tag:blogger.com,1999:blog-2277215496195926573.post1090238027307023870..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Inane drivel from Neil Wilson on full reserve banking.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2277215496195926573.post-71767011905983012982016-10-26T01:26:13.298-07:002016-10-26T01:26:13.298-07:00Yes: Bill Mitchell published a chart on his blog p...Yes: Bill Mitchell published a chart on his blog purporting to show no relationship between central bank independence and inflation. I agree there isn't a HUGE difference between an independent central bank regime and a non-independent CB regime. After all, prior to Gordon Brown granting the Bank of England independence, the UK was not in a state of permanent chaos or hyper-inflation. But still, I prefer independent to non independent CBs.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-61505204656240861632016-10-25T14:52:09.840-07:002016-10-25T14:52:09.840-07:00Coming late to this, but (on the subject of whethe...Coming late to this, but (on the subject of whether MMT-ers raise no objection to the existing CB committees, Bill Mitchell for one has stated his objection quite clearly, although he's also said that the independence is more apparent than real. (Evidence for this is that Alistair Darling explicitly OK'd the 1st round of QE, and it would be surprising if the subsequent rounds were not also done withe the blessing of the then Chancellor.<br /><br />I can't remember exactly what Neil Wilson said about the MPC, but I don't think he likes it any more than he likes the idea of the MMC (and neither, FWIW, do I).<br /><br />I'm sure you've seen this, but as a reminder:<br />http://bilbo.economicoutlook.net/blog/?p=29770<br /><br />(Bill Mitchell on The sham of central bank independence)<br /><br />(Although he's not, as far as I know, an MMT-er, Richard Werner is also against CB independence, as you can judge from "Princes of the Yen" (book and film).montmorencyhttps://www.blogger.com/profile/12879422255762834319noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-36657256249516995152015-05-15T01:42:15.513-07:002015-05-15T01:42:15.513-07:00KK,
You say “So wouldn't it be better to focu...KK,<br /><br />You say “So wouldn't it be better to focus on the essentials of Full Reserve banking without all the controversial aspects of Positive Money proposals?” My answer is that I could do, but as it happens I’m all in favour of PM’s policy of implementing stimulus by creating new money and spending it, and/or cutting taxes. I.e. I don’t think much of alternative methods of implementing stimulus like interest rate adjustments or having government borrow and spend.<br /><br />Re your “a” para, I realise that the BoE is responsible for monetary, not fiscal policy. But my point was that government (certainly in the UK and US) has given powers to their central banks that enable CBs to OVERRIDE the stimulatory effect of fiscal policy. So I think I’m right to say the BoE MPC determines the size of stimulus packages. Thus PM’s system would not in fact amount to what you call a “radical expansion” of CB powers.<br /><br />Re your “b” para, my answer is that it’s certainly possible that CB powers are insufficient to override fiscal effects implemented by government. Indeed it can well be argued that CBs are near impotent at the zero bound. But that doesn’t alter the fact that CBs (at least in the US and UK) are SUPPOSED to have complete control of demand and inflation. <br />Incidentally that impotence of CBs at the zero bound does not apply under PM’s system because creating new base money and spending it and/or cutting taxes has a fiscal as well as monetary effect.<br /><br />Re your “c” para, and whether CB committees have more wisdom than finance ministers and their advisors, my answer is: “probably not”. But the argument behind PM’s money creation committee (MCC) is the same as the argument behind keeping politicians away from the printing press. I.e. existing CB committees and PM’s MCC are INDEPENDENT, whereas finance ministers have an interest in boosting the economy by too much today and leaving the consequent mess to their successors to sort out.<br /><br />Plus it’s a blatant self-contradiction (as I point out above) to raise no objections to EXISTING CB committees, and then throw hissy fits when PM advocates the MCC. And most of those who object to the MCC are guilty of that self-contradiction.<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-62671152913247632982015-05-14T19:30:54.860-07:002015-05-14T19:30:54.860-07:00Me too, I can't understand Neil Wilson.
You ar...Me too, I can't understand Neil Wilson.<br />You are also right in saying "undemocratic committees ARE NOT, repeat ARE NOT an essential ingredient in FR. "<br />So wouldn't it be better to focus on the essentials of Full Reserve banking without all the controversial aspects of Positive Money proposals.<br /><br />As you note, the idea of a new "Money Creation Committee" is particularly controversial and unnecessary. <br />In supporting this feature, you make several errors:<br /><br />(a) "central bank committees have the whip hand when it comes to determining the size of stimulus packages, not democratically elected politicians" <br />"who exactly decides in the size of that stimulus package? ... in the case of the UK, the Bank of England Monetary Policy Committee!!!"<br />All this completely wrong. <br />Under current UK arrangements the BoE MPC does not set the size of the budget deficit. It merely sets interest rates. The BoE is responsible for implementing monetary policy, not fiscal policy. <br />The proposals of Positive Money would be a radical expansion in the role of the BoE with a corresponding radical reduction in the role of the Treasury which is under democratic control through ministers answerable to Parliament.<br />Likewise in the the US, it is the President and Congress which determine taxes and government spending, not the Fed. <br /><br />(b)"politicians have given the BoE powers to override any fiscal stimulus that politicians might implement" <br />"As to the US...if politicians implement stimulus, or too much stimulus, then the central bank may easily “offset” it.<br />This completely false because central banks merely implement monetary policies (mainly interest rates and QE) which, as sometimes asserted by Ralphanomics, have only limited impacts on aggregate demand.<br /><br />(c) Positive Money's faith in "independent technical experts" is naive.<br />Do BoE governors in the UK have more wisdom than Chancellors of the Exchequer? <br />In the US how successful were were Chairs of the Federal Reserve such as Volcker, Greenspan and Bernanke?<br />As Bill Mitchell says: "who would appoint the MCC? ... current arrangements with central bank boards, fiscal advisory bodies (CBO in the US, OBR in the UK etc) the appointees are typically ideological warriors... there is no diversity of opinion or paradigm on these bodies. Straight-down the road neoliberalism. Which means the decisions of the MCC will reflect the prevailing ideology of the day which is a different thing to promoting society well-being."<br />KongKinghttps://www.blogger.com/profile/10992633301481631373noreply@blogger.com