The Austrian Way: Radio 4 and the divine rights of central bankers

After an eventful decade in office, Sir Mervyn King, Governor of the Bank of England, is preparing to sail off into the sunset. Radio 4 listeners over the weekend may have even noticed him appearing on Desert Island Discs with Kirsty Young.

As Sir Mervyn leaves with his obligatory knighthood, superb public pension, public-speaking tour awaiting and we prepare to welcome the new supreme leader of the BoE, Mark Carney, a predictable media circus has been profiling this news. Kirsty’s radio chat with Merv is just the latest example of central banker profiling the media is feeding us.

The dirty love in with central bankers

Why is it that central banking and the need for a national money master are so widely accepted as a given?

The liberal intelligentsia’s group think about finance is perhaps being most intellectually married to central banking as a construct.

The mainstream media debate on this vitally important subject is limited and narrow, with the likes of Ben Bernanke being awarded ‘Person of the Year’ by TIME magazine in 2009.

Question this potentially intellectual dogma and you are branded a renegade, dangerous, maybe even a flat-earther and backward.

Here at Bogpaper we take a different view of the world and are distrustful of central planning, the wisdom of the elite and especially the wisdom of one person.

We’d also like to ask how the hell we have ended up organising high finance so differently to politics?

Why Ben Bernanke is like Louis XIV

Central bankers are truly the kings of the monetary system. The thinking classes, media and most of academia seem to pay homage to the divine right of central bankers. Ask why we need a central bank on Newsnight, Question Time et al and see the reaction you get.

One man is given the task of bringing his infinite wisdom to economic reality.

He holds the most powerful levers in our economy. In real terms he is probably more powerful than his elected Prime Ministerial or Presidential partner in crime.

In today’s economy Ben Bernanke, Governor of the Federal Reserve, is the Louis XIV of finance. Louis the Sun King famously proclaimed: ‘L’état, c’est moi!’ Or, in English: ‘I am the state’. He was indeed and Ben Bernanke could equally easily claim today: ‘I am the market’.

Central bankers, helped by their inner circles, set monetary policy and with it interest rates, the most crucial price signal in the economy. By moving these monetary levers our central bankers define the value of money around which all commerce and trade are organised.

We don’t put up with this shit in politics

Contrast this to politics, where we have done away with the divine right of Kings, Princes and individuals.

In the UK we have assembled around the Magna Carta since 1215 and evolved into a constitutional monarchy. The French went a different way and laced a huge royal boil in one incision – The French Revolution. The Americans and their founding fathers produced one of the most thoughtful and short constitutions the world has seen, in our opinion and the liberal intelligentsia’s too.

The Western, advanced world is now a democratic one where we are guided by millions of political opinions, rather than those of one individual or even an oligopoly. We don’t want the grand designs of one crazed economic planner. We prefer the infinite, collective wisdom of our experience and knowledge.

Democracy and its market for political opinions is a superior model than the grand designs of one individual.

Questions to ask financial megalomaniacs 

Whether or not you believe the modern generation of central bankers caused the tech and then housing bubbles, does it not seem bizarre to you that we empower a lone banker to decide things like the value of money?

It’s madness we scream!

Should the value of money not be set by millions of savers and borrowers meeting together to establish what ‘fair value’ is? We want monetary democracy not tyranny.

William McChesney Martin Jr., the ninth Fed Governor, used to explain that his main role was to ‘defend the dollar’, or preserve its purchasing power and value. Is such a role even needed if money is sound and isolated from the corruptions of politics?

In 1873 Walter Bagehot wrote Lombard Street, a book that became one of the greatest intellectual justifications of the shitty business of central banking.

Bagehot thought the central bank had a duty to step in to manage crises and manias, but that it should save the day according to four principles:

  • In extremis the central bank ought to lend freely
  • This lending should occur at a punitive rate
  • This lending should be against good collateral
  • This lending should be to solvent institutions

Do our central bankers adhere to these criteria?

Bollocks they do!

Since 2008 central bankers have lent almost without limit, at favourable rates, often against shoddy or unknown collateral and often to insolvent situations.

Rousseau recommended there was no point having laws which could not be enforced. By the same token, what is the point in having such golden rules of central banking if the smart guys at the watch cannot be relied upon to adhere to them?

The time to call BS is now!

Central banking and the bounded rationality that surrounds it is dangerous, corrupt and the biggest rent-seeking, extractive part of our economy.

Abraham Lincoln agreed and was quoted thus:

The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies all who question its methods or throw light upon its crimes.

It’s time we called bullshit on this giant central banking bluff.

Got something to add? Have your rant in the comments below…

11 comments on “The Austrian Way: Radio 4 and the divine rights of central bankers

  1. right_writes
    June 4, 2013 at 7:36 am #

    Yes… I heard the first few seconds of that programme… I mistakenly pressed button 4 instead of button 3 or 5 on my car radio…

    I thought… I recognise that theme… It’s Roy Plomley… I was sadly mistaken, it was our famous financial whizz kid from the backstreets of Birmingham…

    The first thing he said was that he didn’t know why we were suffering from such financial sclerosis…

    And mentally referred back, in my simple plebeian/populist mind to Aaron Russo’s little filmette “A Short History of the American Dollar”… (If you haven’t seen it, it is on The YouTubes, and for financial klutzes like me, it works very well).

    As I reached for button 3 or 5 I thought… Is this bloke serious, or is it just a general attitude that our masters have for the “plebs”?

    Central banks, always steal the people’s money, and practise financial repression…

    You have to stand in awe at the brazenness of these folk.

  2. grumpyoldmanuk
    June 4, 2013 at 7:41 am #

    It was also said of Louis Bourbon that he, “learnt nothing and forgot nothing”. The similarities between central bankers and absolute monarchs proliferate, don’t they?

  3. jamesdelingpole1
    June 4, 2013 at 8:03 am #

    Welcome to Bogpaper, The Austrian. Or may I call you “Mr The Austrian”?

  4. jazz606
    June 4, 2013 at 10:05 pm #

    This being the same Mervyn King who didn’t see the banking crisis coming or if he did, kept quiet about it.

  5. David
    June 5, 2013 at 12:16 pm #

    Another excellent article on Bogpaper. Since this site has been set up I have lost count of the number of really good articles by Bogpaper’s writers, keep up the good work guys.

  6. Michael
    June 5, 2013 at 4:52 pm #

    The battle against Central Bank monetary tyranny is going to require a real intellectual revolution. I considered myself well educated and with an economics background (of the Keynesian/Chicago school type) and I thought I was pretty knowledgeable in the field of Finance/Economics. However I never really stopped to think about the nature of money until 2008 when the economic crisis struck and I heard Ron Paul talking about Central Banking in the 2008 presidential campaign. Up until then, I thought Central Banks were just part of the furniture working in the countries best interest rather than an insidious means of concentrating wealth and power and slowly destroying the middle classes wealth. It took a good 3 months of reading Rothbard, Ron Paul, Von Mises and Hazlitt before the scales fell from my eyes. Much later I read G. Edward Griffins “Creature from Jekyll Island” which really turned my take on history upside down!!

    What I’m getting at is that normalcy basis is a big inhibitor in changing people’s mind especially when you’re ideas are competing with logical sounding (but utter fallacious) arguments put forward by the MSM, (most) politicians and (most) economists. The latest one doing the rounds is Bernanke is going to keep printing until the US economy reaches “escape velocity” whatever that means.

    In reality, the economic shock is going to have to be so massive to wake more than 5% of the population up from their normalcy bias and demand real change. At the same time the media will be telling us it is a “crisis of capitalism” rather than a crisis of fiat money and central planning. Over 2 years, I’ve managed to wake up 6 people which wasn’t easy but far greater number just don’t want to know – out of sight, out of mind is their view.

    We need to keep banging the drums and once the next big stage of the monetary crisis hits, people will start to remember that economic “crank” who kept “banging on” about Central Banks and fiat money and the destruction they cause. The unfortunate thing is once that truth is realised, some peoples worlds will have been destroyed.


  1. Steynian 472nd | Free Canuckistan! - June 7, 2013

    […] the stuff of spoilt childhood fantasy made real, which probably explains their appeal; Radio 4 and the divine rights of central bankers; Pay more tax to get nothing in return … […]

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