The Bank of England Owns Up At Last

For those of us who have argued for a long time that orthodox monetary policy is fundamentally misconceived, a significant milestone was achieved this week.  In an important paper published in the Bank of England Quarterly Bulletin*, three Bank of England economists have acknowledged that the overwhelmingly greatest proportion of money in the economy is […]

Re-opening the Debate

Something important has happened in New Zealand politics. After two and a half decades in which economic policy has been a no-go area for political discussion, we have at last seen the beginnings of a debate about what is potentially the central issue of our politics. “There is no alternative” was very much Mrs Thatcher’s […]

Learning the Lessons

As the world-wide recession seems to be bottoming out, one question is being asked with increasing frequency and urgency. Have we learnt the lessons so that it will not happen again? The answer – at least in the US and the UK – is not a reassuring one. As the hard-pressed taxpayer, already burdened with […]

An Ideological Straitjacket

With inflation falling, a full percentage point cut in interest rates at the end of the month now looks like a done deal. But while a relaxation of monetary policy is both welcome and overdue, it does not remotely measure up to what is now required if we are to ward off what could be […]

So Much for Liquidity – Now Let’s Have a Serious Approach to Inflation

The Reserve Bank’s announcement of new provisions to improve the trading banks’ liquidity in the face of the world-wide credit crisis will be widely and justifiably welcomed. It is just a pity that the Reserve Bank is not similarly proactive when it comes to the battle against inflation. Any liquidity problem for our banks is, […]

The Beginning of the End of the Road

Let’s hear it, for once, for our politicians. It’s not every country that has a Finance Minister with the good sense to recognise a policy dead-end when he sees one and with the courage to try to do something about it. The mere prospect of a discussion about a mortgage interest levy is enough to […]

Why Are Interest Rates Not Working?

In theory, it was all so simple. Since inflation could not happen if the money supply was held stable, all you had to do was control the money supply and – no more inflation! The productive economy would rapidly adjust to the new monetarist discipline and would benefit – along with everyone else – from […]