Mervyn King, Governor of the Bank of England and a former economist, has implied on many occasions that issues of money and credit are too complex for anyone to understand. The central bank for the central banks, the Bank for International Settlements in Basel writes about the need ‘to enhance understanding’. Leading academic institutions routinely direct students at doctoral level away from the study of the money system[i]. This agenda control and myth management lies at the heart of both the miseducation of the best and the brightest and the diseducation of the general public.
False ideas are allowed to circulate[ii]. Partial truths are embellished and entrained with partial falsehoods and set at each other’s throats in phoney debates about non-issues[iii]. The role of the broadcast and printed media is central to the success of this deployment of ignorance as a method of control and management.[iv]
Economics is a soft social science such as sociology. However, economists have sold themselves as the ‘scientific banker’. At the same time, banks have taken on more and more scientific behaviours and procedures so that anything to do with finance has become impenetrable, just as mathematics used to be. Computers should make it easy again, but not enough yet.
However, thanks to computers and the internet, we know at least more about the creation of money and the money supply than most of our forefathers. But also they had to defend themselves against abuses of power.
[i] I know of a PhD student of the London School of Economics (LSE) who was told that she could not write about the money supply because “it is not capitalism”. Sir Nicholas Stern has been sidelined from the Treasury and is now a professor at the LSE. Ironically his chair is named after Dr. IG Patel and financed by the Reserve Bank of India and the State Bank of India. [SM]
[ii] The most glaring example is the belief that a bank lend out the money deposited by its customers. Northern Rock should have shattered that myth. Nonetheless scarcely one person in a hundred has ever heard of Capital Adequacy Ratios, which are themselves just the tip of an iceberg of obfuscation and deliberate deceit. This is the sort of Basic Civics that ought to form part of GCSEs.[PE]
[iii] Marxism is a classic example. Karl Marx and Adam Smith were ‘of their time’ and mercantilist in their views about money. From its very inception the USSR had a state bank Gosbank working to central banking principles that differed little from the Dutch founders of the banks of Amsterdam and England at the end of the 17th century. [PE]
[iv] Not quite sure what to write here…but the remark needs justifying…and notable exceptions praised in print!