Bank of England deputy advocates monetary recklessness

“A highly stimulatory monetary stance was needed to sustain demand”, writes Charles Bean, Deputy Governor of the Bank of England, in an article in the FT.

The purpose of money is (1) to facilitate the exchange of goods and services and (2) to enable people to retain their claims on wealth over a period of time – to provide “a store of value”.

Money can be used as a tool of economic management but this is an abuse and prevents it from performing its principal functions. “Stimulus” is nothing more than a means of transferring claims on wealth from creditors to debtors. It is legalised debasement of the currency.

Governments round the world indulge in the practice because, amongst other things, it puts off the time when they must implement effective tax systems that do not give rise to deadweight losses.

It is frightening that someone in such a high position should be advocating this policy.