Comments on: Easing the squeeze - make the Bank more independent http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/ Conservative Party Member of Parliament for Wokingham Sun, 12 Oct 2008 07:10:18 +0000 http://wordpress.org/?v=2.6.2 By: Matthew http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15595 Matthew Tue, 18 Dec 2007 17:15:47 +0000 http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15595 Come on, this is misleading as to the final liability. Northern Rock has assets (its mortgages) worth over Come on, this is misleading as to the final liability. Northern Rock has assets (its mortgages) worth over

]]> By: money market savings accounts » Easing the squeeze - make the Bank more independent http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15594 money market savings accounts » Easing the squeeze - make the Bank more independent Tue, 18 Dec 2007 17:02:14 +0000 http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15594 [...] Check This Out! While looking through the blogosphere we stumbled on an interesting post today. Here's a quick excerpt: The misnaming of these reforms as creating an independent Bank of England [...] Check This Out! While looking through the blogosphere we stumbled on an interesting post today. Here’s a quick excerpt: The misnaming of these reforms as creating an independent Bank of England

]]> By: Stuart Fairney http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15569 Stuart Fairney Tue, 18 Dec 2007 12:03:35 +0000 http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15569 JR This is becoming deeply worrying, can you tell me how much each UK income tax payer has effectively lent Northern Rock at Darling's behest and what our final liabiity might amount to ? Reply: As taxpayers have now lent or guaranteed over JR This is becoming deeply worrying, can you tell me how much each UK income tax payer has effectively lent Northern Rock at Darling’s behest and what our final liabiity might amount to ?

Reply: As taxpayers have now lent or guaranteed over

]]> By: Tony Makara http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15560 Tony Makara Tue, 18 Dec 2007 11:26:52 +0000 http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15560 I must admit to be very nervous about the idea of central banks increasing the money supply. Liquidity is of necessity, but is there not a danger that inflation will result? With interest rates falling, the pound will fall with it, this combined with artificially created liquidity provides all the ingredients for inflation. On the subject of BOE independence, its a good idea in theory, but if government is to have a macroeconomic policy it must surely have a degree of imput into BOE operations? How could the government of the day have any sort of economic strategy if the BOE ran the whole show? Plus there is the question of accountability. To my mind a better policy would be to have a corporate-state style economic body made up of politicians, captains of industry, academic economists, and central bankers. All working to determine the best economic course for the country to undertake. Reply: Inflation is likely to rise in the short term because of past mnonetary excess. In the medium term this credit crunch is severe so I do not see an inflaitonary threat. The Bank in my proposed model has to follow government policy - the government sets the inflation target, chooses tax rates, and sets the budget. I must admit to be very nervous about the idea of central banks increasing the money supply. Liquidity is of necessity, but is there not a danger that inflation will result? With interest rates falling, the pound will fall with it, this combined with artificially created liquidity provides all the ingredients for inflation.

On the subject of BOE independence, its a good idea in theory, but if government is to have a macroeconomic policy it must surely have a degree of imput into BOE operations? How could the government of the day have any sort of economic strategy if the BOE ran the whole show? Plus there is the question of accountability. To my mind a better policy would be to have a corporate-state style economic body made up of politicians, captains of industry, academic economists, and central bankers. All working to determine the best economic course for the country to undertake.

Reply: Inflation is likely to rise in the short term because of past mnonetary excess. In the medium term this credit crunch is severe so I do not see an inflaitonary threat.
The Bank in my proposed model has to follow government policy - the government sets the inflation target, chooses tax rates, and sets the budget.

]]> By: Matthew http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15550 Matthew Tue, 18 Dec 2007 10:16:59 +0000 http://www.johnredwoodsdiary.com/2007/12/18/easing-the-squeeze-make-the-bank-more-independent/#comment-15550 The news today that the Treasury is going to guarantee more of Northern Rock's deposits is another step on the road to nationalisation, but also exposes the problem with your suggestion the other day that lending 1/3rd is better than full nationalisation - it's not a steady situation. Reply: Today's announcement is a bad move. My proposal is for the Bank to act as a tough bank manager. That would work. The news today that the Treasury is going to guarantee more of Northern Rock’s deposits is another step on the road to nationalisation, but also exposes the problem with your suggestion the other day that lending 1/3rd is better than full nationalisation - it’s not a steady situation.

Reply: Today’s announcement is a bad move. My proposal is for the Bank to act as a tough bank manager. That would work.

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