Red Pill, Blue Pill … The other day m'learned colleague Ambrose Evans Pritchard wrote a piece in praise of money-printing. What the world needs is more Quantitative Easing, he argued, though this time deployed in "nuclear force." I have no doubt that this would bring about a full recovery very fast if conducted with enough panache, but is it possible to marshal political consent for such revolutionary action? The Tea Party Congress, like Europe's bourgeousie, would rather wallow in liquidation, Puritan cleansing, and mass default than tolerate the possibility of a solution. I couldn't disagree more violently with this analysis. Nor, happily could most of you. The most popular comment response – approved by over 300 readers – countered: In reality, economics is not the fiscal rocket-science you make it sound. Capitalism itself is based on good old-fashioned honesty. The money at the heart of it must be both an honest store-of-value and an efficient medium of exchange. It ceases to be so when the inherent deceits of fractional reserve banking allow trillions of false credit to be pumped into the system, thus forcing up prices (booms) which inevitably lead to over-valued commodities (busts). – James Delingpole/UK Telegraph
Dominant Social Theme: What do we do now? Print! Indeed, we must …
Free-Market Analysis: James Delingpole and Ambrose Evans-Pritchard are now in a literary face-off about money printing and what needs to be done to revive lagging Western economies.
In a recent article, "Fed fiddles as America slides back into recession," Evans-Pritchard seems to reveal himself as what he has claimed all along not to be – a monetarist. Perhaps this is why Delingpole wrote the article now versus before when Evans-Pritchard stated the same sort of sentiments but in a guarded way.
This argument is certainly worth noting within the context of what we ordinarily cover, which are the dominant social themes of the elite. Within this context, the printing of paper money is a utile meme because the elites fund their globalist activities, apparently, via their control of about 150 central banks around the world.
Evans-Pritchard is carrying the elite's proverbial water as regards this argument, for monetarism is an elite economic system and provides the motor for the elite's larger authoritarianism. Evans-Pritchard places himself on the wrong side of the argument with his support for John Maynard Keynes' incomprehensible formulations.
There are other issues here as well. We've long admired Evans-Pritchard for his criticism of the European Union as anti-freedom, generally, and on a more parochial level the difficulties it poses for Britain. But at the same time, we were also aware that someone of Evans-Pritchard's stature within the journalism business would probably have to make trade-offs.
We think the self-"outing" of Evans-Pritchard as a monetarist is one of those trade-offs. More and more, we've noticed, as the European crisis has deepened, Evans-Pritchard has raised the level of monetarist rhetoric.
We've commented on this in the recent past, especially within the context of his remarks regarding the European Central Bank and the necessity for broad monetary stimulus. Evans-Pritchard put such monetary stimulus within the context of activities he was only reluctantly recommending. But he was recommending it nonetheless, because, as he indicated, there was no other way out.
Yet this struck us as somewhat strange given Evans-Pritchard's defiance when it came to the European Union. He found it such a wretched enterprise, and yet he was providing a position that involved not only salvaging it but also doing so with a mechanism that was bound to make this neo-empire building even worse.
It seemed, well … a bit intellectually dishonest to pose as an opponent of an authoritarian system and then advocate currency debasement – a terrible weapon – as a way of preserving the empire that one had conclusively derided for years.
Evans-Pritchard's perspective was and seems to remain that the crumbling of the EU would be even worse than a currency-undermining bout of monetarism. This seems philosophically inconsistent. Here's more from Delingpole's article:
Here's another fascinating report, this time about where gold is headed. Conservatively it estimates its target price at $2,300 an ounce. Whenever I mention such things, I'm always amused by the rage it generates in some quarters from "experts" who passionately believe that gold is overvalued, that it's a bubble that is about to burst.
Well fine. If that's what you think, don't go and buy gold bullion. No one's forcing you to – and what I say makes no difference either way to the market price: you can't ramp gold like you can share prices. I just happen to think you're making a big mistake which you could easily avoid were you to acquaint yourself with the most basic principles of Austrian economics.
What you need to understand is that the value of gold is not about to go up. What's going to happen is that paper money is going to become increasingly worthless – meaning you'll need that many more worthless paper notes to buy the same amount of gold. This is what Quantitative Easing does. And the reason you're holding gold is not as some kind of crazy speculative investment which might just make you rich, rich, rich! You're doing it for the much less exciting and more depressing reason that all your savings are about to be inflated away and gold is just a way of stopping you growing any more poor.
I'm holding quite a bit of gold at the moment by way of various investments. But believe me, I'd much rather live in a world where the economy was in the kind of shape where it made more sense to buy shares instead.
Delingpole entitled his article Red Pill, Blue Pill – and explained in the copy that the Red Pill stood for those who believed in gold and sound currency and the Blue Pill stood for those who believed (even reluctantly) in monetarism.
He went into some detail about the reader response to Evans-Pritchard's remarks and pointed out that many rejected the monetarism that Evans-Pritchard advocated.
Besides your response to Ambrose's piece, the other thing that has given me tremendous hope on Telegraph blogs in the last few weeks has been the arrival of the brilliant Thomas Pascoe – whom I hereby recruit, if he'll let me, as my wingman … As he showed in his piece the other day on the manipulation of the gold price, Pascoe, too has taken the red pill. He too, recognises, just how potentially dire things might get before this global economic crisis is resolved.
Delingpole concludes his article by writing, "Take the red pill. T-a-a-k- e the RED PILL. It's the only way any of us are going to get out of this one alive."
We would tend to agree with this – that hard money has historically proved itself superior to monopoly/fiat paper currency– and to see such an opinion voiced forthrightly in an influential newspaper is encouraging. What is less encouraging is Evans-Pritchard's enunciated viewpoint that monopoly money expansion is the only way out of the current EU mess.
Having so eloquently pointed out the flaws of the EU, he ought not to waver when it comes to the dissolution of this authoritarian experiment, in our humble opinion. He believes apparently that the EU's bust up will be infinitely worse than another "quantitative easing" of "nuclear force."
But propping up authoritarian experiments is probably not a good idea in any epoch, as history surely tends to show us. Perhaps following Delingpole's column, Pritchard will reconsider his arguments and return to being a principled opponent of the kind soft-fascism that the EU inherently represents.
We like and admire much of the caustic analysis that Evans-Pritchard has aimed at the EU over the past years. To see a schism developing between two mainstream journos over monetary policy is somewhat depressing as there are so few within the mainstream media that will speak out against Europe's growing authoritarianism.
Hopefully, Evans-Pritchard shall reconsider his monetarism and return to eloquently reporting on the disintegrating EU and the reasons that its eventual bust up is probably inevitable.