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2020-06-25

Mervyn King inflation fiscal union

 2016, King published The End of Alchemy – a searing critique of the global banking system – which argued that “another economic and financial crisis would be devastating to the legitimacy of a democratic market system”.

“I think it is a terrible mistake the economics profession has engendered, to believe it doesn’t really matter why the economy is growing slowly; you just need to … lower rates and print more money.”

“That will lead us back to the world from which we had happily escaped in the early 1990s, after two decades of high and volatile inflation, and a very painful recession … that bad old world of high inflation.”

Having consistently warned of the “technical incoherence of monetary union”, King now sees the eurozone as “the single biggest problem we face in rebalancing the world economy”.

He says that “the fundamental mistake … was to pretend monetary union … would ensure each country was responsible for its own debts – something they’ve found it impossible to stick with”. As a result, eurozone governments have now “entered into a gradual and slow move towards fiscal union, for which there is absolutely no legitimate democratic support across Europe”.

Mervyn King Telegraph 25 June 2020

Lord Mervyn King, former governor of the Bank of England The End of Alchemy.


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