This post is not about betting but I need to vent my anger at the UK and US government latest attempt at ‘magic’, a.k.a. quant-easing. Those of you who follow betting may be interested in the concept of ’something for nothing’ and so this post may be of interest.

When David Blane levitated an inch from the ground, it was impressive. But it was, of course, magic; a trick. “Yeah, David, that’s good and i’ve not seen it before, full marks. But, if you really could fly, you’d shoot off in to the air. Now, if you don’t mind, I was on my way to buy the latest edition of ‘Hello’, ‘TVKwik’ and ‘I’m in a stupified coma fed only by media tripe and kept alive by the knowledge that when I feel down I can always go shopping and buy something shiny’. See you next time”.

“I know”, says David. “I’ll suspend myself in a plastic box with no food or water for 4 years over the Thames”. Is he still there, by the way? “A trick so unbelievable the masses will be spellbound and harmless under my powers”. Most of the comments on the magician’s absurd attempt fell into two categories; “How can he survive on no food and water for so long?” and “I’d be so bored with nothing to do for so long”. If he’d have put a TV in front of his face, I dare say the comments would have been limited to his calorie intake. A sad reflection of modern society.

There are many sayings based around con-artists. “Fool me once, shame on you; fool me twice, shame on me”; “Once bitten…”; “pull the wool..”, etc, etc. I don’t subscribe to conspiracy theories or a New World Order but successive Western governments have been trying to trick the electorate into thinking they had discovered ‘money for nothing’ since the early 80’s.

It began with Mr Reagan’s adoption of supply-side economics, followed gamely of course by our own Mrs T. They broke labour laws and moved people into new jobs away from the old, inefficient industries and introduced financial deregulation [suckered by bolshy bankers from the same public schools as senior civil servants]. “There’s no point in government subsidising companies to produce goods that nobody wants or that can be produced cheaper elsewhere [no argument there]. We should concentrate on newer, higher value-added services such as finance, insurance and media.” Unbelievable!

And so it continued. 30 years of financial deregulation, media-hype, dumbing-down and debt-driven full-on consumption of worthless shite. Take a look at Sir Martin Sorrell’s bio for a typical someone who has benefited at the expense of his ultimate customers and shareholders. Sorry, but why exactly was this man knighted? It’s not just the likes of Sir Fred Goodwin who have made hay. In a way I don’t blame them, I just wonder whether they think they are really helping people.

When M&S were allowed to issue store cards and DFS allowed to offer ‘buy now, pay next year’ sofas, so began a slippery slope. Debt ballooned as the likes of WPP made consumption the new religion. Debt grew so much in fact that China couldn’t make PCs fast enough and housewives couldn’t develop houses quick enough.

So why did debt go on growing if we didn’t need it? The ‘new industries’ of advertising and mortgage broking needed feeding. More debt, more consumption, more jobs. For this to go on for so long one major condition needed to be met. The electorate kept in the dark, uneducated as to the true economics of reality.

The money supply outgrew world supply of goods so quickly it started bidding up equity prices in the late 90’s. Coincidentally this was coupled by the expansion of technology aimed at the consumer. Invest in something you use, they always say. And so we did, and bid prices way over value.   As prices began to fall in 2000, the first crack in the new paradigm emerged. Quick thinking, an even quicker wave of the magic wand and the first slashing of interest rates. If debt wasn’t mis-priced before, it certainly was now.

Then 9/11 and a wobble from the financial markets. “We know we’re in a mess already so we need to act fast. Dust off the wand”. Another cut in rates followed. Now debt was even cheaper, property price inflation could be sustained. Private-equity buyouts could be financed, their targets being loaded with debt. Hell, the gains were so good why would you want to wake up? Even as equity prices continued to fall, property and commodity prices took up the baton and carried the weight of the money-supply on their shoulders.

But eventually Mr NINJA [no income, no job or assets] couldn’t repay his loan. He was one step too far. And so slowly reality set in. For some, it’s still setting in. There are still people out there that don’t appreciate the excess of the last 30 years will be paid back by the taxpayers of the next 50 years.  That means less money for consumption [no bad thing] and less jobs.

And so to today. Governments look around for what they can throw money at. Banks? “Yes, they’re important, we cannot do without them”. Motor industry? “Not really, but they employ so many people, surely the electorate will understand.”    But people aren’t buying cars, are they. Mr Indebted is concerned about his job.

“What’s the biggest trick we can come up with? Something so big, so fantastical, so unfathomable, the electorate won’t be able to comprehend”.  ”Quantitative easing, sir”, comes the reply.  And in laymans terms, in reality, whereas money (debt) was really cheap, now Mssrs. Brown and Obama will make it free by quite literally adding zeros to the national debt. [Free to the immediate electorate of course, not free to those foreign countries or future taxpayers expected to finance it].  ”If money is free, why wouldn’t people spend it?”. Well, Mr Brown, it might be free today but i’ve got a feeling it won’t be free forever.

The £10 in your wallet is printed on paper with ink. You cannot go into the Bank of England and claim your piece of gold. Those days are long gone. [If you thought this post was depressing take a look at for what price Gordon sold our gold reserves].  The £10 only has value because people believe that other people perceive it has value. But what if money is free? Taking it to the extreme and make money free and you create a situation that money (notes, bank balances and credit) is literally ‘worth less’. We all understand the idea that if something is expensive we perceive it has value. Well the same concept applies in reverse. If someone offers to bake you a cake for nothing, you may somehow think you will get better value paying £20 and buying it from a shop.

Make money worthless Mr Brown and you will expose your own trick. If this quant-easing trick works and confidence returns before the inevitable depression then inflation will explode. People will indeed spend this free, worthless money in exchange for something they perceive of value. It matters not what. Hyper-inflation of a corrupt government like Zimbabwe will emerge and then interest-rates will rise to make the Conservative’s 15% look like a walk in the park.  Next, an even bigger depression than the 1930’s will ensue since more of us have pensions tied to property and shares. Who’d have thought it was possible in a Western government so far from ‘corruption’.

My advice is accept reality. Take the hit on the chin today.  Let’s accept our mistakes and punishment.  You don’t get something for nothing (without it being at the expense of someone else). You don’t leave school at 18, go to university, drink yourself dumb, pick up a ‘worth-less’ degree, push paper and add £100k of value to the economy. Let’s educate our children, let’s look after the sick and poor and let us realise that wealth is relative and we are happiest when we are judged a success by ourselves and our piers. And that rarely comes with the acquisition of shiny things.

A good book

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