Just Your Garden Variety Four-Year Depression
Sometimes I think we should cut the MPC some slack. The UK’s demand deficiency is mostly due to the failures of the inflation target, not the MPC’s actions per se.
Then MPC members like Paul Fisher foolishly decide to open their mouths:
“For me, the key reason for restarting QE last October was the possibility that the U.K. could topple over into a deep recession again. We seem to have hopefully headed that risk off at the pass. We’ve had a couple of quarters of negative growth, but we haven’t really had a fall back into a deep recession,” he said.
“If I saw that risk re-emerging, then personally I would want to think again about restarting. If there is not that serious possibility of deflation down the road, then I think there is less impetus behind doing more asset purchases.”
Yes, we’re just in your garden variety four year long depression, Mr Fisher, but at least we haven’t fallen back into a “deep recession”. And flexible inflation targeting has now been recast as avoiding the “serious possibility of deflation”?
Professional economists have been appointed as managers of aggregate demand, with almost unlimited discretion over their choice of actions. They so lack in accountability that they feel able to make these bizarre pronouncements without fear of being immediately hounded from office. The death of inflation targeting cannot come too soon.