John Redwood, the Tory politician is due to make a speech in the Speaker’s Dining Room at the House of Commons on Monday 17thMarch in which he will argue against independent central banks.
Now half the point of independent central banks is to keep politicians sticky little hands off the printing press, particularly given that politicians are liable to organise pre-election booms. So to that extent, I’m all in favour of independent central banks.
Another point (and in reference to the freedom that central banks have to determine the amount of stimulus the economy gets in that they determine interest rates) is that it is perfectly feasible to keep decisions on how big a stimulus the economy should get ENTIRELY SEPARATE from political decisions like what proportion of GDP is allocated to the public sector and what forms that public sector spending should take.
And anyone who doesn’t understand how to keep the two separate should read the submissionto the Independent Commission on Banking by Prof. Richard Werner, Positive Money and others.