Home Economics It's Not Certain That Aditya Chakrabortty Reads His Own Pieces

It’s Not Certain That Aditya Chakrabortty Reads His Own Pieces

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It’s not possible to be certain here but it is Aditya Chakrabortty who writes The Guardian’s economic editorials. Which means that we can place the blame for this one at his feet:

If he succeeds, Mr Biden will go some way to repudiate the conventional economic wisdom that argues that if governments keep borrowing too much, they risk defaulting, will end up printing money and be forced in a panic to put up interest rates. The pandemic revealed this to be bunk. Central banks can keep interest rates low by buying government bonds with money created from thin air. Last year, they bought 75% of all public debt.

Printing lots of money shows that government doesn’t end up needing to print lots of money?

Gosh, that’s interesting.

Central banks are creatures of their legislatures, but have been permitted, for ideological reasons, to work without a social contract. In her recent paper, Revolution Without Revolutionaries, the economist Daniela Gabor warned that unelected technocrats must not be allowed to hand politicians reasons to adopt external constraints that can be blamed for unpopular policies. It is timely advice. The UK will have record peacetime levels of debt. Rishi Sunak says such borrowing is “unsustainable”. Yet UK gilts are a risk-free financial asset, which is why banks crave them.

No, he’s really not reading his own piece, is he?

The reason for central bank independence is that no bugger believes politicians when they say we’ll print just this much money and only that much. Or set interest rates so as to kill off inflation. Given that lack of belief in political constraint the job has to be handed off to those that might gain credulity.

But banks crave gilts, do they? That’s why the central banks have been buying 75% of them?

Seriously, how can you believe both things? That banks just lust after more gilts but the Bank of England has to buy them because no other bugger will?

The inequality, financial instability and ecological crises have multiple causes, but their existence is built on radical, free-market economics.

Really? Global inequality has been falling these recent decades of neoliberal victory. Because of neoliberalism too. The idea that the ecological crisis was or is caused by free-market economics rather runs into the ecological state of the Soviet Union. Try swimming in the Aral Sea to test that one.

But to return to that base question above. How an anyone insist that banks want gilts when the Bank of England has to buy them?

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