Politicians Hate Monetary Dominance
The Shadow Chancellor described the decision to effectively print more money as a “last resort”, necessary because of the “complete failure” of Labour’s other measures to tackle the recession.
He told BBC News, “I don’t think anyone should be pleased that we have reached this point. It is an admission of failure and carries considerable risk.”
But rather than change course the Government has spent the last week urging the Bank of England to step in and essentially print more money. The Bank of England has been left with no choice but to step in and try to offset the contractionary effects of George Osborne’s Budget plans
But of course the reason why the Bank is having to take this new approach is because, as their report says, government policy has ‘weighed on output growth over the past three years and will continue to do so’.
And for balance so we have two right-wingers to balance out two quotes from Mr. Balls, this is Tony Abbott, August 2013 in response to the recent RBA rate cut:
“There is no doubt that a reduction in interest rates is a good thing, but you have to ask yourself why are interest rates likely to be cut,” opposition Leader Tony Abbott was quoted as saying by the ABC, ahead of the rate decision.
“If interest rates go down, it is because this government is presiding over an economy which is in much more trouble than government has previously been prepared to admit.”
I just like to document these things. Perhaps a better title for this post would be “Politicians Shouldn’t Make Central Banks Independent of Political Control So They Can Still Take Credit for Monetary Policy.”