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Tag Archives: Bank of England

10-Year retrospective: Lesson 2

A leading economist has predicted that central banks will  not remain independent much longer. His forecast was made  at  a Bank of England conference called to celebrate – yes – 20 years of independence. Guests included Mrs Theresa May, the Prime Minster. It was opened by the Governor, Mark Carney, who drew a different, but…
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Do central banks rely too much on economists?

If  economics is likened to a religion it is easy to see how it may be viewed as dangerous. It may blind its devotees to the claims of competing world-views. If  economists arrogantly claim that their special insight gives them the right to prescribe policy, it may provide spurious legitimacy for harmful actions. It may lead…
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Brexit: Britain bows to its historic adversaries

Is there any comparable case of a great country voluntarily, without any need to do so, placing itself at the mercy of its historical adversaries? That is what the UK has done. Britain’s future is now at the disposal of the remaining countries of the European Union. After being weakened by the results of the…
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Since the crisis, what has happened?

12 points: 1. Central bankers, who were by and large not responsible for supervision pre-crisis , immediately sought to pin the blame for it on regulators, diverting attention from monetary policies – stoking the credit boom, failing to sound the alarm for what they were responsible for, which often included a duty to monitor the…
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The real reasons for low real rates

The lowest interest rates in history are failing to spur sustained recovery. Rather, low real rates mirror financial and structural weaknesses Economists cannot agree on the causes of these low real rates. They discuss various hypotheses. Central banks have held policy rates low for years – have these ultra low nominal rates reduced real rates,…
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Between Debt and the Devil: A Review

According to Adair Turner, Britain’s former chief financial regulator, the global financial crisis had one big cause: bad ideas.  These are ideas that Turner disapproves of. The key proposition of his new book is simply stated: “banking systems left to themselves are bound to produce too much of the wrong sort of debt, instability and…
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‘The Money Trap’ now

The book argued that the crisis was the joint product of  inflation targeting, irresponsible banking and a weak international monetary system. The book tried to show how these were inter-related: First, inflation targeting, which had been a valuable tool in combatting 1970s inflation, had by the 2000s outlived its usefulness as a guide and discipline for…
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Haldane , Rajan on the future of central banking

  In his contribution to Central Banking’s 25th anniversary issue, Andrew Haldane, chief economist of the Bank of England, describes the “giant steps” that central banks have taken to “reinvent” themselves post crisis. These have involved innovations not only in monetary policies and in market operations but also the development of macro-prudential policies. Central bankers…
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G20 fails to act

  People know we haven’t cracked the problem. Anaemic, faltering growth has brought a sense of greater security and well-being only to those in work or those with assets like shares and city property that have floated up on the rising tide of central bank liquidity. Since 2007 vast disparities of wealth have become even…
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Now for the next leg of the “financial crisis”

In effect, this is the money trap in operation – again. Central banks are in a quandary.  Unless they  return to “normal” levels of interest rates quite soon, the current model of capitalism, which depends on market-determined long-term rates, cannot function. If they do, however, raise interest rates any time soon, with debt leverage still…
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