The Austrian Way: Welcome super hero Mark Carney

A rare thing has just happened at our beloved Bank of England. A ten year governor tenure has just ended and a new one begun.

Sir Mervyn King heads off after one final press conference, his membership of the MCC ready to occupy his retirement, his pension pot swollen and his reputation as a central banker mostly in tact according to the mainstream media.

To be honest, we’re rather happier for Merv to be doing our cricket scoring than our economic and monetary scoring.

So now we welcome to Threadneedle Street the apparent doyen of Western central banking, Mark Carney.

The super hero has landed

Mr Carney arises with his super hero cape billowing, George Clooney looks being considered by financial gossipers and to the doting words of George Osborne.

Gorgeous George has urged that Mr Carney is the pre-eminent and most effective central banker in the Western world this last decade. We cynics might say you would trumpet an appointment you bloody made Georgie boy, but then who cares about us cynics.

Whilst Magic Mark’s previous past over-seeing the Canadian banking system was relatively successful, he now moves from Plymouth Albion to Liverpool so to speak.

He’s moving up a League and taking the reins of a much larger, more leveraged, more complex and more political banking system, whilst also settling into a fading economy.

The British banking system makes up a part of our economy 7 times larger than Wall St does for the Americans.

Good luck to him.

We think he’ll need it.

Why Bogpaper ain’t celebrating

As interesting as it is to see a fresh face at the BoE, in our eyes this is just another financial oligarch  come super mandarin, arriving at the helm of our largest, most absurd central planning monstrosity.

We cannot back ‘ol Mark when we don’t even believe in central banking.

We think the ideas of Walter Bagehot and other central bank lovers take a Tyson-like beating at the hands of clearing thinking from Professor Kevin Dowd and other free-banking scholars.

We cannot approve of the neo-classical policies he will likely follow, when we think Keynesianism and Monetarism are flawed.

Good luck achieving any magic multipliers, Mark, but given your remit you’ll need even more luck with your key competence – controlling and perhaps increasing monetary velocity.

Crucially at Bogpaper we believe that monetary velocity is a giant pendulum that cannot be swung to the desired rhythm of central bankers, or even held in their favoured position. They’ve been trying unsuccessfully for over a decade.

We also believe that Keynesianism is not a general theory but a special theory at best, now perverted by years of wrongheaded carriers of the great man’s thoughts.

Sadly, central planning in finance has the same effects as in any other sector of the economy – it favours a few, at the expense of the many.

However, the market is too big, too unruly, too complex, too democratic to fit around the plans of these most powerful of central planners.

Thank God for that.

What will be the Carney Effect?

Apart from different ways of engaging the media and some new social media jazz from the BoE, we don’t expect massive changes, except for perhaps a bit more zeal in certain monetary directions.

Financial commentators and the talking heads having been pontificating about what Magic Mark will do, but no-one really knows yet. What ‘more creative’ methods and policies means we and the markets can only wait to see.

If asked to forecast Mr Carney’s term we expect:

  • Pound down
  • Inflation ever-present and possibly rising
  • Debt levels far from falling
  • Equities supplied with at least enough cheap money
  • Growth in the bond bubble
  • Temptation for Japan-following and Abenomics
  • Continued cooperation with Western central bankers and little questioning of their group think
  • Possible currency crisis

Basically we think our economy is going to be driven pretty similarly, with a bit more use of the turbo, perhaps different tyres and even the hint of using nitrous oxide.

Savers will continue to be robbed at the expense of borrowers.

None of the real causes of economic and monetary problems will be fixed.

The incumbents of many of the world’s major central banks are indeed stepping aside for new blood these next years, but given how the selection processes work for these positions we don’t expect the arrival of any really new and challenging ideas.

The revolution in economics is yet to arrive.

Until then you’ll just have to make do with reading about The Austrian Way, rather than seeing it in action.

5 comments on “The Austrian Way: Welcome super hero Mark Carney

  1. Nick
    July 9, 2013 at 9:23 pm #

    But what do we do as savers? Our money is being stolen to pay for the feckless!!

    • theaustrianway
      July 11, 2013 at 12:29 pm #

      Thanks for the comment and question Nick.

      You’re right – this is theft from you to another. A terrible disincentive to hard work and saving, and an incentive to be a moocher and speculator.

      It can only happen whilst central planners can decide to increase the money supply according to their whims. This is why us Austrian School thinks prefer currencies whose supply is outside the reach of man and thus independent of politics.

      Traditionally the precious metals have acted as decentralised forms of currency, now being joined by a revolution in digital monies that are also decentralised. More to come on these issues in the next Austrian Way

      Stay tuned!

  2. silverminer
    July 11, 2013 at 8:26 pm #

    That people put any faith in central bankers, and the markets clearly hang on their every word, is a sad indictment of the mess we’re in. Instead of economies driven by the invisible hand of the market, all markets blatantly manipulated. The central bankers are like Dutchmen with multiple fingers in the dikes. Eventually, they’ll be overwhelmed and gold and silver will be the last men standing.

  3. Saul S
    July 12, 2013 at 8:03 am #

    My Carney,

    I’m sure you’re reading this, so listen up pal!

    I hope you’re a libertarian, super-spook whose been training in the Canadian wilderness, with sound money, Austrian thinking and maple syrup, to now infiltrate the BoE by stealth.

    Please sneak in there, and start tearing this shit down – one socialist economic construct at a time. I hope you will enter the bank like an unwelcome cancer and eat its wrong-headedness from the inside out. Don’t show any remorse, kick those career-economists and forecasters up the arse so hard they can taste your shoe leather.

    Whilst you’re at it please point Dave and George the way of a few proper books so they can learn some economics, and shit out all the bloody statist dogma they’re so wedded to.

    While you’re at it, please help London become a global centre for Bitcoin and digital currencies, push for Max Keiser to become a Knight of the Realm and give James Delingpole a kiss from me.

    Simple Saul


  1. Steynian 480nth | Free Canuckistan! - July 11, 2013

    […] BOGPAPER– Russell Taylor – In praise of freedom; The Austrian Way: Welcome super hero Mark Carney … […]

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