August 7th, 2013

Wonk World Whacks Carney

The new Governor’s first big day at the office has gone down rather badly in wonk world: The IEA call it “the most dangerous development in UK monetary policy since the late 1980s.”:

“Monetary policy should be designed to ensure that we have stable prices. The level of unemployment is mainly determined by a range of factors such a labour market regulation, the benefits system, tax rates and so on. To try to use monetary policy to reduce unemployment when inflation is already above target is playing with fire and could lead us down the road that we followed in the 1970s. This move also calls into question the independence of the Monetary Policy Committee and the Bank of England’s ability to fulfil its statutory duties.” 

The Adam Smith Institute accused him of “fumbling in the dark”:

“Mark Carney had the leeway to make radical change here but he’s bottled it with baby steps… unemployment and inflation come from both aggregate demand (which the bank can control) and aggregate supply (which it has essentially no control over). Since neither of these numbers distinguish between changes in supply or demand, the Bank is still fumbling in the dark with its guesses over whether a change in inflation comes from demand (which means it should react) or supply (which means it shouldn’t). This means firms are still left guessing, and it means that uncertainty still reigns.”

Well that went well then.


  1. 1
    Wonk says:

    = You should have given the job of Governor to ME instead!

  2. 2

    ‘Fumbling in the dark’? Faces get slapped for less!

  3. 3
    Living in 97.223% white Merseyside says:

    As long as it doesn’t shake my not so solid as the Rock of Gibraltar benefits and pensions, I don’t care.

  4. 4
    Economics 101 says:

    Any single measure selected to set policy ceases to be a reliable measure on which to set policy.

  5. 5
    Gawd Help Us says:

    Yeah but surely it’s all about keeping George in a job.

  6. 6
    dai laughing says:

    monetary policy has already been set by the madness of QE

    mr carney has little to do but count his salary until he retires

  7. 7
    The EU is croques (de merde) monsieur says:

    They are right. This is the kind of idiotic policy that you would only expect from a Labour government.

  8. 8
    Hoots! It's Clown says:

    Happy to let the Governor have a copy of the five tests I prepared earlier. These ensured I put an end to boom and bust, saved the world and invested prudently, never just spent tax-payers money.

  9. 9
    Economist says:

    Keeping interest rates artificially low does serious harm to the economy.

    It prevents capitalism from working, by preventing the necessary clear out which is required periodically, and serves to keep unproductive capital alive. This prevents the reallocation required to properly restart the business cycle.

    Whilst there are arguments that keeping rates low are good for people, unless you are able to borrow at the 0.5% yourself, the benefits are not felt. This is why the economy is not booming. The money being created is not being directed to the real economy: This is an example of massive capital mis-allocation.

    Some commentators describe this phenomena as: Interest Rate Apartheid.

    Stating that rates will remain low until unemployment declines is really stating that Carney’s monetary policy is to keep unemployment at about 7%.

    Businesses will be discouraged from hiring, as they have just been told that their interest rates will increase if they increase employment.

    It is economic national suicide to continue with a monetary policy which is demonstrably draining cash from the real economy, preventing new investment from taking place whilst supply shortage driven inflation is occurring.

    It is not in the national interests of the UK to have appointed Mark Carney as governor of BoE, and this decision should be reversed sooner rather than later.

  10. 10
    Anonymous says:

    Not quite “Work World” is it — more “Right wing head banger corner of wonk world”

  11. 11
    lola says:

    Just shut the bloody thing down. It has no idea what it is doing at all.

  12. 12
    Anonymous says:

    The difference between Carney and the IEA and ASI is his decisions actually have concequences, rather than simply being press release fodder…

  13. 13
    Anonymous says:

    They’re not really wonks, they’re conservative party shills.

    Economic wonks, you professors and people who know what they’re taking about, like Simon Wren Lewis think it’s a good idea.

  14. 14
    Anonymous says:

    The evidence of his predecessor suggests that being wrong on all big economic and financial issues over more than two decades does nor preclude a peerage, so he won’t have to work very hard for that either.

    Maybe he should worry about being right and saying the opposite of the politicians – how they hate it when others are proven right contrary to their theories and preferences.

  15. 15
    Hawk says:


    Now is the time for a pre-emptive strike on the spectre of inflation.

  16. 16
  17. 17
    Observer says:

    So, foreigners enter Britain to claim benefits, unemployment goes up boosted by this immigration, and the Governor takes this as his cue to print more money.

  18. 18
    HP Printer Ink Supplies says:

    We’re really cool with Mark Carney’s approach and look forward to fulfilling his needs for outsources mass digital printing with new HP QEJet printer. We can pump it out faster than he can give to the money markets to piss away! Lets all pat ourselves on the back another day of great innovation that makes dreams happen!

  19. 19
    Spammer in Werxs says:

    Its amazing how these various institutes can always tell you what not to do but can never tell you what you should do. Note also that the economy has been around for some considerable time and all governments have learned to their cost that its much easier to fuck it up than manage it successfully.

  20. 20
    Jimmy says:

    So a thumbs down from the rightie astroturf sector?

    I like him already.

  21. 21
    Engineer says:

    From the savers of the UK (many of whom may have just a few thousand in a Building Society) and from those living on fixed incomes, thanks a flippin’ bundle, Carney. Three more years at least of being robbed blind.

  22. 22
    The natives are restless tonight says:

    … or the jo*oish spivs at Goldie Socks Inc. The warning flags went up the day Ozzie announced his appointment. Now they are waving happily in the breeze – as will be the UK economy is just a few short months with these policies.

  23. 23
    The natives are restless tonight says:

    No accounting for taste is there?

  24. 24
    Mathers says:

    What’s best for Goldman Sachs is what he’s after. What else could he possibly want ?

  25. 25
    Gordon Brown says:

    Or me.

  26. 26
    Liar.Politicians says:

    Quantitative Easing, ZIRP*, and inflation are the destroyer of economies, and Mark Carney is in love with all of it.

    * Zero Interest Rate Policy.

  27. 27
    Larry The Downing Street Cat says:

    I have watched and listened to nothing but fawning economics editors all day long.

    The interviews were so useless, they may have well been asking “Can I suck your cock Mr Carney?”

  28. 28
    Helpful says:

    Looks like we are back to the days of NAIRU: Non Accelerating Inflation Rate of Unemployment,

  29. 29
    Long John Silver's parrot says:

    Mr Carney has now told everyone that interest rates will be low until at least 2017 so you can go out and borrow as much as you like.

    Lloyds are now saying after 5 years they are thinking about paying dividends to shareholders and Mr Osborne has already contacted the professionals in the City about selling the taxpayers’ majority shareholding.

    Happy days are here again.

  30. 30
    Rob says:

    There goes that house price bubble again. Not just savers who are fucked – first time buyers too.

    Why invest in growing a risky business when you can borrow cheap money and speculate on house prices or the share market?

  31. 31
    Ed the Mac says:

    couldn’t agree more.

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