Quantitative Easing (Prohibition)

Over recent times, capitalism in the UK and globally has been undermined as states have grown in size and central banks have distorted logic. Systemic risk management via the clearing banks in the ’70s was gradually replaced by more overt interventions, including by Alan Greenspan in 1987, and in 1997 when Long-Term Capital Management, an offshore company, was bailed out by the US Government. The year 2008 was a watershed moment, when Gordon Brown bailed out financial institutions at an estimated cost to taxpayers of £137 billion, followed by quantitative easing between March 2009 and August 2016. That was dwarfed by the actions of Hank Paulson and Ben Bernanke in the US in 2008. They used $700 billion of intervention to prop up the financial system generally, particularly AIG.

During the covid crisis of 2020 and 2021, when many bad decisions were taken by an already bloated state, between £310 billion and £410 billion—equivalent to between £4,600 and £6,100 per person in the UK—was spent in a number of questionable centrally planned interventions. In rather the same way as early Weimar Germany, Britain finds itself heavily indebted and continuing to run multiple deficits, making matters progressively worse. Our moral decline is clearly evident, as true capitalism has been undermined by regular intervention, increasing state regulation and a growing, bloated and inefficient state. It is interesting that Weimar Germany’s revival started with the dismissal of many civil servants, and social welfare spending being massively cut.

The French Government’s recent funding crisis makes it look even more like a national Ponzi scheme than in the UK. Both wings of French politics refused to sanction debt reduction despite the budget deficit being expected to rise to over 113% of GDP by this year. Market concerns are pushing the euro lower and France’s borrowing costs higher, with bond yields briefly surpassing Spain’s for the first time since 2008.

Javier Milei, Argentina’s President since 2023, has brought significant economic reforms with his radical libertarian agenda, earning both praise and criticism. Milei’s focus has been on cutting public sector spending, reducing inflation and implementing drastic fiscal adjustments, which have led to improvements in Argentina’s economy. Inflation has fallen from nearly 300% to around 119%, public sector jobs have been reduced by 35,000, and the country has achieved a primary fiscal surplus. Argentina’s economy has also exited recession, with a growth rate of 3.9%, and borrowing costs have dropped, signalling reduced debt default risks.

Elon Musk has been appointed to lead Donald Trump’s new Department of government efficiency, which he will co-run with Trump ally and entrepreneur Vivek Ramaswamy. Musk said that the Department’s creation would address Government waste and inefficiency. Trump described DOGE as a transformative initiative aimed at slashing bureaucracy, cutting regulations and restructuring federal agencies, and likened it to the Manhattan project. Money is the foundation of all human exchange of enterprise and replaced barter in the earliest communities. It allows for the transfer of skills through a transferable medium such as a coin, a note or indeed a transfer. By a continuous process of inflation, no matter how it is perpetrated, Governments can confiscate—secretly and unobserved—an important part of the wealth of their citizens. As they do so, the size of the state inevitably grows, and it becomes a self-serving, greedy master of the people it should be serving. Common-sense logic and human relationships among working people are inevitably undermined, and there is a general moral decline in society. Taxes should be transparent, justifiable and simple. The cost of government should be covered by taxes alone, limiting the growth of excessive statism. Gold has historically been the standard store of value and protection against currency debasement for over 5,000 years. It is interesting that profligate Governments always denigrate gold-holding, and holding it is often banned by Governments in crisis who have deceived their electorate.

The words of President Woodrow Wilson after he signed the Federal Reserve Act should serve as a warning to all of us: “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilised world—no longer a Government by free option, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”

Friedrich von Hayek, an eminent Austrian-school economist, said:

“I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”

Given the historical track record of states abusing their citizens by various forms of currency debasement, including QE, the default position should be to make it illegal, unless this democratically elected House has an informed vote supporting debasement. This Bill seeks to achieve that position, and I commend it to the House.