Comments by "Maria" (@maria8809ttt) on "What could the Bank of England do to support the UK economy?" video.

  1. William Mitchell - Modern Monetary Theory Macroeconomic research, teaching and advocacy. Question 1: If the central bank offers a positive interest rate on overnight reserves held by the commercial banks equal to its target policy rate, then it no longer has to conduct open market operations to ensure its policy rate is sustained (ignore any reserve requirements in place when answering). The answer is True. The first question starts with a test of basic understandings of how monetary policy is implemented in a modern monetary economy. Contrary to the account of monetary policy in mainstream macroeconomics textbooks, which tries to tell students that monetary policy describes the processes by which the central bank determines “the total amount of money in existence or to alter that amount”. The rest of this information can be found from the title above and search menu.
    7
  2. For some reason I cannot place the rest of this information without it been removed. William Mitchell's blog is excellent and free to view on line. Richard has an excellent understanding.
    6
  3. LSE did a study on the subject of the capture of economic teaching and students . I placed the information on here to another comment made. It's a really informative read. In their 1993 article – Does Studying Economics Inhibit Cooperation? – economist Robert Frank and psychologists Thomas Gilovich and Dennis Regan summarised the extant literature and conducted a series of their own experiments to explore whether there are significant differences between “economists and noneconomists” in relation to whether they exhibit sociopathological tendencies. This article is also covered.
    5
  4. It is fact, it's the way the global monetary system actually works. It's the framework that polical polacies are placed on. The Morden Monetary System is the description of all possibilities of policies. It has been permanently in place in this form since the global introduction of perminent fiat (Fiat that has always been a choice for monatery issuing sovereigns.) The system was designed with the (Gold Standard restrictions removed) after the collapse of the Bretton Woods System of the Gold Standard. The Gold Standard failed due to the inability for the state to manover quickly enough in crisis. It is working every single day and has done for many years. We all live within this monatery framework. Theory as in academic theory, such as music theory, not as in unproven.
    2
  5. The only limit private sector banks have is people able to fulfil the banks loan criteria for repayment. Even when a loan ends in bankruptcy, it is the state that holds the ultimate liability.
    2
  6. Agreed, financial regulations such as The Glass-Steagall were safty mechanisms placed on the system post THE Great Depression have been removed through Financhal De-regulation. Those need to be put back in place for starters. Unfortunately the political will has to be there. I fear it will take the mother of private sector debt breaches to bring this question to the forefront of policies. As you say, the people or the elites.
    2
  7. An LSE Centre for Economic Performance Discussion Paper (No. 1938, July 2023) Are the upwardly mobile more left wing? It found: 1. “that higher own status and higher-status parents independently produce Conservative voters.” 2. Higher own status leads to “opposition to redistribution”. 3. “individuals with the most Right-wing attitudes (and votes) are then those with high social status whose parents were also of high social status.” The problem then is that not only are the number of economists emerging from universities declining but there is also a growing concentration among males from privileged backgrounds that are liable to exhibit the sorts of tendencies noted above. Think about that in the context of designing progressive government policy. It is not an attractive future. For further information on this subject of future policy makers. It is covered by : William Mitchell - Modern Monetary Theory Macroeconomic research, teaching and advocacy. Blog on line. Titled : The decline of economics education at our universities. February 6th 2025. There I a drop down menu for the search and is free to view. Sadly, I fear for our global future without change.
    1
  8. Senior mainstream economist now admits central banks are not as independent as many believe. ,'In the 1990s, the central bank independence notion manifest in the adoption of inflation targeting as the primary policy target. ' Citizens were thus confronted with the prospect that a major arm of macroeconomic policy – interest rate adjustments – which may impact on their material well-being was being divorced from the process of political accountability' There are several reasons – political and operational – why the notion of central bank independence is a fiction. First, in almost every nation it is the elected politicians who appoint the management boards of central banks including the governors. That makes the flavour of the monetary policy boards reflective of the politics of the day. Second, in many jurisdictions, the Finance or Treasury ministers can overturn a monetary policy decision should they wish. There are various means through which this power can work. Third, and most importantly, on a practical or operational level, the central bank and the treasury functions must be closely coordinated daily to ensure that the policy targets of each are capable of being met. Fiscal policy interventions impact on the reserve balances in the cash system. Central banks manage the corridor or spread within which the short-term interest rates can fluctuate with liquidity variability. Liquidity management must therefore be performed in close liaison with the treasury department, so that the central bank can understand what fiscal injections/withdrawals are coming up on any given day and the implications for the banking reserve system. Fourth, we have countless historical examples where central bank officials have imposed their views and influence on the fiscal process.' The rest of this indepth blog can be viewed on line: William Mitchell Morden Monetary Theory. Macroeconomic research teaching and advocacy. Titled: Senior mainstream economist now admits central banks are not as independent as many believe.
    1
  9. Central banks been independent is a political myth.
    1
  10. I also gave the title and reference and blog of Professor William Mitchell one of the world's leading heterodox macro economists. I am hardly going to reference mainstream economists that are overseeing an obsolete economic model that led to the global financial crisis, and the next private sector debt breach that is imminent.
    1
  11. I referenced Professor William Mitchell's blog as it is extensive and indepth and academically acclaimed work, empirically backed. I get fed up with nonsense political rhetoric that has no base in macroeconomic reality. So I sign post to academic excellence that can enable further reading. The blog has a comment section, usually used by other macroeconomists. You are more than welcome to make your economic debate directly to the professor if you wish.
    1
  12. Back to your original point, the government retain the right to veto, So no the BoE is not independent.
    1
  13. Fractional reserve banking in currency issuing governments is a myth. That is even worse, these myths are in place to prevent good governance that you want, all private sector bank loans are created on credit requests that pass the banks own requirement criteria.All are created using 'new money'.
    1
  14. Governance and Funding/Bank of England Statement: 'We're publicly owned. We are a public body that must answer to the people of the UK through Parliament. We started over 300 years ago as a private bank with shareholders. In 1946, the Government nationalised us because of our central importance to the UK's economy.15 Jan 2025'
    1
  15. ​ @camdig4385  Partly correct. Who chooses the Governor of the Bank of England? The Monarch Who appoints the Governor of the Bank of England? The Monarch appoints the Governor of the Bank of England following a recommendation by the Chancellor of the Exchequer. It's political choice.
    1
  16. Has Richard given permission for the use of his content that your sharing?
    1
  17. There is no legal redress for goods purchased using Bitcoin, it's considered personal property, where as legal tender comes with government backed guarantees and purchasing rights. Blockchain has value. I can't see Bitcoin being much more than a bubble.
    1
  18. The BIS understand that: 1. “Central banks are public institutions with policy mandates; they typically transfer their excess profits to the fiscal authority” – so, ultimately they are part of government and inherit the currency-issuing status. The Economic and Monetary Union is a little different because none of the Member State governments are sovereign in the euro. Only the ECB has the currency-issuing capacity and France, for example, cannot order it to use that capacity. For nations such as Australia, etc, the central banks are creatures of the state. 2. For central banks “the usual concept of solvency does not apply” – they are not commercial entities that are accountable to their shareholders. 3. For whatever reason, many central banks had arrangements with treasury or finance departments in government to indemnify them against losses. What does that mean? Simply that the government will always ‘cover’ the losses in an accounting sense – numbers flowing from the left pocket of government to the right pocket. 4. Other central banks did not follow that path and “note that they are irrelevant from the perspective of the overall public sector balance sheet”. That is, explicitly recognise that the central banks are part of government despite all the claims about ‘independence’. The BIS write in this regard that: 'As central banks generally remit some or all of their profits to the fiscal authority, they are part of the “consolidated” public sector finance picture … Recent losses for a number of central banks have led to smaller transfers to the fiscal authority or none at all, in some cases probably for years to come.' Right to Left pocket or vice versa '.… central banks do not seek profits, cannot be insolvent in the conventional sense as they can, in principle, issue more currency to meet domestic currency obligations, and face no regulatory capital minima precisely because of their unique purpose.' In other words, a currency-issuing government, unlike a non-government corporation, can never run out of money. There are no financial constraints. The BIS, however, sneak this fiction into the story: ' … central banks are protected from court-ordered bankruptcy and are backed (indirectly) by taxpayers.' The taxpayers are not part of this story. Taxes reduce non-government spending capacity (among other functions – like stopping people smoking). They do not fund anything or back anything. Principally, from the macroeconomic perspective, taxes serve to create the real resource space that the government can spend into without causing demand-pull inflation. The central banks are backed by government because they are part of government – that is the reality. “These provisions allow central banks to successfully operate without capital and withstand extended periods of losses and negative equity.” The BIS provide several examples from history. But, then things fall apart The BIS then start qualifying their conclusions: There can be, however, exceptional situations where misperceptions and political economy dynamics can interact with losses to compromise the central bank’s standing. If there is macroeconomic mismanagement and the state lacks credibility, losses may erode the central bank’s standing, which may jeopardise its independence and could even lead to the currency’s collapse. No examples are given. Why? Because this is hot air. Yes, politicians might beat up the story to bring harm to other politicians. Financial markets might talk big about abandoning the currency but if the central bank holds its position then as Japan shows, the ‘market players’ lose. The Roubini-types have been forecasting hell for Japan and claim that the Bank of Japan will back down soon and accede to the market demands for interest rate rises and the abandonment of yield curve control. The full blog to this can be found on line: William Mitchell Modern Monetary Theory Macroeconomic research, teaching and advocacy. Titled in the drop down menu: Central banks accounting losses are rising but are of no importance to anything important. Economic text books need updating.
    1
  19. BoE Staff Working Paper No 845. Titled : Eight centuries of global real interest rates, R-G, and the 'suprasecular' decline, 1311-2018 I think you are referring to the date the BoE become the Central bank in 1694. The history of the BoE is quite extensive.
    1
  20. Richard is correct, you can see the graft on the title search above. Interesting reading.
    1
  21. Google the working paper titled above, you will find lots of info, I tried to link it but it wouldn't. 🙂
    1
  22. Over 40 years of the Capitalist Neoliberal Doctrine has been in place, no matter what the political administration. All governments have worked under neoliberal policy sets of restrictive direct state expenditure for the promotion of capital accumulation.
    1