I think Mervyn is saying “it’s over to you George”

Posted on August 16 2011

I liked this paragraph from Mervyn King's letter to George Osborne on inflation, today. He said:

The big risks currently facing the UK economy come from the rest of the world. In responding to those risks, or indeed to other risks in either direction, the MPC can use Bank Rate or asset purchases to achieve its objective. There is, however, a limit to what monetary policy can do when large real adjustments are required. And it cannot influence inflation over the next few months.But it can ensure that the adjustment takes place against a backdrop of low inflation in the medium term. In so doing, monetary policy will make the best contribution it can to high and stable levels of growth and employment.

I think you can fairly say that's as clear a message as he can send which says "I've done all I can, now it

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4 Responses

Stevo!! says:

August 16 2011 at 5:35 pm

Supply side economics, cutting taxes, privatising state assets, rolling back the state will work! Have faith! Once the state is satisfactorily reduced, the “crowding out” of private enterprise will stop and they can fill the gap.

Despite the fact that its never really been tried outside of classical economic textbooks is no cause for concern, neither is the fact that, despite many corporations being awash with cash, they are just plain refusing to invest.

It is possible to treat the nation like an individual household and all we need to do is reduce the debt and everything will be hunky-dory……even though we still find it necessary to borrow at an average rate of Â£10 billion a month!

There is no proof anywhere of this type of policy actually working, and there is absolutely no proof that present government policy is working.

But it will work, dammitt!! Because we say it will! The IMF and World Bank say it will (who have absolutely no special interest in this whatsoever!)

Have faith!! Don’t panic! Don’t panic!! 🙂
- Lee Hyde says:
  
  August 16 2011 at 6:33 pm
  
  Wait, did you say ‘don’t panic!’? PANIC!!!!
- Bob Irving says:
  
  August 16 2011 at 6:36 pm
  
  I’m panicking! I’m panicking!
John Christensen says:

August 17 2011 at 8:24 am

I’m also panicking. Now form an orderly queue…