Since 2008, unelected Central Bankers in the US Federal Reserve, our Bank of England (BoE), the European Central Bank, and the Bank of Japan have created massive amounts of money out of thin air. The BoE has ‘magicked’ into existence around £325bn, or roughly ¼ of the £1.28trillion debt, to which today’s ‘austere’ Government is adding another £100bn (or two HS2s) per year. This ‘Quantitative Easing’ (QE), or debt monetisation if we are to be more honest, has been called “the biggest transfer of wealth to the rich of any government policy in recent documented history”.
Why should this be? Well, most people will understand that creating more money creates inflation, but they might not necessarily know why. Put simply, most of economics boils down to the rules of supply and demand: if supply outstrips demand, prices go down; if demand outstrips supply, prices go up. In the case of Quantitative Easing, creating more pounds increases the supply of pounds, so the value of those pounds is diminished. This is no good if you’re paid in pounds – your wages are now worth less than they were before. At the same time, more pounds are ‘chasing’ the same quantity of assets, wine, art, property, shares and so on. The relationship between supply and demand has altered, and so the price of those assets rises. Which is good if you happen to hold those assets in the first place (as rich people do).
And this is what we’ve seen following our recent foray into QE. Prices have risen in the equities markets (stock exchanges have hit all time highs) and in everyday markets from food to energy. Since the BoE effectively gave up targeting inflation (they now focus on employment), wage increases have lagged behind price increases.
Furthermore, the current low interest rate policy cannot be permitted to end in the foreseeable future, because higher interest rates would cost the Government more in interest payments on it’s gargantuan loans. Any threat posed by a rise in bond yields will have to be suppressed by more BoE intervention.
Consequently, saving is ‘no brainer’ in the UK – if you have money in a standard savings account, low interest rates and QE are depreciating it’s value more rapidly than any interest adds to it. Put simply, you’re losing value on those savings by leaving them in the bank, so you may as well spend the cash whilst you can.
This is the inherent and insidious threat of monetarism – and to be plain, in the fiat currency. If the value of a man’s labour can be manipulated at the whim of the State then we are one step from slavery. Now I don’t doubt that there are ‘good monetarists’ of the old Friedman school and ‘bad monetarists’ who practice what is called ‘Modern Monetary Theory’ (MMT). The line between good and bad is thin though and the entire system is inherently abusable, to the disadvantage of the average working man. The very meaning of a ‘fiat currency’, on which all the world has lived since 1971, is that the currency is inherently valueless. It is therefore open to manipulation and every Government will abuse it for political ends. The future holds only more of this.
The other parties all proclaim the ‘free market’ while endorsing monetary manipulation (QE) and busily either inflating bubbles in the property market with ‘Help to Buy’ at the taxpayers expense, or calling for energy price freezes. It seems they don’t understand what the ‘free market’ means. At the expense of stating the obvious it emphatically means not making taxpayers bail out banks, not manipulating the currency to keep interest rates low, not practising precisely those policies that caused the 2008 crash!
I and others within UKIP hold ‘truth’ in high regard. In this case, the truth is that UK Plc is bankrupt. Even if by some miracle a small budgetary surplus is one day created, the whole fiasco would be destined to repeat itself once the bubbles they are currently inflating burst. The problem is that with fiat currency you never go bankrupt in theory – you just ‘print’ more and enslave the people more with inflation and wage suppression.
I believe that UKIP, having so clearly told the truth about the EU, should go on and oppose the fiat currency manipulators of the other parties. We need to reduce taxes, and this is only feasible by a default or debt write off/restructure. Let the people who earn the money have it! We need to encourage saving, and this means raising interest rates. Most importantly we must ensure that this form of State authorised robbery never occurs again.
To me, that means a return to the gold standard when the ‘promise to the bearer on demand’ meant something. A Government cannot print gold. Instead, any man can go to his bank with his wages and say “Can I cash this into gold please?” Gold was money long before the £ was heard of and will be long after.
Today we have what can only be described as corporate economy fed by a worthless and manipulable currency. It was once said
“When the laws undertake to make the rich richer and the potent more powerful, the humble members of society — the farmers, mechanics, and labourers — who have neither the time nor the means of securing like favours to themselves, have a right to complain of the injustice of their government.”
The other parties conspire with alternatives to commit legalised robbery. Let UKIP embrace liberty economically, and in so doing put clear purple water between us and the other parties who have so long deceived people. It may be that upon this issue the long term future of our party rests.