This notice has just been issued by the Bank of England:
I added the highlight. I do not agree with the claim. My reason for doing so is section 19 of the Bank of England Act 1998, which says:
In other words, the Monetary Policy Committee is free to decide what it will do so long as it offers opinions with which the Treasury agrees. If the Treasury disagrees it can simply overrule the committee.
Of course, it can be argued that this is, as it is described, a reserve power. However, anyone sitting on the Monetary Policy Committee (MPC) will know that this reserve power exists, as will the Governor of the Bank of England. As a consequence, you can be quite sure that nothing that the MPC does happens outside parameters agreed with the Treasury. I am entirely confident that mechanisms to convey sentiment on such issues will exist.
In that case, is the Bank of England really independent of the government? I very strongly suggest that it is not. Instead what is being played here is a two-part game. One part gives power to a financial elite. The other part lets it be pretended that this elite holds the government to account. The reality is that this is like a tango: whatever supposed stress there is in the relationship is very carefully choreographed. As a result, I do not buy Professor Haskell's argument.
Worse though, I do not like the pretence implicit in this relationship between the Treasury and the Bank of England. Monetary policy in the UK should be under democratic control. The suggestion that it was not was always deeply subversive, and profoundly neoliberal. It is time that this supposed power that is granted to an accountable group was brought firmly back under Parliamentary supervision.
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I don’t wish to sound like Harrison from The Mighty Boosh, but this article is simply an OUTRAGE.
How dare they lie like this? Lying curs the lot of them.
And with a Rees Mogg doppelganger as well. Insult on top of insult.
And FWIW – I agree with your comments.
But being ‘miffed’ doesn’t come close to describing me at seeing this.
This is how the fiction is maintained, isn’t it? Have nonsense suggested by some earnest looking bloke in a suit and by and large people can’t see beyond the theatre to query it. Same deal with royalty, people are too dazzled by the pomp and circumstance to begin to wonder what they’re looking at or what it’s actually there for, that being the stupefying effect it has on them. Our Establishment is propped up by smoke and mirrors.
Oh, and speaking of Central banks, here’s the chief economist at the ECB trying to explain that bank loans are really money creation https://twitter.com/_d11n_/status/1458481698778255361
Richard
Would be interested in getting your comments and thoughts on Turkey.
https://www.bbc.co.uk/news/business-59390250
The president is determined that it’s his way or the highway. In March, he sacked the Bank’s governor, Naci Agbal – who had been hiking interest rates aggressively. Two of his deputy governors soon followed.
Now Mr Erdogan is in control.
Despite this, Mr Erdogan vowed to stick to his policies on Monday, arguing that high interest rates would not lower inflation – an unorthodox view he has repeated for years.
I reject policies that will contract our country, weaken it, condemn our people to unemployment, hunger and poverty,” he said after a cabinet meeting.
I assume he we will not have effective dictatorships in the UK
There are occasions when I agree that might be naive of me
Independence of the BofE was smoke and mirrors from its inception. Gordon Brown announced it to appease financial market interests and silence some of the media coverage, but he wasn’t daft enough to mean it. We are supposed to have forgotten that.
Apparently BofE has forgotten.
I suppose they would argue that the Treasury reserve power is the democratic control – by the elected government.
Is there a definitve account of what can be done and what could be done in monetary and fiscal measures to get the economy up and running again and cut carbon by 50% by 2030, and to respond to potential 2008 and 2020 -style crises ?
Richard has already done much of such an account – including contraints on interest rates, financial transaction taxes etc . Quest, investment spend etc
If there was a Beveridge- type landmark treatise published, it might help to sway public and political understanding – in a positive direction.
I am sketching this, but no promises
The NHS is under democratic control – but I am glad that it is run by professional administrators and doctors answering to the Health Secretary (rather than by the Health Secretary).
So, in some sense, the pseudo-independence of the BOE is probably the right way to go. The real problem I have is that the BoE policy makers are drawn from too narrow a circle. Tackling this is the the approach likely to me most effective – but with the right MPC a lot of the things we want could become possible.
Richard Murphy for the Monetary Policy Committee!!
Right now that is not going to happen
The bizarre thing is they demand theorists to do that job……