A former colleague of mine was frothing at the mouth literally on reading Martin Wolf’s piece, ‘After the bonfire of the Verities’. He thought he should cancel his FT subscription on reading that. I read that piece. It was not one of Mr. Wolf’s bad or lousy pieces. He has had a few of them if not several. IT was confusing and sloppy. He could not make up his mind as to whether he should praise central bankers or bury them. He buried his criticisms, in the end.That is par for the course. The ‘establishment’ is important and ‘Establishment’ folks hang together (pun intended).
What are the specific issues with Mr. Wolf’s piece:
The Fed’s response to the crisis suggests that it believes the current crisis is a problem of liquidity. In fact it is a problem of poorly allocated investments caused by improper pricing of money and credit, pricing which is distorted by the Fed’s inflationary actions.
We live in a world that seems to have abandoned the concept of savings and investment as the source of real wealth and economic growth. Financial markets clamour for more cheap money creation on the part of central banks. …….. Policy makers focus on spurring consumption, while ignoring production. The so-called capitalists have forgotten that capital cannot be created by government fiat.
Control of the world’s economy has been placed in the hands of a banking cartel, which holds great danger for all of us. True prosperity requires sound money, increased productivity, and increased savings and investment. ………….. No amount of monetary expansion can solve our current financial problems, but it can make those problems much worse.