I thought my brother might be interested in this thread (specifically GizzE's musings) so I forwarded him the link and he was indeed interested. He clearly inherited the family's intelligence.
Here are his thoughts...
That is interesting and scary stuff.
As you know, I read the Economist so maybe I am soaked in conventional economic thinking but I tend to take an optimistic (naïve?) view.
If politicians want anything, then it is to be in power. No party wants to preside over a US style depression, so I don't think there is a conspiracy here. Major economic crises tend to lead to violence and extremist parties emerge (Nazis in 1930s Germany). No party can control the outcome of events like that. You can easily imagine the break up of the EU and even the USA under a doomsday scenario. Even autocratic parties like the Chinese Communists value stability and are at risk of revolution. So parties are heavily incentivised to maintain stability. The question is, can they manage it ?
The West has a lot of debt. The concern is they will try and inflate that away so it becomes more manageable in real terms. However, national economic success is a global competition and high inflation economies do disastrously (Zimbabwe, Argentina) so that isn't an attractive route for any country, unless the whole world does it. China holds a lot of western debt and is a competitor, so I can't see them agreeing to cooperate in global inflation. China needs western economies to be stable so they can export all their stuff to us... and increase their credit. A major economic collapse is in no one's best interests.
Because inflation is so damaging, central banks were given independence from politicians, so the latter couldn't just print money. The former hadn't got everything right but I think that is more cock up than conspire.
I don't see the loss of the gold standard as a big thing. Who says how much gold is worth? If a massive gold deposit was found, would the world become poorer as the price of gold fell? The value of money is always nominal to some degree but if we all agree £1 is worth £1, then we are ok. That has been the case since we moved from gold and silver coins to paper notes and base metal coins.
I think Bitcoin is a Ponzi scheme. It has no intrinsic value but consumes vast resources (energy) just to keep going. With energy prices spiking and the push for zero emissions, I can see Bitcoin going the way of Dutch 🌷 tulips.
So I tend to believe that politicians and central banks will navigate through the problems. I am sure we are in for a rocky ride but ultimate wealth (land, houses, ability to generate value through work and trade) won't be destroyed. Aye
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