By both mainstream economists and the general public the cycle of “boom and bust” is believed to be a tendency inherent in any capitalist economy. The fact that the latest of such cycles, beginning in 2008 (and arguably not having ended), originated in the banking sector and that large banks and bankers ratcheted up huge earnings and bonuses only to cause disaster has implicated banking as representative of the very worst aspects of capitalism – the epitome of uncontrollable greed that ends in catastrophe.
Unfortunately this popular view of the mainstream could not be further from the truth. In fact, with its intimate ties to the state and its special, legal privileges it is hard to imagine a less capitalistic industry than banking. Part of the deception – wilfully inflamed by politicians and their lackeys – is one that engulfs other industries subject to state meddling such as utilities markets. This is the belief that, simply because the participants in the industry in question are private individuals or entities that are not officially part of the state, the enterprise must be classified as part of the free market and saddled with all of the supposed flaws of that system. Very often, however, private companies and brands are simply the public facade of what is essentially a state owned operation or state controlled cartel. Read more
Loan Sharking: A Brief Defence
By Sean Gabb
The British Government has announced it will cap the rates of interest on the loans people take out to tide them over till payday. It will amend the current Financial Services Bill to give the planned Financial Conduct Authority the power to limit charges.
Now, some of the interest rates charged do look astonishing. The loan companies that advertise on Channel Five all charge about 2,000 per cent. Others are said to charge as much as 4,000 per cent. The last time I borrowed money, I paid five per cent. I avoid going into debt on my credit cards, because of the 22 per cent charged on them. It may seem heartless to defend the right to charge very high interest rates – especially as these are charged to the very poor, who then have trouble getting out of debt. However, limiting the rate of interest they can be charged is not the way to help the poor. Let me explain. Read more
by Daniel Pryor
An Anarchist Response to the UK Autumn Statement
Major political parties in the United Kingdom are so far divorced from market anarchism as to render them a homogeneous mass of irrelevance. That said, it’s worth examining the policy announcements in Wednesday’s Autumn Statement by Chancellor George Osborne, if only to clarify the anarchist position and provide a critique of what many Brits incorrectly perceive to be “free-market” policies. Read more
by Godfrey Bloom
I spent 40 years with City institutions. I am so glad to be out of it. I retired in 2004. It is impossible to value assets in any realistic way. As a neo-Austrian economist I understand well enough that value is totally subjective in terms of goods or services. The argument needs no repetition for readers of this blog, although much repetition in economics class rooms in state universities.
Money is simply a utility of exchange, a deferment of the completion of a transaction to avoid a return to a barter system. But how do you value a money instrument? I ran a fixed interest fund with some success in the late 80’s and early 90’s, interest being the compensation for deferment of receiving goods or services. The problems we now have were all in the system then but nowhere near the scale of today. Read more
by Don Hank
My recent article on dedollarization mentioned several countries that were dedollarizing but not the UK, which had not yet joined the fray.
However, the UK has taken the most significant and daring step of all. Today’s morning paper says the United Kingdom is issuing SOVEREIGN BONDS denominated in…are you ready for this?…
RENMINBI. You can now buy UK bonds denominated in the Chinese yuan!!! Read more
by Kevin Carson
Occupy Wall Street has come under fire from some libertarians, on the grounds that it’s relatively silent about the role of big government, and its proposed remedies lean heavily toward increased government intervention. Read more
by Robert Henderson
The Labour hierarchy has worked out its narrative on the economic mess they created. It runs like this: NuLabour in power may have made some mistakes, but these were minor and apparent only with hindsight, while the real culprit is the global economy in general and the USA’s obsession with sub-prime mortgages in particular. This is not only a grotesque lie but a stupid one because it can be readily exposed. Read more