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View Diary: Guess Who’s America’s Largest Creditor (Hint: It’s NOT China) (160 comments)

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  •  Wrong! (1+ / 0-)
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    The Bank of England is a separate institution from government - possibly more so than the Fed. It (or rather its economic committee) sets interest rates monthly and controls lending, using Quantative Easing if necessary. It has an overall brief which includes managing the economy and has targets set in the Monetary Policy Framework  

    I'd also point out that the US dollar is being "managed by unelected bankers".

    "Come to Sochi, visit the gay clubs and play with the bears" - NOT a Russian advertising slogan.

    by Lib Dem FoP on Mon May 26, 2014 at 06:52:49 AM PDT

    [ Parent ]

    •  That's a relatively recent development, though. (0+ / 0-)

      And I think it is effectively true: tl;dr skip the next two paragraphs.

      It was one of the first acts of the New Labour (Blair) government in 1997, and was a pretty much direct reaction to the consequences of the mortgage interest rate increase the Conservatives used in 1992 to try to stay in the European Exchange Rate Mechanism (ERM) a precursor to the Euro, or at least an attempt to bring about currency stability in Europe. The BoE is mandated to keep inflation low (at 2%), in line with conventional economic wisdom.

      That is an arrangement which, despite widely-accepted propaganda, benefits investors over workers. Inflation rises well above the limits set for the BoE could be dealt with by wage increases without imposing hardship. And low inflation has hardly brought low unemployment. In so far as there was high(er) employment for a time, it was a side-effect of the personal debt bubbles. That is true in the US and UK, and elsewhere. It looks to me like Germany is expanding one at the moment, which is part of why they are (for the time being) the most influential economy in Europe.

      It should also be mentioned that the BoE is a non-profit institution. It does not have shareholders, and was set up to execute policy. It is not the same as other banks, and in a very different category. In that sense, it is quite true to say that the "UK ha[s] opted not to cede responsibility for the currency to the banks".

      I agree that the Fed is greatly influenced by financial institutions. The degree to which that has been true has varied over time, however, and is a reflection of govt policy.

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