October 14, 2016

Sir, just between us, could it be that not so deep down Martin Wolf is just another statist activist?

Sir, Martin Wolf writes: “The financial crisis, and the stagnant living standards it bequeathed, has clearly undermined the legitimacy of the free-market approach.” “Activist May calls an end to Thatcherism” October 14.

Wolf knows very well, among other because I have explained it to him in literarily hundreds of letters, that current bank regulations, with their risk weighted capital requirements tilted in favor of the sovereign (0% risk weight) and other “safes” like the AAArisktocracy (20%), and against “We the People” (100%); is something completely anathema to a free-market approach. In fact it sounds much like pure statism to me.

Just look at how the financing of houses has been favored when compared to for instance the financing of SMEs and entrepreneurs that could create the new jobs our youth will need. Has that anything to do with free-markets? No wonder more and more grandchildren will have to live, with their parents, in their grandparents’ basements.

Wolf says not a word about getting rid of the regulatory distortions of the allocation of bank credit to the real economy, and has instead been proposing the government to take the advantage of low interest rates to build more infrastructure. He gives not a thought on the possibility that those low rates for the sovereign, are in much paid by citizens that will have to give up their dreams because they will lack the opportunity to access bank credit.

And this does not even touch on how central banks, with their QEs monetary policy interventions, almost completely favor the credits to sovereigns.

Sir, just between us, could it be that Martin Wolf is also just another statist activist?