In response to an FT article by Martin Wolf on 13th November 2017, entitled ‘Unusual times call for unusual strategies from central banks’:
“A war is being waged against the central banks. Its focus is the policies they adopted in the aftermath of the global financial crisis of 2007-09 and the eurozone crisis that followed, especially quantitative easing or “large-scale asset purchases”. But complaints are also made against negative interest rates and even just low rates. These protests could cripple the ability of central banks to respond effectively to the next recession, let alone another crisis…
…One is that these policies are “unusual” or “unconventional”. So what? The world economy has evidently been in an unusual state, in which demand matches potential supply only at very low real and nominal interest rates. The long struggle to raise inflation to target in the US and, still more, in the eurozone and Japan, shows that. Equally, the relationship between unemployment and inflation has changed. Unusual conditions demand unusual policies…
…A related criticism is that easy money policies have worsened inequality, especially of wealth. But keeping the post-crisis economy in recession in order to reduce wealth inequality would have been insane. In any case, wealth inequality matters less than inequality of incomes, where the effect of raising asset prices is to lower returns for prospective owners, so improving inequality in the longer term. Above all, the worst form of inequality is to leave millions of people stuck unnecessarily in prolonged unemployment” – Martin Wolf
These are just three dollops of the latest drivel from the FT’s mouthpiece on Central Banks. There’s much more where that came from – far too much for me to wipe up globule by globule…or it could just be that it’s Monday morning and I’m having a Bob Geldof moment. Anyway, here’s my unspecified response:
"The objections are political, not technical"
Well there's a shocker!
Central Banks are 'political' - 'technical' is the garbage they peddle to justify policies that benefit corrupt banks and complicit governments, in that order.
Until you admit that - I do not say 'understand' because you already do - nothing you write about central banks will be any more useful than a chocolate fireguard.