Monetary policy does not work

So says the Great Tuber:

There is widespread speculation that the Bank of England will cut interest rates as reaction to the UK economic performance that Johnson’s election timing conveniently hid from public view.

My reaction is, so what? The official rate is 0.75%. What is it going to be cut to? 0.5%, again? Well, whoopee. That’s going to change the square root of diddly squat in the real world.

It really is time that we faced reality. Green QE apart -and that is not possible because there are no green government bonds to buy – the role of the central banker envisioned by neoliberal economists is now over.

Monetary policy did not work.

OK, monetary policy doesn’t work. So we can go back to having 5% interest rates no problem then. Because the cut from 5% to 0.75% didn’t work, didn’t have an effect.

Hmm, well, actually, putting it that way the idea that monetary policy doesn’t work is a statement of the utmost stupidity, isn’t it.

But then Great Snippa and all that…..

8 thoughts on “Monetary policy does not work”

  1. If he had said that appointing a Central Banker such as Mark Carnage proves that monetary policy does not work, then he would be right for the first time in his pompous life. Carnage has decided that he is the guy in command of the UK economy. He has abandoned the declared role, which was to control inflation and the money supply. He keeps telling the markets that he will raise interest rates but never does, thereby deliberately tanking the pound. The money supply is out of control and the fucker still has a job!

  2. Bloke in North Dorset

    Spud’s one of those people who reach the pinnacle of their career, look round and realise they’re still at sea level.

  3. Why has UK economic performance been, relatively, in the shitter? A reasonably well founded suggestion is that it has been due to Brexit uncertainty. We are now, at least, somewhat more certain that something like Brexit will happen (cheers) even if we are yet unsure how far out of the exit gate we will be allowed to travel (boos).

    Yet between Brexit ‘certainty’ and now, we have had the holidays and no time to collect and process new stats. Current reports are based on the Gina / Fox batterer Brexit denial version of reality that we are finally past. Come back in 3 months or, better, a year and see where we are then.

  4. No, we’ve partial information. Savils just reported results saying that property business has boomed since the election. An accounting form surveys FDs and they’re eager to get spending since the election. We’ll have the purchasing manager’s indices last week of the month which will be the first formal data with all numbers collected after the election.

    My read is that there’s going to be a significant jump as a result of the lifting of uncertainty.

  5. The signs are that Carney is calling it wrong yet again

    “It is hard not to have a wry smile at the Bank of England moves as the basic data has turned out better than expected. Let is open with today’s main number.

    Rolling three-month growth was 0.1% in November 2019, down from an upwardly revised 0.2% in October.

    Not much I admit but in the circumstances any growth is okay. Also that sentence is both true and misleading because October was originally reported as 0% but there have been ch-ch-changes since.

    The UK economy grew slightly more strongly in September and October than was previously estimated, with later data painting a healthier picture.

    We previously were told that both 3 monthly and monthly growth were 0% whereas now they are 0.2% and 0.1% respectively. So we are ahead of where we thought we were in spite of this.”

    https://notayesmanseconomics.wordpress.com/2020/01/13/even-better-than-expected-uk-gdp-seems-unlikely-to-stop-the-bank-of-england-cutting-interest-rates/

  6. “That’s going to change the square root of diddly squat”: he’s so dim that he doesn’t realise that the square root of diddly squat is bigger than diddly squat.

  7. Obviously the idea that monetary policy is utterly pointless and can never have any impact on the real world is balls, a point best illustrated by those examples of countries which cocked it up. Having said that, isn’t the view that monetary policy is ineffective when you’re stuck in a liquidity trap pretty much conventional? So the argument that “the fall from 5% to weeny % had an effect, hence monetary policy works” isn’t so helpful in this case, since the 5% rate applied before we got stuck in this liquidity trap…

    I do hope that someone not utterly hare-brained has an idea how to get us out of our current one. Have the central banks actually been following some kind of long-term masterplan to that end, or have is what we’ve seen so far just a dance between periods of fire-fighting and spells of trying to gradually pull away from the fire-fighting without the steps necessarily belonging to some grander underlying scheme?

Leave a Reply

Your email address will not be published. Required fields are marked *