Universal Monetary Research at Tenth Egg Street, not Lombard Street
More than a decade ago, Professor Tim Congdon, then at Lombard (1) Street Research, compared European Monetary Union to the Maoist leap forward. (2)
The Great Leap Forward of the People’s Republic of China (PRC) was an economic and social plan used from 1958 to 1961 which aimed to use China’s vast population to rapidly transform China from a primarily agrarian economy by peasant farmers into a modern communist society through the process of agriculturalisation and industrialisation. Mao Zedong based this program on the Theory of Productive Forces. It ended in catastrophe as it triggered a widespread famine that resulted in millions of deaths. (3)
More than a decade ago, Congdon argued that monetary union can work if it is accompanied by political union. EMU is the most daring step so far in European integration much more far-reaching than harmonisation of regulations (sic) or the ending of exchange controls; it is intended not as an incremental advance, but a complete transformation of Europe’s financial arrangements, said Congdon. (2)
On 09 July 2009, Congdon, now at International Monetary Research, argued in the Financial Times that he wanted to keep newly printed money flowing to stave off deflation. (4)
On this eve of Bastille day 2009, Ambrose Evans-Pritchard writes in The Daily Telegraph in an article under the title “Europe digs its economic grave while the ECB answers to no one “:
“Professor Tim Congdon from International Monetary Research said the eurozone money figures are “horrifying” and portend a serious crunch ahead. “My verdict is that the senior people in the ECB [and the Fed] have little organised understanding of the debt-deflationary processes initiated in late 2008,” he said. ” (5)
Is it because the euro was intended as a complete transformation of Europe’s financial arrangements, that the printing of money is the appropriate response to the debt-deflationary processes initiated in late 2008?
As Moist von Lipwig said:
Where do you test a bankable idea? Not in a bank [such as Lombard Street nor at International Monetary Research], that was certain. You needed to test it where people paid far more attention to money, and juggled their finances in a world of constant risk where a split-second decision meant the difference between triumphant profit or ignominious loss. Generically it was known as the real world, but one of its proprietary names was Tenth Egg Street. (6)
Congdon’s Great Leap Forward consists in the printing of money.
As Etienne Gilson said in his introduction to René Descartes’ “Discours de la Méthode”:
On appelle méthode, l’ordre que la pensée doit suivre pour parvenir à la sagesse et conformément auquel elle pense une fois qu’elle y est parvenu.
(Method is the order which thinking has to follow in order to arrive at wisdom and in accordance with which it has to think once it has arrived there (7))
Just like for René Descartes, for Tim Congdon truth is not out there, truth is in here. Truth is in Congdon’s mind.
The real world of Tenth Egg Street does not exist for Congdon.
If I remember well, the final but two note of 100 Belgian francs bore the picture of Lambert Lombard
Tim Congdon, “Could EMU be Europe’s ‘Maoist leap forward’?”, in: Paul Temperton, (ed.), “The euro”, John Wiley and Sons, 1998, 2nd ed., 187 – 203
Keep the money flowing to stave off deflation
By Tim Congdon
Published: July 8 2009 19:53 | Last updated: July 8 2009 19:53
Europe digs its economic grave while the ECB answers to no one
The European Central Bank preens as the last guardian of virtue in a sinful world, yet its actions are devastating the public finances of almost every country under its care.
By Ambrose Evans-Pritchard
Published: 7:01PM BST 12 Jul 2009
Professor Tim Congdon from International Monetary Research said the eurozone money figures are “horrifying” and portend a serious crunch ahead. “My verdict is that the senior people in the ECB [and the Fed] have little organised understanding of the debt-deflationary processes initiated in late 2008,” he said.
Terry Pratchett, “Making Money – A Discworld Novel”, London, Corgi Books, 2008, (originally published in 2007 by Doubleday in … Great Britain), p. 170
[With thanks to my teachers at timesonline.co.uk for having suggested the reading of this novel to me]
Gilson, “Introduction au Discours de la Méthode de Monsieur Descartes”, in : Descartes, “Discours de la Méthode”, Paris, Vrin, 2005, p. 11