"I am not saying the BOE are whiter than white, but when interest rates were left for political bribing it was much worse."

[Si1]

Hat-tip to Greendevil for this question.

Which is least bad, politician-set monetary policy, or technocrat-set monetary policy?

[Uncle_Kenny]

How about market set interest rates?

[Funn3r]

15 minutes ago, Uncle_Kenny said:

How about market set interest rates?

SUBVERSIVE IN SECTOR 5, SECURITY TO SECTOR 5 PLEASE

[Giordano Bruno]

I disagree. In principle, the creation of currency by printing or otherwise should be the exclusive job of the people, or their representatives in parliament. Likewise the setting of interest rates. JFK and Lincoln both paid the price for trying to enable government production of currency. We did have, for a very short while, our own debt-free and interest-free currency which was called the Bradbury Pound. The bankers and their puppets soon put a stop to that.

[darkmarket]

I'd like the 'technocrats' to tell the politicians their remit is unrealistic on occasion. If the Treasury always asks for a stable ~2%, at some point cyclical pressures make it impossible to meet the demand without creating other, more harmful distortions.

As it stands, they like to refer to themselves as technocrats, but it's not merited. It's much like Tony Blair claiming that politics is just like project management, denies the assumptions that ideologically frame the actions.

[Si1]

20 minutes ago, Uncle_Kenny said:

How about market set interest rates?

How does that work? Surely the moment the govt issue gilts then they're influencing (setting) interest rates?

[Uncle_Kenny]

3 minutes ago, Si1 said:

How does that work? Surely the moment the govt issue gilts then they're influencing (setting) interest rates?

Yes, but they are not setting rates by doing this. The rates on gilts fluctuates randomly all the time.

The bank of England base rate is the rate at which the bank will lend to the UK banking system. This is under their control and they use it to manipulate rates paid on mortgages and so on.

[The Knimbies who say No]

Could probably make an algorithm to adjust the rate on a daily basis for the ultimate technocratic solution. If it's political (!) then elected politicians should take responsibility. There's no reason why the MPC couldn't be formed from MPs.

Edited August 6, 2017 by The Knimbies who say No

[Habitationi Bulla]

Within 10yr of he BoE fully controlling things they'd destoyed the banking system to the point it needed bailing out with printed money.

Then we've seen the chaos and destruction this has caused hence why we are sat reading this website.

The govt would never get away with keeping rates so low for so long as if nothing else itd be hurting boomer savings.

[The Spaniard]

29 minutes ago, Giordano Bruno said:

I disagree. In principle, the creation of currency by printing or otherwise should be the exclusive job of the people, or their representatives in parliament. Likewise the setting of interest rates. JFK and Lincoln both paid the price for trying to enable government production of currency. We did have, for a very short while, our own debt-free and interest-free currency which was called the Bradbury Pound. The bankers and their puppets soon put a stop to that.

Wholesale interest rates could be set within a publicly issued money system (as advocated by PositiveMoney) by reverse auctions of new money to banks.

The banks competitively submit their IOUs and the central (state-owned) bank chooses the best of them to be the borrowers of the new money.

The selected commercial banks then owe the allocated new monies back to the central bank at the contracted rates of interest and loan durations.

In this way commercial banks would borrow new (sovereign) money into circulation, the exact opposite of their current power to lend money into existence.

They would presumably then lend it on to their customers, adding their (market driven) interest rate spreads.

No bailouts or taxpayer subsidies, commercial banks to live or die on their competitiveness and risk assessment skills.

[Ah-so]

41 minutes ago, Uncle_Kenny said:

Yes, but they are not setting rates by doing this. The rates on gilts fluctuates randomly all the time.

The bank of England base rate is the rate at which the bank will lend to the UK banking system. This is under their control and they use it to manipulate rates paid on mortgages and so on.

Actually the Base Rate is the rate at which banks can deposit with the Bank of England. 

Because this is a risk free and fully liquid facility, no bank ever has an incentive to receive less than the Base rate. It therefore sets the minimum interest rate for loans.

The BoE will be the lender of last resort, but the rate has traditionally been quite expensive. This has changed a bit in recent years with new lending schemes, such as FLS and TFS, but these are time limited schemes. 

[spyguy]

8 hours ago, Si1 said:

Hat-tip to Greendevil for this question.

Which is least bad, politician-set monetary policy, or technocrat-set monetary policy?

Well, lets draw line in 1945.

1945->2000 monetary policy was set by pols. Sure, there were recessions and the odd bank blew up.

What have we got sicne 2000?

2008-2010 saw about 80% ofthe UK banks go bust or some sort of state ownership.

The BoE, as itwa so smart, avoided recession as they no longer happen with the genius of BoE in control. So we've had 2 business cycles where the slowdown has been avoided - mainly by avoidign the credit bust by lowering IRs, which causes assets price to bubble more.

UK is stuck with double national debt, very low growth, the population tapped out for the next 30 years.

BoE might have been given freedom from political intefernce. But it was not given interference from its own macro-economoics moronic ideas.

BoE does not have enough skin in the game, Pols did.

BoE pension should have acted as a capital buffer between the banks and involveny. Banks go bust, BoE pensiners loose out and end up pushing trolleys round B+Q.

[Locke]

12 hours ago, Si1 said:

How does that work? Surely the moment the govt issue gilts then they're influencing (setting) interest rates?

The thing is, we are so far into the matrix that most people cannot even imagine a world where a State does not control their money.

The government has the ability to do these things, because it threatens to beat the shit out of you/lock you in a cage/straight up murder you if you do not comply and it has the permission of everyone around you to do so.

 

A voluntary currency, presumably, would aim to represent a stable value with neither deflationary nor inflationary effects relative to the value of an hour of labour. Interest rates represent the time value of money and some risk factor and are entirely context sensitive; they would set themselves.

There would be different competing currencies, and the one(s) which came out on top would be those which were the most stable, convenient and secure.

State scrip fulfills none of these and without the overwhelming threat of violence, would fail very quickly (as opposed to quite slowly as they are doing now).

[Gigantic Purple Slug]

The current set up allows for buck passing. This happens for both positives and negatives.

I seem to remember the leader of one party in an interview stating how they were "keeping interest rates low". I'm not sure how this can be claimed when the politician in question was not responsible for setting the rates.

Then on another occasion I remember hearing the BOE buck passing, claiming that HPI should be dealt with by the government by increasing supply rather than it (the BOE) being responsible for dealing with it.

Personally I'd prefer to have just one organisation to wave the pitchfork at. I don't really think it matters which, but it feels to me that politicians should have the responsibility (as it has such a significant impact on peoples lives) rather than technocrats.

 

[Locke]

5 hours ago, spyguy said:

the population tapped out for the next 30 years.

Realistically, I don't think that's true. 

If the government (of which the BoE is a branch) somehow manages to keep things together, expect to see further parasitism, which pushes and pushes the debt cycle out forever. Think 1984, or that Black Mirror episode with the stationary bikes.

If the debt bomb does go off, I think we will see a huge destruction of value, followed by a very rapid recovery. For an example, look at postwar Germany. It was razed to the ground; almost nothing of value was left, but you had massive economic recovery (within 5 years) after the US government was made to ****** off.

So things are going to get much better, or much worse, but I don't think the centre will hold.

[SoldTooSoon]

As I understand it, the Governor and Deputy Governors of the BOE are appointed by the Chancellor of the Exchequer.  The 4 external members of the MPC are also appointed by the Chancellor.  So by my arithmetic, 7 of the 9 members of the MPC owe their positions to the Chancellor.

The creation of the MPC to set interest rates with the very narrow remit of controlling inflation was always just a bit of smoke and mirrors by the Scottish one eyed idiot. They are there to do the Chancellors bidding and provide a convenient expendable scapegoat when it all goes t1ts up!

[spyguy]

6 minutes ago, Locke said:

Realistically, I don't think that's true. 

If the government (of which the BoE is a branch) somehow manages to keep things together, expect to see further parasitism, which pushes and pushes the debt cycle out forever. Think 1984, or that Black Mirror episode with the stationary bikes.

If the debt bomb does go off, I think we will see a huge destruction of value, followed by a very rapid recovery. For an example, look at postwar Germany. It was razed to the ground; almost nothing of value was left, but you had massive economic recovery (within 5 years) after the US government was made to ****** off.

So things are going to get much better, or much worse, but I don't think the centre will hold.

Well,, Germany got a fresh start as everything was destroyed - buildings, government.

Unless we can year 0 our civ8l service and political system, ditching them all, with no pension to pay, then a fresh start for the UK is unlikely.

[simon49]

13 hours ago, Habitationi Bulla said:

Within 10yr of he BoE fully controlling things they'd destoyed the banking system to the point it needed bailing out with printed money.

Then we've seen the chaos and destruction this has caused hence why we are sat reading this website.

The govt would never get away with keeping rates so low for so long as if nothing else itd be hurting boomer savings.

Yes I agree totally with you on that. Giving the BoE the job of setting interest rates has caused the whole collapse of the country.

[adarmo]

13 hours ago, Habitationi Bulla said:

Within 10yr of he BoE fully controlling things they'd destoyed the banking system to the point it needed bailing out with printed money.

Then we've seen the chaos and destruction this has caused hence why we are sat reading this website.

The govt would never get away with keeping rates so low for so long as if nothing else itd be hurting boomer savings.

I hate to be pedantic (not really, I love it) but it was actually the loss of control and oversight of the BoE that, within ten years, caused the mess. Previously the BoE had full responsibility for this, but under Brown the tripartite system was born with (unclear) responsibilities shared between the BoE for monetary policy, the FSA (now FCA) for regulation and the Treasury. 

http://www.politics.co.uk/news/2009/06/02/the-tripartite-system-was-responsible-for-the

Re the interest rates - the issue here as I've said before is that the inflation index required to be controlled to 2.5% +/-1% and then lowered to 2% +/-1% explicitly excluded housing and other assets from its measure and this was a failure of the government. NuLabour turned what was once a extremely strong a powerful regulatory and controlling tool into a lapdog for the government's monetary whim (not that the the previous arrangement under the Tories with respect to interest rates was much better). 

 

[Locke]

2 hours ago, spyguy said:

Well,, Germany got a fresh start as everything was destroyed - buildings, government.

Unless we can year 0 our civ8l service and political system, ditching them all, with no pension to pay, then a fresh start for the UK is unlikely.

 

As you say, the population is tapped out, i.e. there is nothing left to steal. There may well be a "year 0" event w.r.t. government.

Hopefully, there will be buildings and production capability left. I have great faith in people's ability to pick themselves up come soggy bottom time.

 

Slavery, be it hard or soft, is the only thing the State has left if it wants to continue down the road we are on (the first scenario I mentioned)

[spyguy]

1 hour ago, adarmo said:

I hate to be pedantic (not really, I love it) but it was actually the loss of control and oversight of the BoE that, within ten years, caused the mess. Previously the BoE had full responsibility for this, but under Brown the tripartite system was born with (unclear) responsibilities shared between the BoE for monetary policy, the FSA (now FCA) for regulation and the Treasury. 

http://www.politics.co.uk/news/2009/06/02/the-tripartite-system-was-responsible-for-the

Re the interest rates - the issue here as I've said before is that the inflation index required to be controlled to 2.5% +/-1% and then lowered to 2% +/-1% explicitly excluded housing and other assets from its measure and this was a failure of the government. NuLabour turned what was once a extremely strong a powerful regulatory and controlling tool into a lapdog for the government's monetary whim (not that the the previous arrangement under the Tories with respect to interest rates was much better). 

 

Its was the lock of oversight on banks lending that fkced the UK.

Noone was in charge as Brown started the biggest credit bubble the UK had ever seen.

 

[iamnumerate]

1 hour ago, adarmo said:

I hate to be pedantic (not really, I love it) but it was actually the loss of control and oversight of the BoE that, within ten years, caused the mess. Previously the BoE had full responsibility for this, but under Brown the tripartite system was born with (unclear) responsibilities shared between the BoE for monetary policy, the FSA (now FCA) for regulation and the Treasury. 

http://www.politics.co.uk/news/2009/06/02/the-tripartite-system-was-responsible-for-the

Re the interest rates - the issue here as I've said before is that the inflation index required to be controlled to 2.5% +/-1% and then lowered to 2% +/-1% explicitly excluded housing and other assets from its measure and this was a failure of the government. NuLabour turned what was once a extremely strong a powerful regulatory and controlling tool into a lapdog for the government's monetary whim (not that the the previous arrangement under the Tories with respect to interest rates was much better). 

 

Very true, when the BOE regulated the banks, not a single bank needed bailing out for over 100 years,  World Wars, Oil shocks, Great recession everything they survived - unlike other countries, loads failed in the US in the Great Recession.  Sadly some Labour supporters still believe that this the FSA was not a mistake.  You do wonder what would make them believe it was, if we had another 200 years with the BOE without problems would they believe the FSA was wrong?

This has info about it.

https://www.federalreservehistory.org/essays/banking_panics_1930_31

[ThePrufeshanul]

3 hours ago, Locke said:

Realistically, I don't think that's true. 

If the government (of which the BoE is a branch) somehow manages to keep things together, expect to see further parasitism, which pushes and pushes the debt cycle out forever. Think 1984, or that Black Mirror episode with the stationary bikes.

If the debt bomb does go off, I think we will see a huge destruction of value, followed by a very rapid recovery. For an example, look at postwar Germany. It was razed to the ground; almost nothing of value was left, but you had massive economic recovery (within 5 years) after the US government was made to ****** off.

So things are going to get much better, or much worse, but I don't think the centre will hold.

The "centre" could be decades of gradual decline and stagflation like Japan.

I don't think we are going to see a similar situation to Germany - we are not on a war footing and, more importantly, nobody is writing off our debts. 

[adarmo]

26 minutes ago, ThePrufeshanul said:

The "centre" could be decades of gradual decline and stagflation like Japan.

I don't think we are going to see a similar situation to Germany - we are not on a war footing and, more importantly, nobody is writing off our debts. 

I'm inclined to agree that the Japan scenario is a likely one. 

[oracle]

21 hours ago, Si1 said:

Hat-tip to Greendevil for this question.

Which is least bad, politician-set monetary policy, or technocrat-set monetary policy?

why stop at monetary policy?

the reason interest rates are so low is because indirect taxation,micromanagement and regulation has become so high.