The Titanic Debating Society

Tim Congdon is all wrong, and when it comes to 'quantitive easing' Liam Halligan, writing in the Telegraph, is right to bring him to book for supporting the policy. However, he also chooses to distance himself from anyone who seeks what he terms "a return to crude metallic-backed monetary regimes", finding common ground, concurring with Congdon that "the best arrangement is for the state to manage the quantity of money".

"But that management process, under QE, has spiralled completely out of control. The Bank of England's balance sheet has tripled, from around 6pc to 18pc of GDP, in only 18 months. That's unprecedented. The last time such expansion took place it was over 40 years – from Edwardian times to the end of the Second World War. "

He ends with this flourish:

Modern capitalism, at its core, relies on the public's trust of fiat money and the sanctity of contract. QE is seriously undermining both those cardinal concepts. We're not supposed to call QE "money printing" because money printing is the last refuge of declining economic empires and banana republics. It also amounts to state-sponsored theft. And against that, yes Professor Congdon, I declare an "implicit prejudice".

My question is to Halligan is; why should the public trust fiat money, when the management of its issuance has, in his words, "spiralled completely out of control"? The disagreement between him and Congdon is only one of degree rather than principle. Of the two Halligan would be less dangerous in charge of the levers on the money machine, but in monetary theory he still wanders aimlessly in the interventionist desert far from the narrow but sure path of sound, free market money.

Hat tip: Andy Duncan at the Cobden Centre