Since September 2007, when the British Government and
the Bank of England bungled the Northern Rock affair, one government
after another has sent in the boy scouts in an attempt to douse what has
become an international economic wildfire. Their efforts haven't
worked. Indeed, they have often made matters worse — much worse — and
the fire remains uncontained.
Heads of state continue to rush from one meeting to the next.
Worryingly, they (and the army of pundits that follow them) continue to
focus most of their rhetoric on whether fiscal austerity or more fiscal
stimulus is the right strategy to contain the crisis and turn things
around. Instead, they should be focusing on the money supply. As history
shows us, money and monetary policy trumps fiscal policy.
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