Britain is the country best known for its social welfare schemes. Free health care system (NHS), free Universal Education System, pension and monetary aid schemes for single moms and elderly people and a lot many welfare policies that attract people to live in UK. Britain is the country with absolute Gun Control and least number of Illegal guns. Yet something happened miserably wrong with British economy that created havoc in the country and those people, who were being considered as most peaceful and rich are rioting on roads burgling in shopping malls. Britain is in shambles right now, People are killing each other and they are committing suicide. The only reason behind this is the Social welfares, Fiat Currency (Euro) and communist mind set of British central planners.
The real sickness of British society is the constant-inflation policy of the British government and central planners. Fiat currency inflation is also known as indirect robbery which always works under a disguise of progress. Since 1931, British government is corrupting the money supply by promoting an average rate of around 6 percent per year. This is constant destruction of the wealth of the nation which is stolen by the corrupt, selfish hands of irrational, irresponsible politicians.
Politicians promote inflation with a very selfish motive which is to continue ruling power and domination1 over common citizens by bribing them through welfare policies like Education for All, Universal Health Care System, Employment Guarantee system and similar irrational policies. They use the inflated money to invest in such ridiculous policies to win hearts of voters so that they may retain governmental power. Inflated money is also used to continue warfare which is often used again to woo voters by spreading jingoism and protectionism.
The Britons of 1910 would never have imagined about the horrific events that rocked the streets of London and other important cities in UK earlier this month. Yet, this was inevitable result of the inflation, welfare and warfare that was promoted by wholesale state interference mixed economy system right since 1914. While Britain continued losing economical strength. The Bank of England, like the central banks of other countries, is well famous for abysmal record of incompetence, dismal Keynesianism and predictive failure kept planning and investing for the corrupt politicians who continued to promote welfare estates of socialism.
The irony is these central planners have no clue about what they are doing or what damages they are causing with their senseless policies. Yet, they still believe that they are able to precisely predict the future and they will be able to control the inflation and price rise pretty soon as is mentioned in this article of the Telegraph. It must also be noted that Indian central planner are also suffering from similar hallucination as our Prime Minister keeps saying that government will be able to control inflation and price rise within next five months but then after every five months, the finance minister Pranab Mukherjee states that the government has no magical wand to control inflation. They never accept that they caused inflation deliberately by printing money out of thin air.
Keynesianism is a disastrous failure in every other country, but almost all central planners of different countries including Bank of England keep experimenting with the failed Keynesian policies. The same mentality worked in American mixed economy socialist system where the central planners and the Fed decided to maintain the Dot Com bubble, Mississippi Bubble, the South Sea Bubble, and now the government-bond bubble. Even the United States failed with their experiments of Keynesianism and recently they were at the verge of bankruptcy, they already have forced a new recession period in world economy2 .
Politicians and central planners use Keynesian policies as the magic wand to reduce the effect of business cycles. Back in 1971, every £10 of printed money used to generate £1 of GDP growth and it enabled the Bank of England to hide the corruption or damage of their previous boom-bust inflation by producing yet higher boom-bust-inflation. The central planners like Bank of England, Fed or Reserve Bank of India keep following the same system of boom-bust-inflation and they never seem to control price rise, but they will keep following same faulty methods until they will ruin the whole country.
Central planners believe that if markets are low, they should deliberately break windows so that people may get work to do, to make new windows. They don’t realize that breaking windows is loss of wealth; they never learnt what Frédéric Bastiat said.
According to the reports, within one week of the riots in United Kingdom, the paper pound lost 10 percent of its paper fiat value. While the riots created havoc across the country, the loss of property due to all these riots in Britain was certainly not higher than the loss induced by the British government and the Bank of India on British citizens whose ten percent of the purchasing power of their entire life’s savings, and all of their pensions and other non-real goods investments wiped out in one week due to the incompetence of government and its monopoly over the control of money. Within a week, the pound hit £1,000 for an ounce of gold. The £ lost its value extremely while the gold kept acquiring gains. Before the World War 1, the £ was strictly based on gold and its value remained £4 for an ounce of gold for nearly 4 years. But then, during the World War 1, pound was temporarily debased from gold to permit inflation. In 1931, Britain faced another burst and £ was again inflated when the sterling link to gold was completely broken. In 1971, the third boom-bursts-inflation cycle occurred when £ was based on paper dollar which was recently removed from a gold standard. The fourth boom-bursts-inflation cycle recently occurred in 2008 when Bank of India tried to hideout extreme economical failures of Gordon Brown.
However, it certainly isn’t the end; a fifth boom-bursts-inflation cycle will certainly push England towards hyperinflation which is being enjoyed by Zimbabwe at present.
However, these central planners have a trick to defy their failure. There are reasonable fears that they will generate a major war like they did in 1984. Whenever nations face terrible economic failure, the central planners opt for creating emergency situations. A conspiracy builder might even dare to say that the British riots were deliberately generated by the British government and central planners to hide their continuous economic failure. Such mishaps allow politicians and central planner to generate more Fiat money and induce it in market on the name of compensation and reconstruction aid. However, this new money created out of thin air again works to increase inflation and prolong the economic crisis3 .
This economic crisis is not a natural tragedy; it isn’t a consequence of aliens attack. This extremely weak economic condition of Britain is because of the irresponsible and greedy act of British politicians and central planner. As a matter of fact, all the economic troubles of different countries facing economic slump, price rise, high inflation rate and lower production is because of the governments and central banks of those countries. The Indian inflation rates are abysmally high and price rise is rising towards skies, this is certainly the fault of the UPA government and the Reserve Bank of India and they can easily solve this situation too if they dare to have political will and economical rationality. They will have to stop- their games of boom-bursts-inflation and will have to repeal the paper money to give way for the gold standard.