We believe that the one of the biggest issues facing modern society, relevant to all others, is our inability to understand modern money and incorporate functional finance in public policy.
Central Banks know better. Understand completely the role played by governments in facilitating economic growth. Yet only speak of it in whispers and nuance if at all. Ironically, with all efforts taken up by banks QE, Forward Guidance, ZIRP , etc all with what is known to have less impact than say temporarily repealing VAT or social security taxes not a peep. Ironically for central banks these efforts are the only measures likely to result in what they want-positive inflation and space for increased rates.
But then knowledge that banks don't actually make the world go round would disseminate! We can't have that :[
Here Simon Wren-Lewis puts it perfectly
"I guess it is deemed politically sensitive to talk about such things"
The effect of government spending on economy.
"But silence is not a neutral position in the current political context. Silence suggests that the demand impact of fiscal policy is somehow unimportant, or perhaps particularly uncertain: both of which the Bank knows are untrue. This is not about monetary policy makers trying to avoid treading on the toes of fiscal policy makers. It is about monetary policy makers supporting a political position which chooses to be economical with the truth about the impact of fiscal policy. The Bank being coy is the Bank colluding with those who are being economical with the truth. "
Central Banks know better. Understand completely the role played by governments in facilitating economic growth. Yet only speak of it in whispers and nuance if at all. Ironically, with all efforts taken up by banks QE, Forward Guidance, ZIRP , etc all with what is known to have less impact than say temporarily repealing VAT or social security taxes not a peep. Ironically for central banks these efforts are the only measures likely to result in what they want-positive inflation and space for increased rates.
But then knowledge that banks don't actually make the world go round would disseminate! We can't have that :[
Here Simon Wren-Lewis puts it perfectly
"I guess it is deemed politically sensitive to talk about such things"
The effect of government spending on economy.
"But silence is not a neutral position in the current political context. Silence suggests that the demand impact of fiscal policy is somehow unimportant, or perhaps particularly uncertain: both of which the Bank knows are untrue. This is not about monetary policy makers trying to avoid treading on the toes of fiscal policy makers. It is about monetary policy makers supporting a political position which chooses to be economical with the truth about the impact of fiscal policy. The Bank being coy is the Bank colluding with those who are being economical with the truth. "
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