A lively and readable account of our gigantic economic mess

Cover of Life After the State by Dominic FrisbyLife After The State
By Dominic Frisby
Buy at Amazon

As all investors know, the failure of US bank Lehman Brothers five years ago threatened to send the entire global financial system over the edge of a cliff. Having thrown Lehman under a truck and watched the consequences in rapidly freezing money markets, the US authorities quickly reversed course and leapt to the rescue of every other systemically important financial institution. The British monetary administration was similarly swift to dash to the pumps.

The outcome has been the worst recession for at least a generation, an even bigger debt mountain, and a gigantic lake of liquidity brimming over into financial asset inflation. British and American banks have been largely or partly recapitalised (Europe’s hardly at all), but they all remain almost entirely unreconstructed. There is now a widespread feeling of concern, mixed with resentment at the ongoing extraordinary privilege of a banking system blessed with trillions of new dollars, pounds and yen. Oh, and the lowest interest rates seen for 300 years.

It chimes with the discordant spirit of our age that some of the most revealing coverage of the worst financial crisis in living memory has appeared not in the pages of the Financial Times or The Wall Street Journal, but in those of Vanity Fair and Rolling Stone. In the former, Michael Lewis, as befits a bond salesman turned journalist, explored the more grotesque instances of the credit bubble in forensic detail. In the latter, Matt Taibbi set new standards for gonzo journalism and coined that immortal description of Goldman Sachs as “a giant vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.

On which note, I am happy to report that hot on the heels of Messrs Lewis and Taibbi is MoneyWeek’s very own correspondent, Dominic Frisby, in a new book, Life After The State. So we now have a serious economic and cultural critique of Big Government written by someone who, among his other various attributes, is a stand-up comedian.

And for those looking for answers to our current economic and financial malaise, the most pertinent one has to be: we are in this mess because of decades of uncontrolled growth by Big Government, to the point at which the state is inextricably tied up with just about every facet of modern life. We are paying the price, in other words, for decades of promises that none of us, let alone our political “masters”, could ever realistically afford. The sky is now darkening with chickens coming home to roost.

Indeed, the state is so broadly entrenched in our lives that it “looks after the birth of the baby, educates the child, employs the man, cares for the aged, and buries the dead”. However, in dominating the birthing business, the state also spends £700 insuring each of those NHS births against negligence claims; in the process of educating our children, there can be no guarantee that they will read, write or count properly; in providing employment for the man, we are left to question whether such employment has any value.


glossary-bump-90x90

Financial terms explained

From ADRs to the Z score - everything you always wanted to know about finance but were too embarrassed to ask, in MoneyWeek's financial glossary.


For socialists, these arguments will seem like poison. But Dominic has done a genuine service to all those willing to look beyond narrow political labels to a core underlying truth. This truth was candidly expressed by fund manager Paul Singer when he recently remarked that “America is deeply insolvent, and for that matter, so are most of continental Europe, the UK and Japan”.

It is not enough simply to throw one’s hands in the air and concede that substantive political change is impossible. As Dominic says in the words of one anonymous internet poster known as ‘Injin’: “Find the right answer, realise you’ll never see it in your lifetime, and then advocate it anyway, because it’s the right answer.”

It was not always this way. Life After The State contains several examples of how a more innocent age managed to look after its own without even dreaming of subsidy from Big Government. ‘Big Government’, of course, can only ever redistribute wealth from those who actually possess capital – it cannot magic wealth out of thin air, despite what the neo-Keynesians busily printing money today happen to think.

Life After The State is a lively and readable account of how we got into a gigantic economic mess and how we might best extract ourselves from the mire. It also provides an easily accessible history of sound money, inflation, and the role of gold in reintroducing the former. For anyone nursing a nagging sense of disbelief in our modern monetary system, and looking for alternatives, Life After The State is thoroughly recommended.

• Life After The State, by Dominic Frisby, is available from Amazon or Unbound, priced £7.19.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+


ScreenHunter_01 Mar. 25 09.51

New to MoneyWeek?

Ed Bowsher Editor Money Week

Welcome, and thank you for visiting us.

Here at MoneyWeek, our aim is simple. To give you intelligent and enjoyable commentary on the most important financial stories of the week, and tell you how to profit from them.

If you've enjoyed what you've read so far, I've got something you'll definitely be interested in.

Every working day the MoneyWeek team sends out a hard-hitting email, 'Money Morning', giving you a rundown of the latest financial events, and revealing what you should do to maximise profits and head off losses…

And with your permission, I'd like to send you Money Morning for FREE.

To sign-up enter your email address below.

We hope you enjoy your stay on the site. Good luck with your investments!

Ed Bowsher,
Digital Managing Editor, MoneyWeek

(No thanks)

Because these emails are completely free, we do have to fund them with advertising. Occasionally we will send you promotional emails, however we will never give, sell or rent your email address to any other companies.For more information, please see our Privacy policy.

MoneyWeek magazine

Latest issue:

Magazine cover
Walking out on the banks

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 3 FREE Issues
Shale gas 'fracking' promises to transform Britain's energy market. Find out what it is, what it means, and how to invest.

More from MoneyWeek

The problem with the Bank of England

Fracking: Nine reasons not to get carried away

Five small-cap stocks worth a flutter

This Dutch company could help us tame floods

ScreenHunter_01 Mar. 25 09.51

Get the latest tips and investment opportunities from MoneyWeek magazine: Claim 3 FREE Issues HERE