Quote:
Originally Posted by Pierre
The problem is that the BoE have one tool and one tool only.
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Indeed, however it works to a Government mandated target for inflation in the good times and gets left with the only macroeconomic lever going - for wholly ideological reasons - in the bad times.
It suits the Government (as a concept - not just this one) to pretend the Bank is acting independently and play itself as a victim of circumstance. The Government wants to remove money from the economy, the Bank steps in.
The obvious alternative (taxation) gets avoided.