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Mervyn King should make us despair
The slo-mo crisis we find ourselves in will indeed come to an end. But I doubt it will do while Mervyn King is still calling the shots, writes Douglas Carswell MP
"No reason to despair", says Bank of England Governor, Mervyn King. "All crises must come to an end".
Gulp. If this all-crises-must-come-to-an-end line is the best our top economic technocrat can come up with, it is hardly reassuring.
Economic crises do indeed come to an end - but usually because those in charge start to do the right thing. Mervyn King's Bank of England has been doing the wrong things. Unless he changes course, he will compound our current crisis, rather than resolve it.
Mr King was at the helm as the central bank kept interest rates recklessly low in the years before the credit crunch, stoking up a credit bubble and mistaking it for growth.
Once the credit bubble burst, it was Mervyn's Monetary Policy Committee that slashed rates further, hoping to cure the patient by giving it more of what made it ill.
At almost every stage he has talked of deflationary dangers as inflation has been taking hold. The MPC has consistently failed to meet its inflation target for years.
Rather than maintain sound money, Mr King's bank has engaged in a massive bout of monetary stimulus, attempting to engineer economic growth.
With almost every passing day it becomes clear that Mervyn's print-more-money/provide-cheap-credit approach has failed; debt remains larger than ever; the banks remain zombies. With every disincentive to save, there has been no significant build-up of real credit in the system. And, to cap it all, we seem to be drifting back into recession.
This slo-mo crisis will indeed come to an end. But I doubt it will do so while Mervyn King and his debauched monetarism are still calling the shots.
Douglas Carswell is the Member of Parliament for Clacton. He tweets at @DouglasCarswell. This post was used with permission and originally appeared at TalkCarswell.com
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