by Alasdair Macleod, GoldMoney:
The British government’s desperate dash towards free markets has failed, badly bungled. The establishment in Whitehall and Westminster is back and realigned with the international government consensus. The socialist wealth redistributors, the interventionists, and the anti-Brexit Remainers now formulate government policy. In Britain, free markets are dead.Â
Citizens of other western nations should take note of these developments. The replacement of Kwasi Kwarteng as Chancellor of the Exchequer by Jeremy Hunt, an establishment man and deemed to be a safe pair of hands, is set to guarantee the continuing authority of the state over its electors. The underlying problem, that the electorate can no longer afford its government, is lost in the noise.
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We must abandon any hope of a reversal of rapacious government policies that continually strip electors of their freedom and personal wealth. With a rapidly approaching financial crisis, which is now widely expected, the UK government will double down on its anti-market, anti-sound money policies. We can expect more price subsidies and price controls — paid for, of course, by yet more currency debasement.
It’s not just the UK. All advanced economies are approaching an endpoint in their governments’ anti-market policies. The global status quo can now only be challenged by markets. Rising interest rates, driven by collapsing purchasing powers of the major fiat currencies are bringing on that challenge, triggering a global financial and currency crisis.Â
The destiny of financial markets is already becoming evident, with asset values in an intractable decline. The contraction of OTC derivative markets is in its earliest stages, a factor of which the public is generally unaware, but will have enormous consequences. Bank credit for the non-financial sector is in the firing line as well, leading with certainty to a slump in global GDP. And we can be sure that policymakers everywhere will do their utmost to rescue the failing system by new rounds of quantitative easing.
Welcome to an outlook dominated by the accumulated errors of the global establishment, all set to hit us at the same time. As for the return to free markets? Not until considerable volumes of political and intellectual water have flowed under the bridge.
An obituary for free markets  Â
After a long illness, the death last Friday of free markets was announced in London. Market freedom had been increasingly suppressed since the First World War. In its comatose state, the last flicker of life was extinguished by the sacking of the British Chancellor of the Exchequer, Kwasi Kwarteng, and the reversal of bungled policies designed to liberate the British economy from increasing state control. The Prime Minister might be be ousted as well — possibly even before the ink dries in this article.
There can be no doubt of the fate of this one last attempt at a return to free markets. The blob killed it off — an apt term for the amorphous Westminster (politicians) and Whitehall (civil service) establishment that tried to prevent Brexit. What was particularly striking was the collective attitude of the Conservative Parliamentary Party, which is now exposed as full-on socialistic in supporting tax redistribution from the haves and their businesses to the have-nots, and entirely interventionist in their anti-market policies. The legacy of Margaret Thatcher is long gone.
Whether Liz Truss survives this coup is now immaterial to the course of government. The blob would prefer to get rid of her so that it can pursue unfettered its agenda of increasing the state’s control over the people, closer integration with European governments, and even a reversal of Brexit. In the absence of unexpected developments, individual freedom only remains to be finally buried.
This sad outcome is enough to turn frustrated libertarians into anarchists, wishing for a collapse of the whole rotten system — the sooner the better. Fortunately, or unfortunately, the increasing progression of statist control and suppression of free markets has nearly run its course. A financial crisis of humungous proportions is lurking in the wings, which in this analyst’s opinion has a fair chance of wiping out all rapacious states’ income entirely by collapsing their fiat currencies. For with their authoritarianism, they have bred economic and catallactic ignorance, which will certainly lead to their destruction.
As Ludwig von Mises put it in an essay entitled A Critique of Interventionism written in 1930,Â
“Only the naive inflationists could believe that government could enrich mankind through fiat money. Government cannot create anything; its orders cannot even evict anything from the world of reality, but they can evict from the world of the permissible. Government cannot make man richer, but it can make him poorer. “
Besides his close attention to valid economic theory, the authority for Mises’ thesis came from his experience in the post-war years, when he witnessed at first-hand the economics and politics of the Austrian hyperinflation, closely followed by that of Germany. In the century since, we have forgotten the lesson. So too, it appears, have the Austrian and German people whose forebears suffered catastrophic destruction of their wealth. Furthermore, it is almost certain that when the currency collapse becomes fact will we be ignorant of the follow-on consequences so vividly described in Hayek’s The Road to Serfdom. It chronicled the likely political developments that follow a government’s impoverishment of the masses by inflation.
But we can only consider one thing at a time. Borne out of statist ignorance and intellectual arrogance, today’s disregard by governments for the rights and individual freedoms of their peoples is responsible for the economic and catallactic crisis now before us. Our political leaders, hiding their coordinated attack on everyone’s freedom, are beginning to realise that their tenure is ending in crisis. Like those of a car whose brakes have suddenly failed while dashing downhill, the levers of power no longer function.
