Realist Bear

[Killer Bunny]

Every time you talk about GB as the guy who sets IRs I will respond saying ********. As I have told you before it weakens your argument.

Otherwise you are a great guy.

Why mess up your reputation?

fp

[Casual Observer]

Every time you talk about GB as the guy who sets IRs I will respond saying ********. As I have told you before it weakens your argument.

Otherwise you are a great guy.

Why mess up your reputation?

fp

Don't spoil the conspiracy theory with boring facts!

[zag2me]

I noticed the same thing, It was one of Labours big policies to take interest rate control off the chancellor.

[HAL]

Every time you talk about GB as the guy who sets IRs I will respond saying ********. As I have told you before it weakens your argument.

Otherwise you are a great guy.

Why mess up your reputation?

fp

Whilst what you say is technically correct - even you must agree that GB has some measure of influence over IR decisions - indirectley over membership of the MPC and by the basket of goods used in the CPI (and its manipulation).

My question to you is what degree of influence do you think GB has (it cannot be zero)?

HAL

[Casual Observer]

Whilst what you say is technically correct - even you must agree that GB has some measure of influence over IR decisions - indirectley over membership of the MPC and by the basket of goods used in the CPI (and its manipulation).

My question to you is what degree of influence do you think GB has (it cannot be zero)?

HAL

The chancellor sets the target against which the MPC makes its IR decisions. No sane, rational person would want its government to do anything less, surely? On what other basis should these national targets be set, other than by an elected government? If you want IRs set to follow a house price crash agenda, then you must vote accordingly (e.g. set up a HPC party and see if you can get elected)

As for CPI as a measure, I think this is a bit of a red herring. The trend is not much different to RPI, i.e. IR decisions would not have been any different if we'd stuck to RPI and set a target of 3%.

The MPC raised rates several times between late 2003 and August 2005, which destroys the conspiracy theory IMO.

[Killer Bunny]

My question to you is what degree of influence do you think GB has (it cannot be zero)?

As Casual Observer says The Treasury sets inflation target and sets the measure and what's in it.

Also, of course, GB decides behind closed doors, currently, who's on the MPC. Though Merv is apopleptic about this and it will surely change.

Other than that once the MPC meets its up to them.

[OzzMosiz]

Who is responsible for what is in the CPI basket? Cos everytime something looks like its going up its removed

and something which is likely to go down is added.

Conspiracy theory? You bet!!!

[Realistbear]

"The one who does the hiring and the firing is the one who makes the decisions"

There are few that would describe the BoE as independent:

http://observer.guardian.co.uk/print/0,385...-102271,00.html

The day Gordon set the Bank free - and brought it under his control

Sunday September 28, 2003

Observer

The facts:

http://www.bankofengland.co.uk/about/parliament/index.htm

The Bank’s relationship with Parliament

As a public organisation,

wholly-owned by Government

, and with a significant public policy role, the Bank is accountable to Parliament.

http://www.bankofengland.co.uk/monetarypolicy/overview.htm

The Bank's Monetary Policy Committee (MPC) is made up of nine members – the Governor, the two Deputy Governors, the Bank's Chief Economist, the Executive Director for Markets and

four external members appointed directly by the Chancellor

. The appointment of external members is designed to ensure that the MPC benefits from thinking and expertise in addition to that gained inside the Bank of England.

http://www.bankofengland.co.uk/about/governance/index.htm

The Court of Directors

Court consists of the Governor, two Deputy Governors and 16 Directors. The Directors are all non-executive. The

Governors are appointed by the Crown

for five years and the Directors for three years

The Monetary Policy Committee (MPC)

At least once a year,

the Government specifies the price stability target and its growth and employment objectives

. The MPC must meet at least monthly; its members comprise the Governor and Deputy Governors, two of the Bank's Executive Directors and four members appointed by the Chancellor.

http://www.bankofengland.co.uk/monetarypolicy/index.htm

Monetary PolicyMonetary Policy

One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency.

Stable prices

are defined by the Government's inflation target

, which the Bank seeks to meet through the decisions on interest rates taken by the Monetary Policy Committee.

http://uk.encarta.msn.com/encyclopedia_761...of_england.html

As Great Britain’s central bank, the

Bank of England has traditionally enjoyed less independence from political control than similar institutions such as Germany’s Bundesbank and the United States Federal Reserve System

. In the mid-1990s some changes to established practices, such as making public the minutes of the regular meetings between the governor and the Chancellor of the Exchequer, were introduced to improve the bank’s credibility as an agent against inflation. In May 1997 the new Labour Chancellor of the Exchequer,

Gordon Brown, carried the process further by giving the Bank of England effective

operational independence

,

with sole responsibility for setting base interest rates in Great Britain.

http://www.res.org.uk/society/mediabriefin...b03/maloney.pdf

While other central banks can set their own monetary objectives the BoE cannot.

To think that the BoE is an independent bank that reaches decisions outside political control and influence is naive. Gordon sets the inflation target which the bank is bound to deal with. Gordon appoints the 4 external members and the Treasury appoint the rest. They are entirely the creatures of central government with the power of hiring and firing. They are fed the information that is selcted, spun, manipulated or otherwise as Gordon sees fit. Until the BoE can set their own monetary objectives they will continue to be puppets of Gordon Brown and central government.

[Casual Observer]

"

One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency.

Stable prices

are defined by the Government's inflation target

, which the Bank seeks to meet through the decisions on interest rates taken by the Monetary Policy Committee.

How terrible. The elected government sets the national inflation target. You've really uncovered a bombshell there, RB.

Who would you like to set it, a house price crash forum?

Of course the elected government sets the target, but the MPC makes the monthly decisions on IRs.

Edited July 13, 2006 by Casual Observer

[Casual Observer]

Here's a serious question to the conspiracy theorists.

Viz a viz interest rates and inflation targets and measures, how should it work?

[Guest Alright Jack]

Every time you talk about GB as the guy who sets IRs I will respond saying ********. As I have told you before it weakens your argument.

Otherwise you are a great guy.

Why mess up your reputation?

fp

Every time you talk about MK as the guy who sets IRs I will respond saying ********. As I have told you before it weakens your argument.

Otherwise you are a great guy.

Why mess up your reputation?

aj

[OzzMosiz]

Of course the elected government sets the target, but the MPC makes the monthly decisions on IRs.

Yes, based on CPI figured, which the government control by deciding what they measure that on (removing

things going up in price from the list). So in effect the MPC are puppets.

[Casual Observer]

Yes, based on CPI figured, which the government control by deciding what they measure that on (removing

things going up in price from the list). So in effect the MPC are puppets.

So how comes the RPI trend hasn't accelerated away from CPI?

[Dr Doom]

I disagree with both viewpoints here. There is a lot of steps that have

been taken to make it appear that the government controls the bank of

england. But let's face it, they do not.

Yes you can say the bank has been nationalised in 1946, and made

'independent' in 1997. All smoke and mirrors, no institution

of that size and with so much power could be truely independent.

The BOE's highest level of management is appointed by "The Crown",

a private corporation, headed by "The Queen".

If we live in a democracy, why does the queen need to 'manage' our

central bank? If she is really just for show why not take away

such immense power. After all she is unelected.

Personally I don't believe it is the queen that really controls

the BOE. More likely hidden elites that use "The Crown"

as a respectable front for their immense power.

Control and ownership mean the same thing for practical

purposes. Ownership of something is pretty much meaningless

unless you truely control whatever it is.

[OzzMosiz]

So how comes the RPI trend hasn't accelerated away from CPI?

because its inaccurate / forged?

[HAL]

Here's a serious question to the conspiracy theorists.

Viz a viz interest rates and inflation targets and measures, how should it work?

I am not sure that views opposing yours are tantamount to a conspiracy theory. We are just looking at the facts - GB sets the agenda and then the MPC plays by the rules (even if they do change with GB deems fit).

But you do ask a serious question: How should it work?

Well here is a start:

- No fudging the basket of good

- Measure basket of necessities (food, fuel, house prices, council tax etc)

- Measure basket of luxuries (DVD players, restaurant meals, holidays etc)

- Apply weighting 80% for Essentials and 20% for luxury

- Do not use any hedonistic, swaps or other fudge factors

- Base inflation target on that and stick to it day in day out

What is important is that we stick a known measure - essentials do not change and they should make up most of the CPI - afterall are we not trying to measure what affects all the people all of the time and not just some of the people some of the time.

HAL

[Marina]

I noticed the same thing, It was one of Labours big policies to take interest rate control off the chancellor.

This government is the biggest bunch of control freaks in history. Do you seriously believe if IRs were being raised by the BOE while Gordon Brown wanted them down (to stimulate yet more borrowing) - he would sit by and let it happen?

Gordon Brown selects who sits on the MPC - and you are astonishingly naive if you don't know how this works (in the real world) - which means he gets what he wants.

If he doesn't .... 'Gordon Brown (the most successful chancellor in history (choke!)) today took back control of Interest Rates from the BOE stating that their interests were too narrow and he felt their present decisions were not in the best interests of the country as a whole'

It would be as easy as that. A click of the fingers and back to open state control, instead of the current alleged independence.

[OzzMosiz]

I am not sure that views opposing yours are tantamount to a conspiracy theory. We are just looking at the facts - GB sets the agenda and then the MPC plays by the rules (even if they do change with GB deems fit).

But you do ask a serious question: How should it work?

Well here is a start:

- No fudging the basket of good

- Measure basket of necessities (food, fuel, house prices, council tax etc)

- Measure basket of luxuries (DVD players, restaurant meals, holidays etc)

- Apply weighting 80% for Essentials and 20% for luxury

- Do not use any hedonistic, swaps or other fudge factors

- Base inflation target on that and stick to it day in day out

What is important is that we stick a known measure - essentials do not change and they should make up most of the CPI - afterall are we not trying to measure what affects all the people all of the time and not just some of the people some of the time.

HAL

I like this HAL guy. Got his head screwed on!!

[Killer Bunny]

While other central banks can set their own monetary objectives the BoE cannot.

To think that the BoE is an independent bank that reaches decisions outside political control and influence is naive. Gordon sets the inflation target which the bank is bound to deal with. Gordon appoints the 4 external members and the Treasury appoint the rest. They are entirely the creatures of central government with the power of hiring and firing. They are fed the information that is selcted, spun, manipulated or otherwise as Gordon sees fit. Until the BoE can set their own monetary objectives they will continue to be puppets of Gordon Brown and central government.

Nothing new here, nothing to see. Move on.

Apart from the B0llocks that GB feeds Bof E with stats and they don't have their own.

And of course that other central banks are independent of govt, as you suggest, and of each other.

The banks are interdependent and dependent on G7 or 8 policy. So, of course there is input and phone calls from GB. But he does not control or direct.

And GB does not control MPC once the people are appointed. That is my point. No-one would be so foolish as to be political on that committee. The MPC has a target and they will do what they need to achieve it. If anyone steps outside and becomes political a) they don't get reappointed and b ) they continually get outvoted. Everyone knows that the MPC fuc4ed up in August 2005 and Merv said so. Note they haven't recut since - Merv brought them back into line - to achieve the target and only the target.

Sometimes individuals get cold feet 'cos one of their mates loses their jobs. But they are brought back into line or not reappointed.

Never before has a trend only been one alteration in a direction. ie cut in Aug 05. Yet that is exactly what we will have next month when there is a rise. That is entirely apolitical.

fp

Edited July 13, 2006 by Financial Planner

[Realistbear]

Nothing new here, nothing to see. Move on.

Apart from the B0llocks that GB feeds Bof E with stats and they don't have their own.

And of course that other central banks are independent of govt, as you suggest, and of each other.

The banks are interdependent and dependent on G7 or 8 policy. So, of course there is input and phone calls from GB. But he does not control or direct.

And GB does not control MPC once the people are appointed. That is my point. No-one would be so foolish as to be political on that committee. The MPC has a target and they will do what they need to achieve it. If anyone steps outside and becomes political a) they don't get reappointed and b ) they continually get outvoted. Everyone knows that the MPC fuc4ed up in August 2005 and Merv said so. Note they haven't recut since - Merv brought them back into line - to achieve the target and only the target.

Sometimes individuals get cold feet 'cos one of their mates loses their jobs. But they are brought back into line or not reappointed.

Never before has a trend only been one alteration in a direction. ie cut in Aug 05. Yet that is exactly what we will have next month when there is a rise. That is entirely apolitical.

fp

No-one would be so foolish as to be political on that committee. The MPC has a target and they will do what they need to achieve it

.

Every decision is political as individuals come to problems with their own set of pre-suppositions, loyalties and political agenda. It is impossible to operate in a political vacuum.

Who sets the targets? The answer is why the BoE are a puppet of central government and the Chancellor.

As I quoted above:

http://www.bankofengland.co.uk/monetarypolicy/index.htm

Monetary PolicyMonetary Policy

One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency.

Stable prices are

defined by the Government's inflation target

, which the Bank seeks to meet through the decisions on interest rates taken by the Monetary Policy Committee.

Edited July 13, 2006 by Realistbear

[Casual Observer]

One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions on interest rates taken by the Monetary Policy Committee. [/indent]

And I repeat, who do you expect to set the UK inflation target, other than an elected government? You underline the point as if to imply there's something sinister about it!

Edited July 13, 2006 by Casual Observer

[teddyboy]

Have to say, although 'OFFICIALLY' Gordon Brown does not control IR's. I think behind closed doors HE DOES. Here is a man that sets his own FINANCIAL RULES and then BENDS them coz it makes him look incompetent. This is a man that says NO MORE BOOM & BUST and will do everything to stop the inevitable BUST!

I think this government are corrupt and are masters of SPIN! Look at the health minister? The NHS is better shape now than in 1997. Then a few days laters THE NHS IS PHUCKED and in £600m worth of DEBT!!!!

I would not believe a WORD that this government says, they have proven time and time again that they are full of sh*t.

I DO HOWEVER agree with FP that RB's posts are fantastic and this 'OFFICIAL' anomoly does lose him some credability.

TB

[tinecu]

I disagree with both viewpoints here. There is a lot of steps that have

been taken to make it appear that the government controls the bank of

england. But let's face it, they do not.

Yes you can say the bank has been nationalised in 1946, and made

'independent' in 1997. All smoke and mirrors, no institution

of that size and with so much power could be truely independent.

The BOE's highest level of management is appointed by "The Crown",

a private corporation, headed by "The Queen".

If we live in a democracy, why does the queen need to 'manage' our

central bank? If she is really just for show why not take away

such immense power. After all she is unelected.

Personally I don't believe it is the queen that really controls

the BOE. More likely hidden elites that use "The Crown"

as a respectable front for their immense power.

Control and ownership mean the same thing for practical

purposes. Ownership of something is pretty much meaningless

unless you truely control whatever it is.

Oooo Dr Doom...faceless elites running the BoE?

Which tails would you suppose are wagging this dog?

Prime suspects please!

[Realistbear]

And I repeat, who do you expect to set the UK inflation target, other than an elected government? You underline the point as if to imply there's something sinister about it!

Exactly! Nothing sinister just the plain fact that the BoE are not independent.

IN the meantime, Brown appoints two more muppets:

http://www.gnn.gov.uk/Content/Detail.asp?R...mp;NewsAreaID=2

Thursday 13 July 2006 11:18

HM Treasury (National)

Appointment to the Monetary Policy Committee

The Chancellor has today announced to the House of Commons the appointments of Tim Besley and Andrew Sentance to the Bank of England's Monetary Policy Committee (MPC).

The Chancellor said:

"I am delighted that Tim Besley and Andrew Sentance have agreed to join the Monetary Policy Committee. Their extensive experience will enable them to make an invaluable contribution to the work of the Committee."

Members of the MPC are appointed to the Bank staff. However they may engage,

with the permission of the Chancellor

, in outside activities that do not present a conflict of interest.

With the permission of Gordon eh?

Edited July 13, 2006 by Realistbear

[DabHand]

And I repeat, who do you expect to set the UK inflation target, other than an elected government? You underline the point as if to imply there's something sinister about it!

Because the governement dictates this based on short term political machinations. e.g. keeping HPI going long enough to get Gordon into number 10/labour re-elected for antoher term....to the detriment of the economy over a longer term. How can you read this forum and not have picked this up, its been discussed often enough.

Note also an elected official does not equate to the best man for the job, that is a spurious argument. Hence why political control of NHS/Schools etc give rise to false targets, wasted money and poor results.