As many Filter^ readers may know, I am a Founding Fellow of The Cobden Centre, and the person that did the most leg work to get the charity up and running - Steve Baker - was recently elected to parliament. Yesterday he gave his maiden speech in the House of Commons, and seized the opportunity to confront the banking system head on:
Unlike the situation in respect of any other commodity, in the case of money, price controls do not drive the product off the market. Artificially lowered interest rates increase the demand for credit, and decrease the supply of savings, but the legal privilege granted to banks means that they can meet demand by extending credit that is unbacked by real savings. There is a good argument to say that that causes the boom-and-bust cycle, the misdirection of resources in the capital structure of production, and over-consumption by consumers. That is the biggest problem that we face today...
Today, money is a product of the state. The Bank of England controls the price, quantity and quality of money. Perhaps if we were talking about any other commodity, there would be far less confusion over and questioning of the cause of the crisis. If money is a product of the state, we should ask ourselves, "Is this a good idea?"
It's a personal thrill to see someone you know in a position of such influence, and it's an even larger professional thrill to hear the content of his first speech. I understand that every MP in the UK is in possession of Eamon Butler's primer on Mises. Perhaps, at long last, the climate of opinion is changing in UK politics.
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