The Bank of England is at it again. After years of reckless money printing and artificially low interest rates that distorted the economy and impoverished the working class, its next brilliant idea is… to do it all over again. As the BBC reports, “The Bank of England is expected to cut interest rates later this year, potentially as soon as June, in response to slowing inflation and a cooling economy.” This, we are told, will be a welcome relief for borrowers and a boost to the economy. In reality, it is just another act of short-term political expediency that will set up an even greater crash in the future.
Forcing interest rates below their natural market level leads to disaster. Interest rates are not just numbers central bankers adjust to please politicians; they are vital price signals that balance savings and investment. When rates are forced down artificially, businesses are lured into uneconomic investments—projects that seem profitable only because credit is cheap, not because they serve real consumer demand.
This leads to an overexpansion in those sectors where the new money is spent—whether it’s technology, property, or speculative finance—until the inevitable moment when the central bank reverses course. The artificially induced boom collapses into a bust, leaving behind bankruptcies and unemployment, and ravaged savings. Every major economic crisis of the past century has followed this pattern, and yet the Bank of England wants to run the same experiment again.
Then there’s prices. The additional money created out of thin air doesn’t just sit in bank vaults. It floods into the economy, and sooner or later, it reaches the retail sector. The BBC talks about “inflation coming down,” but this is a verbal trick, or economic ignorance. Prices are not falling—they are simply rising at a slightly slower rate than last year’s record highs.
Since 2020, the price of nearly everything has soared—food, rent, fuel, and household bills. But wages have lagged behind. Why? Because ordinary working people earn their money a long way from the money creation machine. The first recipients of newly printed money—the banks and well-connected gamblers—get to spend it before prices rise. By the time it reaches workers and pensioners, the damage is done. This is a redistribution of wealth from the poor to the rich, disguised as economic policy.
Cutting interest rates will also lead to a further drop in the external value of the pound. The pound has already dipped more than usual in recent years, thanks to endless currency debasement, and a financial system propped up by gimmicks instead of real productivity. A weaker pound means more expensive imports—higher costs for energy, food, and consumer goods. It also discourages foreign investment in British businesses, making the country even more dependent on debt-financed consumption.
In the long run, this policy makes Britain poorer. The nation will produce less and import more, eroding the real wealth of its people. A strong currency is the sign of a strong economy. Letting the pound slide is not a sign of competitiveness—it’s a sign of decline.
So who benefits from this policy? Certainly not the average Briton, whose wages will lose purchasing power, and whose future will be mortgaged for the sake of another short-term sugar high.
No, the real winners are the coke-fuelled gamblers in the City of London—the financial parasites who make fortunes speculating on the effects of central bank manipulation. They will take the cheap money, inflate another bubble, and cash out before the inevitable collapse. When it all goes wrong, they will be first in line for a bailout, while ordinary people lose their jobs and their homes.
And then there are the politicians. An economic downturn would make Labour look bad at a time when they need to maintain public confidence. The Bank of England is supposed to be independent, but let’s not pretend it exists in a vacuum. Lower interest rates will create the illusion of prosperity, and give politicians something to boast about in the media. When the bubble bursts, the same people who caused the crisis will tell us it was “unforeseen” and demand more interventions to fix the damage.
If Britain wants real economic recovery, it doesn’t need more money printing and interest rate manipulation. The only real solution is a fully-convertible gold standard. By its nature and most probably effects, fiat money distorts market signals and allows governments to engage in reckless monetary expansion, leading to boom-and-bust cycles. A gold standard would restore sound money, ensuring that credit expansion is tied to real savings, not central bank manipulations. It would eliminate inflation as a tool of government theft and force banks to operate honestly, without the ability to rely on the state to bail them out with printed money when their speculative investments collapse. A government truly committed to economic stability would abolish the Bank of England altogether and allow free-market banking to determine interest rates naturally, without coercion or political interference.
None of this will happen, of course. The ruling class is too invested in the current system. The Bank of England will keep distorting the economy, politicians will keep promising free money, and the real cost will be paid by ordinary people who see their living standards decline year after year. And when the next crisis comes, the experts will once again act surprised, as if it were all some great mystery.
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[…] Article by Bryan Mercadente […]
From Hugo Miller
I have said this before, but gold is an analogue asset in a digital age. Gold is good as a hedge against inflation, but it is not perfect – gold inflates by about 1.6% per annum as more is dug out of the ground, and the supply can be increased if demand increases. There is also the ‘non-zero probability’ that large quantities of gold may be discovered either here on Earth or in an asteroid. The ONLY thing that gives gold – or any commodity – its value is its scarcity.
Bitcoin has an immutably fixed supply of 21 million coins. It is the only commodity that has ever existed where the supply CANNOT be increased to meet demand. One block will be created every ten minutes until May 2140 when the last block is ‘mined’. Nothing can alter this, unless God decides to change the laws of mathematics.
Bitcoin is superior to gold in many other ways; it is easy to ‘assay’ and to store; it can be sent round the world in any quantity at the speed of light; it can be carried unseen through customs if you are fleeing a repressive regime such as that in the UK; it is not only a store of value but a medium of exchange – there are places in the world where one can live on Bitcoin – try paying for a cup of coffee with a speck of gold!
Bitcoin will change the world for the better in many ways. Millions of people around the world are ‘unbanked’ – they have to transact using cash or barter. Nobody will accept credit-card payments from Africa because so many are fraudulent. These are the people who are embracing Bitcoin and who are benefitting the most. Bitcoin is a life-line for them. We don’t appreciate this in the west, as we have a functioning payment system. Bitcoin will open up opportunities for trade with so many talented people in the Third World that it will benefit all of humanity.
Gold is so last century!
Dear Hugo,
Thank you for your comment. You have, indeed, made these points before, but as this is a live debate, they are always worth revisiting.
No one disputes that Bitcoin has advantages—its ease of transfer, its resistance to state control, and its potential to serve the unbanked are all commendable features. However, the assertion that Bitcoin’s fixed supply makes it uniquely valuable deserves scrutiny. The supply of Bitcoin may be fixed in a mathematical sense, but its practical scarcity is another matter. One cannot simply ‘dig up’ new gold deposits at will, whereas new cryptocurrencies, with competing features, can be created indefinitely. Bitcoin itself may be capped at 21 million units, but what stops the market from shifting to another digital asset if circumstances change?
As for Bitcoin’s role as a store of value, its volatility remains a serious issue. Gold has served as a reliable medium of wealth preservation across centuries, through wars, financial crises, and political upheavals. By contrast, Bitcoin’s relatively short existence has been marked by extreme price swings. The idea that one might escape a collapsing economy by carrying Bitcoin on a USB stick or in a mental key phrase is an interesting one, but it assumes that the digital infrastructure needed to access it will remain functional.
Gold is not perfect. Nothing is. But it has a history of weathering economic storms that no digital asset, no matter how elegantly designed, can yet claim.
Best regards,
Bryan
[…] Keith Preston on February 8, 2025 • ( Leave a comment ) 7 February, 2025 Bryan […]
Hugo Miller writes;
You ask; “Bitcoin itself may be capped at 21 million units, but what stops the market from shifting to another digital asset if circumstances change?”
Bitcoin is unique. It is a commodity, whereas all other ‘crypto-currencies’ are (un-registered) securities. There is no comparison between Bitcoin and the 20,000-odd other cryptos out there.
For example, Bitcoin has no corporation, no CEO, no HQ, no website, no nothing. It is merely 32,000 lines of computer code made freely available for anybody in the world to use.
Now let’s look at XRP, for example – founded by Ripple Labs, the first thing they did was create one hundred billion ‘coins’ for themselves out of thin air. Then they tried to ‘pump’ XRP by various means so they could sell them to foolish ‘investors’ who fell for the scam. The whole thing is a commercial operation intended to enrich the creators and developers. There is also the small matter that the first 32,000 blocks in the block-chain have vanished.
In the case of Bitcoin, the first million ‘coins’ were mined by the pseudonymous founder, Satoshi Nakamoto. He mined these coins in the same way anybody else could – and can – mine them. Then he vanished. The network has grown as more and more people realise what a tremendous gift to humanity Satoshi has given us. No individual makes a profit from promoting Bitcoin. Humanity as a whole profits – if and when Bitcoin is adopted by governments, inflation will end. Millions of the ‘un-banked’ around the world will benefit. And the ability to wage forever-wars will end, since governments will no longer be able to print the money to fund them.
You write; “The idea that one might escape a collapsing economy by carrying Bitcoin on a USB stick or in a mental key phrase is an interesting one, but it assumes that the digital infrastructure needed to access it will remain functional”
If the “digital infrastucture” fails, we will be in big trouble. The one thing that will continue to function is Bitcoin. Blockstream have launched a satellite system that broadcasts the entire Bitcoin block-chain to anybody with a receiver. The soon-to-be-imposed government CBDC will be highly centralised with a single point of failure. The Bitcoin block-chain is held on hundreds of thousands of computers around the world. Even if the electricity were to fail world-wide for a hundred years, as soon as the power comes back on, your Bitcoin will still be sitting there where you left it on the block-chain.
Everybody goes on a journey with Bitcoin. At first it makes no sense at all, but the more one studies it, the more one appreciates it as the greatest invention probably since the wheel – it has so much potential to change the world for the better. The best gold can claim is that it will stop things getting worse.