This comes from a speech Mark Carney gave yesterday, talking about Central Bank Independence:
In no small part due to my predecessors, particularly Lord King, the stagflationary threats in the UK were tamed by a new regime for monetary stability that was both democratically accountable and highly effective.
\Clear remits. Parliamentary accountability. Sound governance. Independent, transparent and effective policy-making. These were the great successes of the time and their value endures today.
But these innovations didn’t deliver lasting macroeconomic stability. Far from it. Price stability was no guarantee of financial stability. An initially healthy focus became a dangerous distraction.Three thoughts.
First, the arrangement only worked during a credit boom that lasted from 1998 to 2008. That’s not exactly an indication of success.
Second, The acknowledgement of failure is welcome.
And then see what Carney actually says:
We gather this evening almost seven years to the day that the failure of Lehman Brothers shattered conventional wisdom and laid bare three lies about finance.
Unlike the statue’s three lies, those falsehoods have had lasting consequences.
***
LIE I: “THIS TIME IS DIFFERENT”The first lie is the four most expensive words in the English language: “This Time Is Different.”2
This misconception is usually the product of an initial success, with early progress gradually building into blind faith in a new era of effortless prosperity.
It took a revolution in macroeconomic policy to help win the battles against the high and unstable inflation, rising unemployment and volatile growth of the 1970s and ‘80s.
In no small part due to my predecessors, particularly Lord King, the stagflationary threats in the UK were tamed by a new regime for monetary stability that was both democratically accountable and highly effective.
Clear remits. Parliamentary accountability. Sound governance. Independent, transparent and effective policy-making. These were the great successes of the time and their value endures today.
But these innovations didn’t deliver lasting macroeconomic stability. Far from it.
Price stability was no guarantee of financial stability. An initially healthy focus became a dangerous distraction. Against the serene backdrop of the so-called Great Moderation, a storm was brewing.
Carney’s not actually talking about central bank independence at all. Something which happened post 97 after all.
What a lying toad our 0.2 of a Professor can be, eh?
Ritchie:
Third, staggeringly, because nothing in the BoE remit has changed, there is no acknowledgement that the distraction of solely focussing on inflation remains unhealthy, and even dangerous.
Carney:
Over the past seven years great strides have been made.
Take “this time is different”.
To guard against future complacency, policy frameworks have been substantially overhauled. The Bank of England has been given formal responsibility to maintain financial stability and has considerable powers to promote it. In anticipation of problems, we have increased bank capital and tightened mortgage standards. We are using our monetary policy and macroprudential policy tools in concert, so that a low for long interest rate environment can promote both price and financial stability.
BoE’s remit has changed, actually back rather to what is was before the Brown Terror. To ensure the sturdiness of the markets…..
What a toad.
TIm
He’s a crank – and a shameless one at that. I think it was a newer commentator who reminded me of a quote from Season 1 of ‘The Wire’.
‘You wanted to be in the game, well you’re in the game now’
He has been playing the game ‘from the sidelines’ for a few years – now he has a chance to get into the midst of it, is it surprising he resorts to selective quotation? His economic policies are not far removed from Those of the NSDAP (or ‘National Savings and Deposit Scheme’ as he calls it) – is it any wonder he has absorbed some of their policies in other areas?
Incidentally – not sure if you saw this given you are not in the UK – might be worth a post…..
http://www.cityam.com/224630/strange-bedfellows-corbyn-not-first-pitch-people-s-qe
Can someone more expert than I am tell me quite how the remit changed (back)? I presume it was in the wind-up of the FSA, was there some primary legislation for it?
MyBurningEars
Yes. Financial Services Act 2012.
http://www.legislation.gov.uk/ukpga/2012/21/pdfs/ukpga_20120021_en.pdf
Is it a turning back of the remit or an enhanced remit incorporating elements of a previous remit?
Either way, I found it very hard to read Carney’s speech as an acknowledgement that independence had failed. In fact, whilst he referred directly to independent decision-making, I didn’t read any acknowledgement of independence per se.
http://www.theguardian.com/business/economics-blog/2015/sep/22/jeremy-corbyn-qe-for-the-people-jeopardises-bank-of-england-independence
****Trigger warning*****
http://www.theguardian.com/politics/2015/sep/22/richard-murphy-corbynomics-tax-social-housing-britain?CMP=twt_gu
Ah, a solid list of Murphy diamond prevarication, misdirection and outright lies. Accepted as gospel by Zoe.
I get the idea. I even get why it might be, from first principles, considered a ‘good idea’. HTFF does he think this might be implementable?
The only way I can think of (and it is a) appalling and b) won’t work) is mandatory “Bank of the State of Courage” debit cards as the only available means of payment.
An appalling idea, but one which someone will likely try when technology permits, like a contactless debit card for stuff you enjoy. Say you want to get hammered, your first pint is tax free, your third costs today’s prices, and by the time you’re on your eighth and using lewd language you’re paying £10 a unit in taxes.
I notice the academic literature says JS Mill mentioned it in 1884, and there’s a paper discussing practicalities of implementation in 1979.
As a betting man, my guess is that the LHTD will claim this as another new idea of his by 2017.
So, has the cunt hitched himself onto the consumption bandwagon because its the Guardian and he knows what buttons to press, or does he truly believe this crap?
Wasn’t it a short time ago that he flounced his subscription in a huff to the Guardian? How times change!
“We have to discourage conspicuous consumption, which is eating up our planet.”
Translation:
“all these working class people trying to attain the same standard of living as me should be punished and forced back to where they belong.”
“Tax is, anyway, the second most interesting word ending in x in the English language,”
Really! I never knew Dominixtrix was so exiting; do tell Richard.
“We need to discourage conspicuous consumption, which is eating up.our planet”
So if we keep it quiet and don’t make it conspicuous it’s fine for the planet is it? Perhaps Jezza’s economics guru could explain.
And while we’re at it, will he please make up his mind whether PQE is inflationary or not or whether that’s the whole point or… what is your point Richard?
Ok is the zoe Williams interview in the Guardian for real or a massive pisstake?
The group noun for Zoe Williams articles is zoetropes.
So consumption and more inflation are good because they get more people into work. But conspicuous consumption and no inflation are bad because they don’t get people into work?