This comment was made at Macrobusiness (link may be locked – but there is a free trial available)
Unfortunately, while the end of the neo-liberal monetary policy epoch – including the outsourcing of economic management to ‘independent’ Central bankers – is crumbling before our eyes and is obvious to just about everyone who visits these pages or takes more than a passing interest in economics, that fact is only starting to be understood out in the broader economic community.
The general public have no idea. The politicians have no idea – just beads of sweat and an ongoing feeling of panic.
The best thing anyone can do is try to increase the number of people who have some understanding.
It is not impossible – once upon a time even the bell hops knew what the J curve was.
10,000,000 informed people is nothing more than 1000 people telling 100 and that 100 repeating the process.
Most Amway Diamond distributors could do that before lunchtime.
… and this
“Quite what is “neo-liberal” about much of the central bankers behaviour is something of a mystery.”
The idea that the management of the economy should be removed from government “meddling” is at the core of the neo-liberal movement towards central banker independence and de-facto management of demand with interest rates.
The neo-liberals believed the move to central bankers independence to be an advance because it removed the economy from the hands of politicians.
Unfortunately, they were mistaken because the economy is inherently political and fixing the political process is the solution and not trying to avoid it by placing economic management in the hands of a independent central banker priesthood with a limited monetary policy lever.
By trying to manage demand with interest rates – read household debt – Central Bankers have created the mess we are in and they are powerless to fix the problem. Only government has the power to reverse the mistakes and fix them.
Neo-liberals are no help because they can’t accept that completely free markets are not self regulating and a myth in any event. So they keep insisting that less regulation is the solution instead of accepting that sensible regulation is a must.
If central bankers were to manage the economy they need to control fiscal as well as monetary policy but if you are going to do that they need to be democratically elected.
Which means we are back at square one.
The elected government controlling monetary and fiscal policy.