James Delingpole: The consensus on printing money reminds me of the case for global warming

We all have a pretty good idea of why the Soviet Union collapsed: it’s because its state-run planned economy wasn’t as efficient as its rivals in the free-market West. The lesson we’ve learned from this is that capitalism won the political argument. But it’s a false lesson, because capitalism didn’t. The problems that made the Soviet Union such a failure are now endemic in the West. To give one tiny example, in my Sunday paper last weekend was a story about how the Culture Secretary, Jeremy Hunt, is launching ‘a drive to encourage Britons to holiday in their own country… with discounts worth a fifth on breaks booked during the Olympic year’.

Who is paying for this scheme? You are, of course. The government has no money of its own. It finances its expenditure in one of three main ways: through taxation; through borrowing; through money-printing. So whether through confiscation from the present generation (tax) or future generations (borrowing, money printing), the government has decided on your and your children’s behalf that rather than allowing you to keep your money to spend on trivia like food, healthcare, education etc it would be better deployed on a whizzo scheme to discourage British people from taking their holidays abroad.

Put like that it sounds stupid, doesn’t it? But that’s how we ought to put it, every time. Until we can educate ourselves that, as Frederic Bastiat put it, ‘Government is the great fiction through which everybody endeavours to live at the expense of everybody else’, we will never get out of the ginormous heap of economic and sociopolitical ordure in which we find ourselves buried up to the neck.

It is in the nature of politicians to imagine that doing something will always make things better than if they had done nothing. The Soviets tested this notion to destruction. Despite being as richly endowed in natural resources as any people on earth, they lived in penury because of the way the resources were allocated: not by the market but by bureaucratic planners. This led to squandering, hoarding and inefficiency on an epic scale.

In his superb Basic Economics, Thomas Sowell quotes two Russian economists on the Soviet Union’s failures: ‘To make one ton of copper we use about 1,000 kilowatt hours of electrical energy, as against 300 in West Germany. To produce one ton of cement we use twice the amount of energy that Japan does.’

Again, the idiocy of this seems obvious. So why do so many of us fail to apply the same lofty scorn, say, to our coalition’s plans to divert precious scarce resources to wind-farm building? Or its brilliant scheme to enrich Siemens, despoil the Chilterns, and further indebt the economy by enabling rich commuters to shave 20 minutes off their travel time from Birmingham to London?

One answer is that we are a nation of economic illiterates. I’m not claiming to be the world’s greatest expert in this regard. But I have, of late, been doing my best to educate myself because I’m becoming increasingly worried that our political class is conducting a dangerous experiment which is steering us towards an economic catastrophe of perhaps unprecedented magnitude.

I’m thinking particularly of money-printing: ‘quantitative easing’, as it’s euphemistically known. Vince Cable described it the other day as an ‘unorthodox’ experiment whose impacts were ‘very imperfectly understood’: probably the first time he’s talked a glimmer of sense. Cable went on to say that the alternative to QE was ‘probably a disaster’ — which is where we diverge. Sure, almost every economic commentator you read appears to agree that QE is the necessary evil that saved our economy from armageddon. But a decade ago, pretty much every expert you read was in full agreement that ‘decarbonisation’ was the only solution to the deadly threat of anthropogenic global warming. I recognise just the same bastard alliance of junk science, appeals to authority, vested interests and half-baked chattering class received ideas working to promote the ‘QE: our only hope’ meme.

A key plank in the argument for QE is the Keynesian concept of ‘aggregate demand’. In times of recession, we’re assured by the experts, the government needs to do what the private sector won’t: spend money like there’s no tomorrow, thus stimulating the economy back into health. It’s a superficially persuasive theory: even if you’re just paying workers to dig holes in the ground and then fill them up again (a much more useful project than HS2), at least you’ll have people with money in their pockets to go out and spend on beer, fags, lottery tickets and so on, thus providing income to publicans, newsagents etc.

What the theory ignores is the basic truth outlined at the beginning. Governments — be they Joe Stalin’s, Barack Obama’s or Dave Cameron’s — are crap at allocating scarce resources. Whichever method they use to finance their meddling, and money printing is probably the most dangerous of the lot, they’re stealing from the (relatively) lean, productive and efficient private sector and squandering it on boondoggles like Solyndra or the Edinburgh tram disaster.

For me, QE — and the need for a return to sound money — is the most urgent story of our time. It’s why recently I’ve become involved with www.cobdencentre.org and www.bogpaper.com, both of which discuss these issues from the perspective of those Austrian school economists (Von Mises, Hayek, etc) who saw the current crisis coming a mile off — and probably offer the only real escape route. Hope for the best, prepare for the worst, that’s what I say. If, as I fear, there’s a shitstorm around the corner then Bogpaper could be just what you need….

,This article was originally published at The Spectator

10 comments on “James Delingpole: The consensus on printing money reminds me of the case for global warming

  1. Kitler
    March 12, 2012 at 5:39 am #

    Excellent article now when does the revolution start?

    • Bogpaper.com
      March 13, 2012 at 5:07 pm #

      Whenever we want it to. Let’s get a community going on Bogpaper which will educate and inform everyone about where governments and central banks have royally screwed us over.

      • Kitler
        March 14, 2012 at 3:33 am #

        You are talking a big subject but an interesting one.

  2. Alex Yeates
    March 12, 2012 at 8:12 pm #

    The trouble is people are so Economically retarded in this country that they will never realise that proper recovery will have to involve a large scale, group effort.

    “Populist politics over sound economics” has never been more relevant.

    We really need to educate the masses. Now that would be money well spent.

    • Bogpaper.com
      March 13, 2012 at 5:05 pm #

      Hi Alex.

      Our aim at Bogpaper is to educate the masses. It’s important people realise that there is an alternative to the economics which is taught in schools and practised by government. Hopefully as Bogpaper grows we can help to educate the increasing numbers of people who are beginning to realise that something has gone horribly wrong!

  3. Damien Phillips
    March 13, 2012 at 3:25 pm #

    Great article! Currently reading Thomas Sowell’s Basic Economics, and so far it has exploded at least one fallacy on every page. You realise how much rubbish we are subjected to on a daily basis through the media and via politicians. Then again, as Jack Hunter in the US pointed out, “How do you know that what you know is wrong, if you’re always told that it’s right.”

    QE and money printing in general is clearly going to lead to a disastrous end, and anyone would see that if they took a moment to think about it. Austrian economics is relatively easy to explain to a layperson and makes much more sense than the mixture of voodoo and bullshit that constitutes mainstream macroeconomics. It’s time we got the word out. Soon we’ll all be Austrians…

    • Bogpaper.com
      March 13, 2012 at 5:01 pm #

      Thanks Damien, well said! Bogpaper is all about people like you who have sought to learn about the fallacies of modern economics. We agree that money printing will lead to a disastrous end, the problem is no one knows when this will be. In the meantime we need to keep making sure that as many people learn about Austrian economics and forget the ‘voodoo and bullshit that constitutes mainstream economics!’.

  4. Ozboy
    March 14, 2012 at 7:45 am #

    There certainly is a shitstorm a-comin’; how you will survive it depends to a large extent IMHO on your level of self-sufficiency.

    You might like this thread of mine on sound money:



  1. Why money-printing is like 'global warming' – Telegraph Blogs - March 22, 2012

    […] had a similar awakening a few months back when I went to see Detlev Schlichter talk to a small group of (somewhat […]

  2. James Delingpole: Why money-printing is like ‘global warming’ | JunkScience.com - March 22, 2012

    […] had a similar awakening a few months back when I went to see Detlev Schlichter talk to a small group of (somewhat […]

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