there we all were, happy families crowded around the radio set 1930s-style to listen to the Governor's words of wisdom about the financial crisis and the lessons to be learnt. – UK Telegraph
Dominant Social Theme: A little humility would be helpful from the Bank of England. Jeez, they're not perfect.
Free-Market Analysis: So the wheel keeps on turning, even after it has delinked from the axle. Monopoly-fiat central banking is not so arcane as it used to be: It's price fixing and it doesn't work.
Mervyn King can "draw all the lessons" he wants from the unrolling crisis but it really doesn't make any difference. When a handful of good, gray men fix the price of money, economies over time are bound to go wrong.
What is interesting now, however, is this biggest-of-all elite dominant social theme is maintained and perpetuated. It is a fear-based promotion, that only the top minds can properly guide us. But it is one – even in this Internet era – that the elites are determined to insist upon.
It's obvious by now. This is part of the article's formula (excerpted above) that the shadow play is distinctly less convincing these days even though it is presented (in its threadbare state) much as it used to be when it was a good deal more grand. Here's something else from the article:
We got a mea culpa of sorts. But mainly we got self-justification from a leader of an organisation that was as culpable as any for the regulatory and policy failings that led to the crash but which has miraculously found itself about to acquire unprecedented regulatory powers over banking, financial services generally and the economy more broadly. This without any independent investigation and report into what went wrong within the Bank of England previously.
And things did go wrong. Sir Mervyn on Wednesday night chose to belittle what power and influence the Bank had to stop the credit boom (even going as far as to say there was no boom that led to the bust). However, as he was forced to admit, the Bank could have played a significant role in averting disaster if it had used its influence and powers of intervention. But it failed to do so.
He claims the Bank identified the problems yet it did not shout loud enough or try hard enough to persuade fellow regulators, politicians and the markets that excessive risks were building up. It failed in the service it owed to the community.
Sir Mervyn is also wrong to imply the Bank had no policy tools to intervene effectively. There was a boom before the bust – a credit boom, as we all know. It could have been curbed with higher interest rates. The risk of slowing growth, or even a mild recession, would have been preferable to the disaster that befell us.
Raising rates would have sent a very obvious signal and would have removed the punch bowl from an already rowdy party. Sir Mervyn is keen on the punch bowl cliche to describe how the Bank will act in future, but he's failed here before.
This is beyond banal now, to use the "punch bowl" analogy once more. That was a somewhat fresh metaphor 50 years ago, but now with tens of millions out of work, angry, hungry, despairing, the trite mouthing of these premasticated memes is truly obscene.
More than obscene, it is contemptuous. We've written over and over that at some point what was hidden becomes clear, what was mysterious becomes obvious. Monopoly fiat central banking is obvious now. It stands revealed – in its pathetic nakedness – as the con that it is.
King and the others can dress up in fine gowns and mouth clichés but this will not do much, in our view, to ameliorate the bottom-line lack of confidence about the system itself. Even those of the greater masses who do not clearly understand the elite's full financial idiocy are well aware by now that something has gone wrong.
The elites behind the rolling disaster of modern Western economies are faced with a delicate balancing act. They wish to move toward global governance while dragging along the current monopoly money facility.
Conclusion: The question occurs to us again and again: How will this trick be managed in the Internet era where so many are watching and fewer are fooled?