Category Archives: central banks

Het groote tafereel der dwaasheid

Detail of the frontispiece illustration of an edition of the 1720 Pieter Langendijk farce Arlequin Actionist

Detail of the frontispiece illustration of an edition of the 1720 Pieter Langendijk farce Arlequin Actionist

Prudence is foolishness and foolishness prudence

Speculation, writes Dalrymple,

is necessary for all who do not want to end up impoverished, and there can be no such thing as enough, even for those who are not greedy by nature, for money is no longer a store of value. More, more, more is necessary, if you want to keep what little you already have.

Taxpayers in the West

have had a long schooling in low expectations from their taxes: they may pay 40 per cent (80 per cent within living memory) of their income above a certain level in taxes, as well as taxes on everything that they buy or do.

However,

they would not be so foolish as to conclude that therefore their children will be properly educated by the state, or that they will be well looked-after when they are ill.

It does not surprise taxpayers that the state bureaucracy (local and national)

will do anything rather than reduce payments to its staff and hangers-on.

Dalrymple’s diagnosis: fiat money is at the root of this disease. The conjuring of currency out of nothing by the central banks

has accustomed governments to the idea that they can go on borrowing and spending money forever without ever having to pay it back. This alters their attitude to deficit spending, which is not as the occasion requires (as Keynes envisaged), but permanent, the way we live now. And it alters the whole character of the citizenry.