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Uncertainty Rules UK

What Mervyn King could have said yesterday:

Good people of the United Kingdom,

The Bank of England will do whatever is necessary to keep nominal demand growing along a path consistent with hitting our 2% inflation target over the medium term.  We stand ready to extend the Bank’s balance sheet by an unlimited amount, buying whatever assets are necessary to keep nominal demand growing along a stable 5% path starting from the first quarter of 2012.

Thanks, and goodbye.

What Mervyn King actually said yesterday:

… a large black cloud of uncertainty hanging over not only the euro area but our economy too …
… Complete uncertainty means that the risks to prospective investments … are simply impossible to quantify …
… the black cloud of uncertainty and higher bank funding costs …
… The paralysing effect of uncertainty, with consumers and businesses holding back from commitments to spending …
… the black cloud of uncertainty has created extreme private sector risk aversion …
… private sector spending is depressed by extreme uncertainty
… during the present period of heightened uncertainty

Well, thanks so much for that, Mervyn.

Your job, Sir Merv, is to provide certainty.  Nominal certainty.  That is what we pay you for.  That is what monetary policy is for, and why we have delegated it to your “independent” central bank.  We want you to provide nominal certainty, nominal stability.  Certainty over the future path of the price level, if you like.  Better yet – certainty over the future path of nominal incomes, nominal spending.

So please just shut the hell up about uncertainty.  Please.

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