This financial crisis has now rumbled on for almost as long as the Second World War. Are we any closer to resolving it?
Not according to Christine Lagarde, head honcho at the IMF. In a starting admission, she today said "I am often asked, five years into the crisis, whether the financial sector is safer today than it was then. My answer? 'Despite real progress, not yet.'"
You heard that right. After billions on bailouts, and years of print-money-and-pray economics, the banks are no safer.
Meanwhile, across the Atlantic former head of the Fed, Paul Volcker, has suggested that after endless talk of reform to deal with the "too big to fail" fallacy, taxpayers are still liable should the banks go belly up.
We are starting to see some of the disastrous economic consequences of economists. Ever since the credit crunch came along we have handed them a blank cheque to put things right. Have they?
Central bankers and economists have produced a response to the credit crunch that could well turn out to be worse than useless. They have spent billions making it worse in the long term.
What I find so odd is that Monetarists, who otherwise seem to recognise the importance of free markets, are apparently unable to appreciate the need to have the free market allocate credit, too. All too often they end up, in effect, calling for the state to hose the economy with cheap credit. State rationing like any other.
Until the Keynesian-Monetarist orthodoxy is overturned by the Austrian school of economics, I fear that everything the experts do will ultimately make things worse. Of course once we are all Austrian, there won't be any experts to muck up the money in the first place.blog comments powered by Disqus
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