A major new IEA book explores the historical experience of free banking.

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We have been reminded again this week that the British economy is not in a great place. The latest Office for National Statistics (ONS) data revealed that the economy contracted by a worse-than-expected 0.3 per cent in October.

The ONS pointed to some seasonal factors that may explain this outcome, such as wet weather. But the most likely, immediate reason for the slowdown is tight monetary policy, which reached 5.25 per cent in August. After initially dismissing the risk of inflation towards the end of the pandemic, the Bank of England insists on maintaining these rates for some time to come.

The Bank’s Monetary Policy Committee decided this week to keep interest rates on hold, and quite inexplicably, three members voted for a rate increase. The Bank is concerned that inflation remains above the 2 per cent target, still running at 4.7 per cent in the 12 months to October 2023.

But, as the IEA’s Julian Jessop warned this week, there is a clear risk that the Bank will keep rates higher for longer than necessary or desirable. The underlying problem is that the Bank focuses on backwards-looking indicators and is trying to regain credibility after past mistakes.

The Bank is downplaying the forward indicators, which show a sharp reduction in the money supply, producer prices and global energy costs. This misstep could result in the UK being pushed into the fourth recession in 15 years.

Beyond monetary policy, there are profound policy failings at the heart of Britain’s stagnation. Despite increasingly poor quality, the rising cost of public services has pushed the tax burden up to the highest in seven decades. The failure to reform the planning system means Britain lacks homes, cheap energy and infrastructure. The increasing role handed over to largely unaccountable regulators creates barriers to entrepreneurship and innovation.

There will be many more months and years of poor economic data unless the government is willing to take some serious steps towards reform. The alternative will leave Britain stuck as a stagnation nation.

Matthew Lesh

IEA Director of Public Policy and Communications
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The Bank is set for more mistakes ([link removed])

Economics Fellow Julian Jessop, The Daily Telegraph, ([link removed]) The i ([link removed]) & City AM ([link removed])

Steady as she goes… As expected, the Bank of England held interest rates this week, but will October’s GDP figures have turned heads on Threadneedle Street?
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‘Time is running out for the economy’: UK’s tax level highest on record ([link removed])

Matthew Lesh, City AM ([link removed])

Britain’s burden to bear… With the public sector in such poor shape, the prospect of lowering the tax burden seems remote.
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** The Experience of Free Banking
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The Bank of England’s failure to control inflation following the Covid-19 pandemic has prompted widespread calls for reform. A new book published by the IEA this week challenges the conventional wisdom that central banks are even necessary.
* Central banks have consistently failed to keep down inflation and ensure financial stability.
* There have been at least sixty historical episodes of free banking, ranging from several years to over a century.
* Scotland, France, and the antebellum United States, among many other examples, demonstrate the possibility of economic development without a central bank.
* The Experience of Free Banking includes chapters authored by over a dozen leading international academics in economic and monetary history.

Read the Publication ([link removed])
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** Abolish Bank of England! Shock new demand in explosive report after interest rate freeze ([link removed])
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The Daily Express ([link removed])

Don’t cry for me… Argentina is already leading the way by abolishing its central bank. Could the Bank of England be next?
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The strong track record of free banking ([link removed])

Editor Professor Kevin Dowd, talkTV ([link removed])

Clear precedents… Free banking systems have been tried and tested in at least 60 countries throughout history.

A radical alternative to central banks ([link removed])

Kevin Dowd, The Critic ([link removed])

Private cash cows… Governments throughout history have undermined free banking to give themselves easy access to cheap money.
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Watch our latest explainer video to find out more…
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IEA Latest.
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Where is the solidarity with Guyana? ([link removed])

Head of Political Economy Kristian Niemietz, The Spectator ([link removed])

Picking and choosing… Recent headlines have been dominated by ‘anti-war’ protests in solidarity with Palestinians. But when a socialist state threatens its small, oil-rich neighbour with invasion, we hear crickets.
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Is Australia Defeating The NIMBYs? | IEA Podcast ([link removed])

Matthew Lesh interviews Chris Rath MP, IEA YouTube ([link removed])

Un-Crowded House… What lessons can be learned from down under when it comes to solving the housing crisis?
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More public spending is not the solution to economic stagnation ([link removed])

Kristian Niemietz, GB News ([link removed])

Show me the money… With public spending having risen to 45 per cent of GDP, surely we would have seen the miraculous wealth-creating power of state spending by now.
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How HR is strangling the economy ([link removed])

Editorial and Research Fellow Len Shackleton, The Telegraph ([link removed])

Hostile work environment!… Bloated human resourses teams are quickly becoming the kings and queens of the office.
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Let’s be honest, new spy powers could kill off how we use Facetime and iMessage ([link removed])

Matthew Lesh, City AM ([link removed])

In case you missed it… Parliament this week was dominated by the Rwanda legislation. But beneath the headlines, the government’s assault on encryption continues.
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Postmodernism Is Not The Enemy | Moral Sentiments ([link removed])

Communications Officer Harrison Griffiths interviews King’s College London Professor and IEA Academic Advisory Council member Mark Pennington, IEA YouTube ([link removed])

Antithesis or synthesis?… Postmodernism is considered anathema to liberal thought. But do those two broad churches have more in common than meets the eye?
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Time to go for growth ([link removed])

Reem Ibrahim, GB News ([link removed])

Miniscule progress… The latest round of tax cuts will not be enough to get Britain growing again.
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Beyond the Robot | Parallax Views ([link removed])

Cultural Affairs Fellow Marc Glendening interviews historian Gary Lachman, IEA YouTube ([link removed])

Existential dread… The work of existentialist philosopher Colin Wilson is fascinating and under-discussed.

IEA Insider.


** James Forder to leave the Institute of Economic Affairs ([link removed])
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After a distinguished two-and-a-half year tenure, James Forder will leave his role as the IEA’s Academic & Research Director in the New Year, to focus on his academic work in Oxford and other interests.

Forder has overseen the publication of more than sixty books, papers and briefings since his arrival at the IEA in July 2021.

The search for Forder’s successor will begin in due course. Dr Kristian Niemietz, the IEA’s Head of Political Economy, will serve as Acting Research Director during any interim period.
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** Syed attends COP28
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As world leaders gathered this week in Dubai for the 2023 United Nations Climate Change Conference, our Academic Fellow Syed Kamall joined them to make the case for free market environmentalism.

Syed joined a panel with Climate & Freedom International Coalition co-founder Rod Richardson, Member of the Flemish Parliament Andries Gryffroy, Egyptian Senator Mohamed Farid. They discussed how embracing innovation and market-based solutions provides a better alternative to the top-down approach to environmentalism dominating US, UK, and EU policy.
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** More Market, Less Government: How To Power UK Energy
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Syed has also co-authored and edited More Market, Less Government: How To Power UK Energy, a new book scrutinising the UK government’s net zero policy program. Politeia will be hosting a discussion to mark its release.

Date: Monday 18th December

Time: 12:00 - 13:00

Venue: 55 Tufton Street, London SW1P3QL

If you would like to attend, RSVP to [email protected].


** The Road to Freedom: Estonia’s Rise from Soviet Vassal State to One of the Freest Nations on Earth ([link removed])
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The latest instalment in the Realities of Socialism ([link removed]) series was released this week. Read The Road to Freedom: Estonia’s Rise from Soviet Vassal State to One of the Freest Nations on Earth ([link removed]) , by Peter J. Boettke, Matthew D. Mitchell & Konstantin Zhukov to find out more.
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