Douglas Carswell

04 AUG 2016

Will Mark Carney use Brexit to stoke a dangerous bubble?

The Bank of England is widely expected to cut interest rates to record lows today. We're supposed to believe that Brexit makes more monetary stimulus for the economy indispensable. But that's not what the evidence shows.

Since June 23rd, markets have gone up, not down. So has foreign investment. The pre-referendum Q2 economic data, which the "experts" predicted would show uncertainty depressing growth, turned out to be strong. Yes, sterling fell against the dollar, but it has steadied, and Britain's gaping current account deficit suggests that, in relative terms, it was overvalued before.

Granted, not all of the data has been good. The PMI index shows business confidence has been shaken. But how much of that is down to the Brexit hysteria stoked by George Osborne and the Bank's Governor, Mark Carney?

UKIP's Economy Spokesman, Mark Reckless, suggests the Bank's policymakers are determined to cut interest rates no matter what because they're still stuck in a Remain mindset. You can watch his take here.

I suspect the malaise goes deeper still. If the financial crisis showed anything, it's that the global economy is dangerously hooked on credit. But the lesson central banks the world over have taken seems to be that the withdrawal symptoms are worse than the drug.

Since 2008, central banks have done everything they can to boost borrowing and spending all over again. The aim is to create the illusion of sustainable growth. But – as we saw in 2008 – a credit-fuelled boom is dangerously unsustainable.

Brexit isn't just the latest excuse for more money printing. It's the scapegoat for the monetary policy disaster. As Mervyn King, Mark Carney's predecessor, has written, cheap credit is the systemic risk to the global economy.

Instead of casting around for someone else to blame, shouldn't central banks take some responsibility?

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