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spyguy

Bis Working Paper - Central Banking Post Crisis

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Claudio Borio from BIS (Bank for International Settlements) has a new working paper.

Its causing a stir - well, as much as a stir as these sort of things cause.

Gillian Tett @ FT (subs might be req) has a piece around it:

(ooh she's just like Patsy Kensitt's older, smarter, not rock star sh*gging, sister)

http://www.ft.com/cms/s/0/877b7bfa-fb21-11e0-bebe-00144feab49a.html#axzz1bUjEgmFp

Buttonwoon @ Economist refers to Tett's aritcle + the original paper:

http://www.economist.com/blogs/buttonwood/2011/10/debt-crisis-1

And here's a direct link to the paper:

http://www.bis.org/publ/work353.pdf

Both articles and the original paper are well worth a read.

Here are some choice snippets from the paper:

"Put differently, when dealing with major financial busts monetary policy addresses the symptoms rather than the underlying causes of the slow recovery. It alleviates the pain, but masks the illness. It gains time, but makes it easier for policymakers to waste it."

"If governments allow public debt to grow beyond sustainable levels, pressures to compromise the central bank’s independence will grow at some point in order to avoid default. If central banks engage in extensive balance-sheet policy, that independence will come under threat even earlier"

And this one, which is a total slap in the face to Merv's imported inflation, not my problem claim:

"It is quite common for countries to treat commodity price increases as “imported”, and hence exogenous, sometimes even formally excluding them from the price index used as a guide for monetary policy (eg a measure of “core inflation”). This is reasonable from a partial equilibrium perspective. But the commodity price increase itself may also be the result of the aggregate monetary policy stance for the world, in which all countries participate. And being determined in auction markets, commodity prices are more flexible than prices of goods and services. They are thus more likely to be the first to adjust, acting as a signal of aggregate demand pressures, and hence of limited economic slack, for the world economy – a possible harbinger of further inflationary pressures down the road."

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"Put differently, when dealing with major financial busts monetary policy addresses the symptoms rather than the underlying causes of the slow recovery. It alleviates the pain, but masks the illness. It gains time, but makes it easier for policymakers to waste it."

Nothing to do with them wasting time, it's about ensuring it's someone else's problem in politics hoping to pass the buck to the opposition for them to take the blame.

Govt shouldn't be running debt, especially the debt that accumulates. I have no problem if money is borrowed and then paid back, we run into problems when the debt is perpetually rolled over like now.

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Govt shouldn't be running debt, especially the debt that accumulates. I have no problem if money is borrowed and then paid back, we run into problems when the debt is perpetually rolled over like now.

Suppose there are two parties in a democracy:

Party One: 'we will only borrow when we must in bad times, then raise taxes in good times to repay it'

Party Two: 'we will borrow as much as we can and give you lots of FREE STUFF while passing the cost of the debts onto your kids'

Which do you think will get elected?

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They are thus more likely to be the first to adjust, acting as a signal of aggregate demand pressures, and hence of limited economic slack, for the world economy – a possible harbinger of further inflationary pressures down the road."

Oil prices have been falling quite significantly for 6 months.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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