#194 - Charles Goodhart: The Money Endgame - Debt, Inflation & Central Bank Failure

**Charles Goodhart** (0:00)
The country effectively goes fiscally bankrupt, and the outcome is almost certainly massive inflation at some stage, with or possibly without a financial crisis.

**Peter McCormack** (0:13)
And I don't think people are really prepared.

**Charles Goodhart** (0:16)
Exactly.

**Peter McCormack** (0:17)
So democracy is the block to any kind of long-term economic planning.

**Charles Goodhart** (0:23)
We have a democratic crisis on our hands. Those 70 years were probably the best years that not only the UK, but effectively the Western world has ever seen.

**Peter McCormack** (0:36)
We didn't know how lucky we were.

**Charles Goodhart** (0:37)
We didn't know how lucky we were. And many of the conditions that gave us that magnificent period are over.

**Peter McCormack** (0:47)
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So when you look at the UK today, what do you see and what concerns you?

**Charles Goodhart** (1:30)
I see a country that was imperial and great, inevitably declining in position and role. That decline, which was inevitable, is always likely to be a concern. Imperial powers, whoever they are, whether it's been Rome, Netherlands, whatever, whenever they get into decline, it's always a difficult period.
And again, inevitably, some of the great industries in which his country initially was important, even dominant such as shipbuilding, are completely gone. And it's very difficult to adapt to a different world in which one is a smaller player.

**Peter McCormack** (2:35)
But why was it inevitable? What structurally?

**Charles Goodhart** (2:39)
Well, the UK was extraordinarily fortunate. I don't think there's probably ever been a case where there's such a small population in such a small island has come to dominate so much of the world.
And I think this was due to two factors. The first one was at that time, the huge importance of naval power. And we were a great naval power. And also that the Industrial Revolution really began in this country. We put those two together. And through the course of the 19th century, Great Britain became an extraordinarily great imperial power. But inevitably, when air power came to dominate naval power, the powers went to the countries in larger scale. Naval power became less important. Air power and the ability to scale up in the industry became more important.
World War I was really the turning point. It was a total disaster for this country in many ways. We never recovered from it. And in a sense, from 1914 onwards, it was downhill all the way with a greater kick in the pants and World War II.

**Peter McCormack** (4:15)
And so the post-World War II recovery boom, was that just a temporary?

**Charles Goodhart** (4:19)
Oh, yes. Oh, yes. We were never ever going to be able to compete with the likes of the United States.
As it turned out later, China, and as it will come in the next few years into India.

**Peter McCormack** (4:35)
So we're now, do you think we're struggling to accept our role in the world?

**Charles Goodhart** (4:41)
I think inevitably so. Yes, we are. We haven't got the economic power, we haven't got the manpower, we haven't got the drive and optimism that we used to have.

**Peter McCormack** (4:59)
Interesting you bring up drive and optimism because that is something we can control.

**Charles Goodhart** (5:06)
I don't know, you're either born an optimist or a pessimist. I was always been a pessimist, partly on the grounds that if you're wrong, you're happy because things are actually better than you feared. Well, if you're an optimist and you're wrong, it's doubly awful.
It's not only were you wrong, but things are worse than you'd expected.

**Peter McCormack** (5:28)
I think people are really starting to feel the decline now.

**Charles Goodhart** (5:32)
Oh, they've been feeling, they've been feeling. The idea that they're just beginning to feel the decline now, they've been feeling the decline for decades.

**Peter McCormack** (5:42)
Okay, interesting. Explain that to me because I told you as a 47-year-old, lived through the 80s, the 90s was all hope and opportunity and we had the technical and internet revolution and there felt like a lot of opportunity there.