Tom Winnifrith, London’s best tipster for small cap stocks has long been a Eurosceptic. In the newsletter for his Gold Fund, he recently said the following, “It is clear that the UK has only thus far avoided becoming the next Spain or Portugal because it has remained outside of the Euro. Our floating currency has provided us with a crucial lifeline in the form of better international competitiveness, whilst our independent monetary policy has enabled us to cut interest rates faster and deeper than would otherwise have been the case. The Bank of England has even been able to support government spending through its quantitative easing programme, yet another buttress of support that would be absent had the UK joined the Euro.”
This is complete rubbish. While it may be true that having a floating sterling enables us to maintain competitivness, this is just a euphemism. What our government has been engaged in is continual debasement of the currency, the modern equivalent of clipping the silver coins. A reliance on debasing the currency is comparable to an addiction to cocaine; you will never really get better until to stop doing it, because each devaluation or debasement gives you a temporary ‘high’ so that you forget to make the structural changes necessary for long term health.
