Tuesday, October 28, 2008

Aargh - on that subject

I know that kicking Polly Toynbee for economic ignorance is like shooting, well a whale in a barrel, but here's another bit of elementary ignorance that ought to be caught at first bloody instance.  Such as:

Mervyn King can't admit his mistake in keeping interest rates so high for the past year as this crisis brewed. Only personal pride stops the MPC meeting immediately, confessing its error and cutting rates by 2%.

She must know that the Monetary Policy Committee has one remit: to maintain inflation at an annual rate of on or about 2%.  Surely she must know that?  And that therefore, retaining relatively high interest rates is necessary.  It is in fact another aspect of Brown's masterstroke of giving 'independence' to the Bank of England was that all the implications of setting interest rates - stimulating demand, strengthening the currency, controlling house prices and so on - were reduced to the single aim of controlling CPI inflation.  So if Polly wants to attack the fact that interest rates have been too high to stimulate demand, she should be addressing her complaints to the man who removed demand control from the agenda.

Toynbee also refers to economists that doubt whether Keynesian economics can truly work (and there are a lot of them who agree with Winston Churchill that a Government trying to borrow and spend itself out of recession is like a man standing in a bucket, trying to lift himself up by pulling on the handles) are 'neo-conomists'.  This is the most grimly anti-intellectual neologism I've seen in ages.  I expect to see it in common Guardian parlance before the week is out.

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