CHEEKY CRAP FROM OUR PRIME MINISTER (for how long??) COURTESY OF IAIN MARTIN

“The far greater depressions and inflations of the twentieth century have not educed nearly as much mass interest in economics as did the milder economic crises of the past century” - Murray Rothbard, History of Money and Banking in the United States (Mises Institute)

I comment on the extract below from Iain Martin, the excellent Sunday Telegraph columnist. Iain Martin is far from being a regular crap artist, but free marketeers are too thin on the ground to let false history pass without comment especially when it comes from our Gordon:

"Confession of a free marketeer: Gordon Brown is right
By Iain Martin

Henry Morgenthau Jr is a name not much mentioned now; in his time he was a giant, an architect of the new world that emerged from the wreckage of war.

He was President Roosevelt's treasury secretary, who chaired the Bretton Woods conference in New Hampshire in 1944 and largely got his way on a redesign of the global capitalist system. The results were a new basis on which currencies would operate, the creation of the World Bank and the International Monetary Fund to encourage growth, more open markets and a greater role for government in the regulation of international finance......

In 1999, Brown said: "The founders of Bretton Woods resolved that the failed policies of laissez-faire which resulted in vast inequities and recurring depression from the 1870s to the 1930s would not be repeated… Unregulated market forces had brought great instability and even greater injustice. In the post-war era, governments had to work collectively.".....

the lesson from Morgenthau and his contemporaries is that we are not powerless in the face of forces over which we might think we have no control. Brown's intervention shows that he understands this. In response free marketeers will need to have more to say than "get government out of the way"."

Free marketeers do indeed need to have more to say than “get government out of the way”.  They have to say why, which in this case means pointing out that Gordo’s “laissez-faire” and “unregulated market forces” had disappeared (at least insofar as Bretton Woods was concerned) long before his starting point of 1870!

For a simple proof of this one need look no further than banking, where free market banking had disappeared in England at least two generations earlier and in Gordo’s Scotland (despite an excellent record in its period of genuine free market banking) in 1844-5.  (In Morgenthau’s USA the early influence of government was even greater; genuine free market banking never existed there at all)

On April 15th in the Financial Times, Martin Wolf (another regular guy) had to admit that: “the incidence of banking crises has been as high since 1980 as in any period since 1800” whilst Ben Bernanke, Chairman of the Federal Reserve Bank, has admitted that the Fed caused the Great Depression. 

The UK’s own Great Depression was caused by government too, by its return to the Gold Standard in 1925 at the parity of its departure in 1914, despite the years of substantial inflation in between, (an error which provided an excuse to go off it altogether in 1931).

In fact the 1925 version was a Gold Exchange Standard, which it was able to impose on other countries, the essential feature being an internationally co-ordinated inflationary government-issued paper money based on the UK pound.  Bretton Woods provided the same thing except that it was based on the US dollar, which was the main objective of Morgenthau.  Neither has stood the test of time and both caused untold damage around the world.

The last thing that is needed in today’s crisis is more government interference, internationally co-ordinated or not.  Gordo should learn a little more about financial crises in his own country and how it avoided them in its period of free-market banking.

Free-marketeers have indeed more to say than “get government out of the way”.  We should also say “get government schools and government education out of the way; its history syllabus and lessons are bunk!