The central banker’s new clothes

Project Syndicate/Robert Skidelsky

Repost from 4-21-2021

German stamp depicting the emperor's new clothes from the Hans Christian Anderson story

“The BOE claims that there is no connection between monetary and fiscal policy, and that its asset purchases are aimed only at meeting its mandated 2% inflation target. The fact that the amount of the bank’s asset purchases since March 2020 just so happens to match the government’s deficit over the same period is no more than a coincidence. To claim otherwise – that the BOE is engaging in clandestine monetary financing of the deficit – smacks of conspiracy theory.”

USAGOLD note: The Bank of England is not alone in developing an overly cozy relationship with its national government. The Federal Reserve Bank finds itself in a similar situation – though the scale is much larger, the circumstances are virtually the same. As a result, Skidelsky’s criticism reaches far beyond its intended target, i.e, the Bank of England. Skidelsky is a member of the British House of Lords and an economics professor at Warwick University.

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