What we need is a stable Sterling and that should have been the role of the BoE, not chasing faux metrics like price inflation, which was deflation due to cheap imports and so masked the currency inflation (as in devaluation) due to too much money – but not value – floating about.

I consider a Pound Sterling as a contract. The Government’s role is to ensure that contracts are upheld, not conspire to undermine and devalue them. By printing money they devalue the contract that is “to promise to pay the bearer”. To me, that is theft.

In the short run it is protecting the UK and it is also true the pound was overvalued due to the financial flow of money. However, the UK also needs to slash costs and wages as much as Europe for us to remain credible and not once again lose investment from overseas by the fear of it being devalued away!

As for the Euro, this is a political tool to integrate Europe. Britain can join and be part of a world power or it can remain outside and become a Switzerland. Its days of glory on its own and well and truly history!

As we blogged at the weekend – “IT’S THE DEMAND STUPID!” – so Germany is offering ITS car industry what we’ve been advocating…incentives for car buyers themselves. This is a time to get many old cars off the road for good and replaced by the new models clogging up storage sites and production pipelines. It won’t be easy with consumers rightly so cautious but it’s the only way to get the industry moving again.
For trade union leaders to look only at the supply side and factory jobs is plainly ridiculous.

The same applies to most industries in the doldrums – it’s worth selling pipeline overstocks at cost price or below for the long-term good of the company and their staff. Government support would be better directed in this way than the plethora of navel-gazing schemes that are coming out of Downing Street by the dozen.
Whatever our understandable qualms about Europe their practical politicians seem far more likely to ‘save the world’ than our bunch of naive theorists!

This logic is effectively what doomed the Latin Monetary Union back in the late 19th century. Strangely enough, it was a rather similar set of nations back then too. . . .

Not an exact re-run of the Latin Monetary Union, of course, but then history doesn’t repeat, but it does rhyme.

(With due apologies to JR’s more serious contributors)

“So if I am Brown and I declare I have eradicated ‘boom and bust’ and then fiddle with the ONS statistics to hide a million people in university and extra half million in incapacity benefit then I can claim that my elimination of ‘boom and bust’ is evident in ‘low’ unemployment figures. If I rig all the ONS output so that we now talk about national debt as a percentage of GDP instead of raw numbers then I can say things like ‘Borrowing this year was only 3% of GDP’. Which doesn’t sound like a lot. 3%? That’s not a lot is it? Doesn’t sound like much. Rather than ‘I borrowed and squandered another 40bn quid last year because I’m financially incompetent!!!’ In this way I can double national debt while, paradoxically, lauding myself for ‘balancing the budget over the cycle’. Now, most normal people would interpret this as meaning that if I (say) had national debt at 300bn before the ‘cycle’ I would have national debt of 300bn at the end of the cycle. What Fools!!!!! I’d actually have national debt of 600bn. It’s all about perception you see.

Same with abolishing ‘boom and bust’. If I believe I have abolished boom and bust. I mean really, really, really, cross-my-heart-and-hope-to-die then hey presto I have abolished ‘boom and bust’. Try it. Works for me. Vote Labour. Taking the tough decisions because it’s the right thing to do.

The same approach works for budget projections. I decide when I’ll stop borrowing so much cash – say five years into the future and then just get up on budget day (or inter budget day or emergency budget day – same principle) and give it ‘Borrowing this year will be 40bn, next year 35bn, next year 15bn, next year 8bn and neutral five years from now. The numbers don’t really matter. I just make them up. I mean a few billion either way is peanuts. Actually I’m always too optimistic. I always seem to borrow more than I’d planned but hey nobody ever manages to pin me down on it so I just keep doing it.

Same with this 150bn deficit for 2009/2010. I have no idea what the real deficit will be. For sure it’ll be more than 150bn quid but if I just believe its 150bn quid then that’ll do for me. The rest of you can just work on your own reality. I’m the best Prime Minister ever, me!!