Slaves of some defunct economist

It really is amazing how timid the British authorities are in the face of financial meltdown, despite what Gordon Brown said this afternoon.

The Americans really understand finance – they have a culture and history dominated by financial innovation and banking collapse. The British naively swallow all that stuff about sound money: they really think it’s real – as if anything that cascades round the world at the rate of $3 trillion a day can ever be sound. The authorities watch with fingers crossed as the markets plummet, believing they are watching the free market in action – when actually it is a perversion of the free market, a caricature that corrodes it.

Lloyd George intervened in the banking crisis that preceded the First World War by getting the Treasury to print their own notes. Maybe the Brown government would do the equivalent if they had to, but I wonder.

Keynes had it right when he said that “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” Unfortunately for us, the current batch of practical men now rule the world. They certainly rule the UK.