Mervyn? It's Gordon
By Adrian Ash
September 7, 2007
Eavesdropping on the UK
government's hotline to the Bank of England...
THE BANK OF ENGLAND chose not to raise
Sterling base rates on Thursday, despite the UK money supply
growing at a two-decade record. It also made fresh short-term
loans available to London's illiquid money market.
But might the UK authorities be considering a
more "prudent" response to the credit crunch, too?
Read on...
GB: Mervyn? It's Gordon.
MK: Ah, good morning Chancell...I mean, Prime
Minister. How's the smile coming along?
GB: No time for small talk, I'm live on air on
the Today programme. John Humphrys might let me get a word in
edge-wise at any moment...
MK: At least it's not Naughtie...
GB: Look, we need to get the gold back.
MK: Sorry?
GB: The gold, Mervyn – we need it back.
MK: What gold?
GB: You know perfectly well what gold,
Governor.
MK: What – all of it?
GB: Correct. All 415 tonnes. Safe in a vault,
deep underground.
MK: What in the...
GB: All this sub-prime shenanigans...those
hedge-fund charlies in Mayfair...that bampot at Barclays...
MK: But this is no time to panic, not in public
at least. Kaletsky's still on side at The Times. And
besides, the economy's sound, remember?
GB: Do I remember? This is no time to be
facetious...
MK: How does it go again? "The lowest
interest rates for 40 years! Employment at a record high! More
debt per working family than any other people in
history..."
GB: Save your jokes for your banking numpties,
please Governor, and stick to your football gags while you're at
it. I'm simply saying that the prudent course here would be –
hold on, Humphrys is taking a breath...
[Mumbles...indistinct..."A new type of politics...the
tough questions, not the easy path of short-term
slogans"...John Humphrys starts shouting – again
– in the background...]
GB: Where was I?
MK: The prudent course...
GB: Oh yes, the prudent course would be to Buy
Gold and hold onto it.
MK: Well really, Prime Minister, I'm
speechless...
GB: Aye, I noticed that. About time you spoke
up, no?
MK: And say what exactly? That we're going to
slash lending rates? Prime Minister, the banks won't lend to
each other for much less than 7 per cent as it is. Barclays came
to us twice in one week because they couldn't raise cash in the
market. Things won't suddenly get all free and easy if we tell
the lenders they should settle for a lower rate of return...
GB: My point exactly. Desperate times. Credit
crunch on. Recession looming. Buy and hold gold.
MK: And you're going to go to the country on
those slogans? The Gold
Price has nearly doubled in Sterling! How do you propose we
go about buying it back?
GB: That's not my job today, it's yours. And
Darling's, of course, poor nugget. Why don't you just print some
more money or sell a few gilts?
MK: Didn't you see July's money supply numbers?
"No return to boom and bust," you kept telling the
nation. Now M4 is rising faster than at any time since the
Lawson Bubble got started...
GB: Okay, so why don't you just make something
up? Always seems to work here in Whitehall. Say it was...I don't
know...say it was a gold loan...write it down as a P.F.I.
project...
MK: Sorry, did you just say "gold
loan"? This is Gordon Brown that I'm speaking to, yes? Not
a prank call...
GB: Look, I know you're not Eddie George, but
can't you at least pretend to be calm? Just open the taps and
buy gold at the same time. The government gets a solid, valuable
asset to help back the value of Sterling, and the Gold
Price would be sure to go higher thanks to all that new
money supply. Ed Balls says it's moving already. His model
projects we might even recover that two-billion loss from the
gold that we sold back seven years ago...
MK: The gold that "we" sold? With all
due respect, Prime Minister, the Bank of England played no part
in your decision! We were as shocked as the bullion banks when
you told us. It was like going back to Robin Leigh-Pemberton's
day...taking phonecalls – at work – to say Mrs Thatcher had
changed the interest rate.
GB: Aye, and that's the other thing, Mervyn –
you're not going to do anything stupid with interest rates on
Thursday now, are you? I repeat: Nothing stupid with interest
rates.
MK: You print the posters, and I'll get the
badges made up. I mean, honestly! How could we raise interest
rates anyway? The Fed's been desperate to slash Dollar rates
since subprime housing topped out in summer last year. Now's it
got the excuse that it needs from Wall Street. Tricky John over
in Frankfurt is about to lose his nerve, too. And as for the
Japanese, well...
GB: So that's settled then. Cheap money for
all. A new inflation measure if the CPI ever plays up again.
Forwards, not backwards. Britain's bright home-owning future.
MK: But about the gold, Prime Minister. It's
simply out of the question. Just where in the world would we
find gold bars – at spot price – that we can buy directly
with Pounds Sterling?
GB: Hmmm, have you not heard about BullionVault...?