The FT and Our Monetary Shamans
As our long time readers know, we regard the Financial Times' editorial line in monetary matters as terribly misguided. The paper is strongly in favor of Keynesian recipes and central economic planning. Money printing and deficit spending are both hailed as the only thinkable 'solutions' to the problems money printing and deficit spending have created in the first place. The free market rarely comes up for air in the FT, especially not when the topic under discussion is money. The paper's chief economist Martin Wolf is best described as a dangerous monetary crank. That may sound uncharitable, but it happens to be the truth (sometimes one must call a spade a spade; what else can one say about a man who openly called for 'more money printing' and 'helicopter money' on numerous occasions?). To be fair, the FT is not a completely useless rag. The Alphaville blog is often quite informative, and the paper also gives room to critical voices from time to time (in very measured doses).
However, the main reason why we occasionally read the FT's editorials is to learn what the etatiste opposition thinks. Its writers just love to make up new and better 'plans' for the bureaucrats at central banks and other central planning institutions. This is actually par for the course – as a rule, socialists of all stripes want the authorities to adopt their personal plan. Individuals and their plans and goals do not figure in these grandiose social engineering schemes.
No matter how far out the ideas presented in the FT are, many are sooner or later adopted, in short, the paper often appears to be floating 'trial balloons' just before they become the official line of thinking. Not least because of the adoption of many of these policy prescriptions, we are approaching the system's final catastrophe at what is probably the fastest speed possible under the current institutional arrangements.
A hat tip to Bill Fleckenstein: in one of his recent missives, he mentioned an FT article that we would very likely have missed otherwise. The article in question is by Mrs. Gillian Tett, and although its tone suggests that she is presenting a new idea, she is actually describing things as they already are. Mrs. Tett argues that the next Fed chairman must become like a 'shaman' (or as we would put it, a witch doctor). However, isn't that a description that fits central bankers already? Let us see:
They are representatives of several religions (Keynesianism, monetarism and a dash of rational expectationism, wrapped in an econometric package) and the entire financial world parses and dreads their pronouncements. They give work to a large priestly caste that is most of the time writing apologias for their actions, clad in a cloak of scientism.
According to Mrs. Tett, the next Fed chairman must bend us to his or her will by “persuading us all to think in a manner that suits the Fed’s economic goals”, by means of the wily employment of 'ritualistic statements'.