Driven to the point of no return (From The Northern Echo)

Driven to the point of no return

2:31pm Tuesday 27th September 2011 in Peter Mullen By Peter Mullen

WE are all going to be poor. I know that’s a depressing start to the column this week, but do have a little patience with me; it gets much worse as it goes on.

The reason we are all going to be poor is that the European banks – and, of course, our own Government – are printing money faster than you could waste it in all the slot machines in Las Vegas.

The economic crisis was created because we borrowed beyond our means. By “we” I mean individual householders who were encouraged by irresponsible banks to borrow on the strength of house prices to pay for luxuries, gadgets and holidays: buy now and, not just pay later, but with luck, pay never.

That was the lying promise that was made to us all by financial institutions.

Then there was the unscrupulousness of the banks themselves who lent money left right and centre to people who could not possibly repay. This policy was instigated and encouraged back in the last century by President Bill Clinton who threw money at impoverished black people so that they could become property owners. This was a utopian – or cynical – piece of social engineering, which was always bound to end badly.

The sheer size, volume and disaster of the economic collapse was caused by deliberate acts of UK government policy. Just take the British Government, for example, during the years of the Blair-Brown premierships. They borrowed and spent as if money did not have any intrinsic or real value. But money does have intrinsic value. There is no such thing as a free lunch. And so that policy of spend and borrow became a self-fulfilling prophecy.

As soon as New Labour created an extra 800,000 public service posts – mainly in jobs of no value at all – they were bound to plunge the nation into irretrievable debt.

Of course, this too was done for electioneering purposes: give 800,000 people jobs – they won’t care that most of them are in fact non-jobs – with over-generous pensions, and naturally they will vote for the party which so provided for them. Add to this extravagant expenditure on benefits for people who are mostly quite fit for work, throw money at useless and inefficient bureaucracies such as state schooling and the NHS, and you not only subsume the country under a mountain of debt, but you demoralise the nation by turning it into a sort of debauched bureaucracy of spivs.

I warned you this column would get worse, and so it does. Because what, having seen the consequences of their actions, might you expect a responsible government to do about the mess they have landed us all in? Reform perhaps? A radical reversal of policy – measures to cut taxes and encourage entrepreneurship and savings – which alone can rescue us? Not at all. The only answer these profligate false stewards who govern the country have is to offer more of the same policies which created the disaster in the first place. That is something called quantitative easing – a euphemistic phrase for printing money.

And the result? The more money you have slurping about in a recessionary economy, the higher the rate of inflation. The higher the rate of inflation the lower the value of your wage and your pension. Governments have always used inflation to overcome a debt crisis from the time of the Weimar Republic to Mervyn King’s governership of the Bank of England.