Page 32 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

BANKING
“When taxpayers were asked to bail out the banks, they did so at a cost. And that cost was the concept of the free market.”
result eight years later is something of a mix between Wolf ’s two possible futures. e paucity of leadership, particularly in the UK and the US, and exempli ed by the US presidential election, has not helped either.
We have Western domination still – that is true. But this is mostly owing to the slow disappointment of the Asian economies, particularly China, rather than the outright success of Western Europe and the US. Market- led globalisation and nancial capitalism have to a large degree been undermined by the medicine itself. When taxpayers were asked to bail out the banks, they did so at a cost. And that cost was the concept of the free market. e argument that the market would self-govern and would cull from its own when necessary was dead in the water the minute Hank Paulson put pen to paper on the TARP (Troubled Asset Relief Program) funding Bill.
Furthermore, the massive injection of money supply through multiple rounds of quantitative easing, radically and forever altered the notion of the national central bank as a passive guide that would, on occasion, nudge its herd in the right direction.
We also have deep-rooted protectionism as the key de ning feature now within western democracies rather than within their Asian counterparts. Whereas previously it would have been unimaginable for an advanced western nation such as the United Kingdom to choose isolation from Europe, its fear of immigration, and the ever-widening gap between its politicians and its people, have led to a sharp turn to the right and towards unashamed protectionism.
When history looks back at the decade that followed the 2008 Financial Crisis I think it will judge us harshly. ere is no doubt that the determined response of central banks in pumping multiples of money supply into major economies was necessary. at was the swift response that was needed to stop the blood-letting in the banks after Lehman Brothers went down.
And there is no doubt that a Keynesian scal response was equally necessary, although it was poorly executed owing to the political fear of selling to a disenfranchised public the notion of deeper government debt to help fund it. Fewer bridges and roads were built than were ought to have been built.
But the real failure that will be studied by future economists will not be in regards to either of these macro-economic tools. It is neither monetary
30