Interest rates are simply prices for borrowing. As with all prices, they should be determined by supply and demand in a free market. When they are fixed by a wise man, or by a wise committee, they no longer carry information about the preferences of consumers and the scarcity of resources. On the contrary, no matter how wise the dictator, interest rates set by diktat are sure to be a kind of misinformation, leading those who act on them into error.
It's time to remove the power of the BoE of its power to set interest rates. As Jamie says:
The Bank of England should not get tougher or try harder. It should give up.
And he can prove it, too.
If you haven't read Bad Thoughts by Jamie Whyte, I urge you to spend the 7 quid now and you can thank me later. The more people who read this book and learn to think, the better the world will be.
Tip of the clown wig to Samizdata.
2 comments:
It's nice to hear others say this, but 45% of people who responded to my Fun Online Poll said exactly the same.
Oh, you cunting stupid fuckwits.
National banks set interest rates in general accordance with global expectation, taking into account local and global economic situations.
Interest rates are linked to your FX rate - your currency's value against other currencies.
So, as a responsible government, you peg your base interest rate competitive enough so your net importers don't get screwed, with the balance that your net importers don't get shafted.
And then, we have the current "government" who fly in the face of that, to give short term feelgood factor, whilst shafting us irrecovably in the long term.
wv: FACTAHA
Yeah, I bet they laugh at "facts" in the buker, too.
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