The Last Ditch by Tom Paine

THE LAST DITCH

The View From….2007

Published by Tom

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The View From…Moscow at Conservatives Abroad : The View From….

The past is another country. Back in 2007, living in Moscow, I was persuaded to contribute the linked piece to the Conservatives Abroad website. I guess I had still not fully accepted at that point that I was no longer a Conservative. I had pretty much nailed where the country was going, however;

The only reason Britain’s levels of taxation (now higher than Germany’s) are not bringing the economy to a halt, is frothy unsustainable growth driven by rising consumer debt. British consumers owe more than all other Europeans combined. They owe more than the total sovereign debt of Africa and South America. Economic growth depends on them borrowing more. And this is now called “prudence”.

Given how clearly I perceived the problem, I was still foolish however. I did not have the foresight to sell my house, cash in my pension savings and buy gold. I simply did not anticipate the breathtaking effrontery with which democratic governments, egged on by a decisive bloc of voters facing well-deserved beggary, would be prepared to pillage the prudent to buy votes. Yet I should have done, for I had seen it happen before.

Years ago, when I was a hard-working young family man of limited means and many outgoings, my wife and I lived in the other half of a semi-detached house from a retired industrialist and his wife. They were a lovely old couple and charming neighbours. Labour's hyper-inflation of the Denis Healey/IMF bailiffs era had reduced them from comfortably living on the interest from their life savings to genteel poverty on devalued and dwindling capital. This was the same inflation that wiped out the mortgages of my parents' generation, allowing them to pay for good houses with bad money.

My neighbours' life of work had been plundered to pay off others' debts. It was trans-generational piracy. Little did I know, foolishly confident as I was in the (then) political success of the doctrine of monetarism, that I was looking at my own fate. Yet "quantitative easing" is nothing but a fancy name for such inflationary policies and the gods of the marketplace will not be fooled by euphemism.

As the virtual printing presses continue metaphorically to hum on both sides of the Atlantic (and as mounting government debts increase the temptation to pay the moneylenders back in bad coin) have I once more seen the future?

4 responses to “The View From….2007”

  1. jameshigham Avatar
    jameshigham

    I simply did not anticipate the breathtaking effrontery with which democratic governments, egged on by an decisive bloc of voters facing well-deserved beggary, would be prepared to pillage the prudent to buy votes.
    Should have read my longer pieces, Tom. It was all in there, from 2006 on.

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  2. Suboptimal Planet Avatar
    Suboptimal Planet

    Good article, Tom.
    I’m one of the millions of hard-working young professionals not yet on the property ladder.
    I face a choice between buying into a horribly overvalued housing market, in the hope that inflation will outpace interest rates, or holding tight and waiting for the overdue crash, somehow protecting my savings from inflation in the mean time.
    I’ve bought some gold and silver, but I don’t feel good about it (partly because I got into the game quite late).
    I don’t want to speculate, I just want to preserve what wealth I’ve been able to assemble.
    There is no justice in the current situation. I’m always reminded of Theodore Dalrymple’s article on the subject: Inflation’s Moral Hazard:

    asset inflation — ultimately, the debasement of the currency — as the principal source of wealth corrodes the character of people. It not only undermines the traditional bourgeois virtues but makes them ridiculous and even reverses them. Prudence becomes imprudence, thrift becomes improvidence, sobriety becomes mean-spiritedness, modesty becomes lack of ambition, self-control becomes betrayal of the inner self, patience becomes lack of foresight, steadiness becomes inflexibility: all that was wisdom becomes foolishness. And circumstances force almost everyone to join in the dance.

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  3. Rob Avatar
    Rob

    “Given how clearly I perceived the problem, I was still foolish however. I did not have the foresight to sell my house, cash in my pension savings and buy gold.”
    You should think yourself fortunate. Late in 1996, I told my wife that we should sell our house, and buy gold. I also instructed my accountant to create another company through which I decided to put all of our trade. The old company became a holding company owning all of the properties and plant and machinery. For various reasons, it took longer than I thought it would to set up, but the new company started trading in mid 1997. Eighteen months later, in October 2008, our orders fell by 70%and by August 2009, the company was in liquidation.
    Fortunately, the assets were protected, and the holding company bought the stock from the receiver and is now trading profitably with a much reduced turnover and staff. If I hadn’t acted when I did, I would have lost everything and a dozen people would be out of work.
    Unfortunately, I didn’t take my own advice as far as selling the house and buying gold was concerned, for, as my wife pointed out, we still need somewhere to live. I did suggest that we should rent, but she loves our house and I regard it as her domain, so I didn’t press the matter. Oh well.

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  4. Guthrum Avatar
    Guthrum

    Do you remember ‘Nobody could have seen this coming’
    You did, I did and hundreds of other writers did professional and amateur.

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Tom is a retired international lawyer. He was a partner in a City of London law firm and spent almost twenty years abroad serving clients from all over the world.

Returning to London on retirement in 2011, he was dismayed to discover how much liberty had been lost in the UK while he was away.

He’s a classical liberal (libertarian, if you must) who, like his illustrious namesake, considers that

“…government even in its best state is but a necessary evil; in its worst state an intolerable one.”

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