The Looming Test for Central Bank Independence
The Accord itself — admirably short — was published for the morning papers on Sunday, March 4, 1951:
The Treasury and the Federal Reserve System have reached full accord with respect to debt management and monetary policies to be pursued in furthering their common purpose to assure the successful financing of the Government's requirements and, at the same time, to minimize monetization of the public debt.
The striking difference between then and now is that the pressure to keep rates low is coming from central banks themselves. Guided by the belief that any bad news requires a monetary response, central banks today are assuring financial markets that rates will be low for a long time, with some engaging in “yield curve control” to explicitly cap rates farther along the yield curve. They’re expanding the money supply rapidly at the same time as governments are running large budget deficits.
It’s surprising that officials do not see inflation even as a risk.
Mervyn King Bloomberg 1 March 2021
Mervyn King's analysis of the “Great Stagnation”
https://englundmacro.blogspot.com/2019/10/mervyn-kings-analysis-of-great.html
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