Central Planning Going Global
By Terence Corcoran
The
supreme political leaders of the world economy keep meeting and meeting and
meeting - first the G8, then the G20, now Rio+20, with another round (the 14th)
of the expanding Trans-Pacific Partnership trade negotiations set for San Diego
on July 2. All this within a few weeks. Meanwhile, the world economy keeps
tanking, not helped by other international gatherings of finance ministers,
Basel bank regulators, Financial Stability Boards, IMF leaders and central
bankers.
It would
be too facile to claim that maybe the world economy is tanking because of all
these meetings at which nothing happens, little is agreed upon and what is
agreed to is often just a dodge of good policy - or, more often, a prescription
for bad policy. On the other hand, nobody these days balks at facile analyses
or empty slogans. Just read this week's G20 declaration, in which, among scores
of other platitudes, leaders said they "are in full agreement that we need
to intensify our efforts to reduce both internal and external imbalances."
In brief,
the odds are good that these novel and experimental attempts at global
governance and economic management are becoming sources of destruction. Instead
of focused national policies around the world, we have global conflabs that
generate orchestrated chaos for which nobody is responsible.
One
destructive product of the internationalist approach to policymaking may well
be a breakdown in central bankers' grasp of monetary policy. At least one
economist, Steve Hanke at The Johns Hopkins University in Baltimore, says the
combination of monetary mistakes and escalating bank regulation is creating a
credit crunch in the United States and turmoil elsewhere.
While
central banks, especially the U.S. Federal Reserve, have caused an expansion of
government-created money, private-sector money growth has disappeared. In the
United States and much of Europe, with the exception of Germany, money-supply
growth has been non-existent and even negative.
.jpg)
