[ExI] Bank of England

[dan_ust at yahoo.com]

--- On Thu, 6/18/09, Stefano Vaj <stefano.vaj at gmail.com> wrote:
> On Thu, Jun 18, 2009 at 2:57 PM, <dan_ust at yahoo.com>
> wrote:
>> "Also, I don't think his explanation need mean
>> whenever we see a state it must needs have a monopoly over
>> money.  It would mainly apply to states that were
>> threatened or felt their existence would be threatened by
>> leaving money alone.  States that aren't under and don't
>> perceive such threats, probably won't feel any pressure to
>> monopolize or, in more advanced economies, set up a central
>> bank."
> 
> Yes, but *shouldn't* it have a monopoly on money - as in
> nationalising
> the relevant central bank -

Central banks are always closely tied to the government, so I think there's little need.  They also usually provide the loans or monies governments need.  They don't, as a rule, go to "war" with their governments.  Also, central banks usually come into existence either by the government creating them (as in both Banks of US, which caused lots of chaos in the first half of the 19th century) or through granting central bank privileges to a private bank ()

> or to breach the monopoly thereof as
> Kennedy did by printing the money it needs?

Why would it need to if the central bank provides the needed funds?  I admit, a central bank and other government officials might not always agree 100%, but in most cases central banks act as the governments bank.  The clashes as such are usually clashes between different factions within the government -- think of the Greenspan years during the Clinton presidency -- than clashes between the central bank and the government.  And, were a central bank to seriously assert total policy independence, no doubt its government would either replace its board or shut it down.

Of course, we do have an historical example or two of central banks clashing with the government and being shut down: both Banks of US.  However, in both cases, these were _ideological_ clashes and those who shut the bank down (US Presidents Jefferson and Jackson) actually had anti-government-in-money sentiments.  (Of course, in both cases, the banks were funding the opposition parties.)

Regards,

Dan