Re: Much ado about nothing?

To Randy, Bill, Warren:

Your position in this discussion rests upon one crucial
assumption: That the central bank is wholly controlled by the government (f.inst.
through the treasury). Then you must be against all institutional
arrangements where there ar barriers against gvt. influence on the CB, no?

In Norway the CB has in later years been gradually more decoupled from gvt.
influence, a deliberate choice made by the parliamentary majority (which I
do not believe have much understanding of economics, but who wish to do
the "modern" thing -- and to decouple the CB is "modern".).

At the same time the bank received a revised instruction on what should be
the prime goal of its operations: To curb inflation (earlier it was to keep
the exchange rate stable). This has been used very effectively as an
instrument to put downward pressure on wage demands, and on the budgets
in municipalities for education, childcare, schools, care for the elderly,
public transport, culture and similar unimportant things. The majority
politicians and gvt. ministers simply say "we can't use more money or allow
higher wages because then interest rates will increase and also the exchange
rate." They talk about this as if it was the weather, earthquakes or other
non-controllable natural events. By this the neoliberal board of the CB has now
effectively been given the role of economic policy dictator in Norway.

In Norway one may of course do something about these institutional
arrangements. But I don't think it is possible in the EU, since there are
different national governments, political systems, countries, cultures,
languages (and will remain so in the future as far as I can imagine) that share one
CB -- by EU law decoupled from any "political influence".

To conclude, I seems to me that Randy, Bill and Warren's recipes can only be
implemented in countries that are not too big, and not too split up in autonomous
sub-units. This is an extra argument against confederate-type superstates.

Trond Andresen

--
Trond Andresen <trond.andresen@itk.ntnu.no>
The Norwegian University of Science and Technology
Faculty of Information Technology, Mathematics and Electrical Engineering
Department of Engineering Cybernetics
N-7491 Trondheim, NORWAY