Drudge Headlines BOE Ignorance

This is a screen shot from Drudge yesterday afternoon:





Seems Mervyn King, current governor of the Bank of England, thinks that Greece, a currency user, is in the same position wrt government "debt" as the USA, a currency issuer.

Drudge linked to a UK Telegraph article here. Excerpt:

"America, and many other large economies including the UK, share some of the same problems as Greece with its public finances: Every country around the world is in a similar position, even the United States; the world’s largest economy has a very large fiscal deficit. And one of the concerns in financial markets is clearly – how will this enormous stock of public debt be reduced over the next few years?

Hey, Merv, how about by changing policy to simply redeem the Treasury Securities and let the current bondholders retain their balances in a a bank account instead? That certainly would reduce the stock of "debt"! It continues:

"And it’s very important that governments, both here and elsewhere, get to grips with this problem, have a clear approach and a very clear and credible approach to reducing the size of those deficits over, in our case, the lifetime of this parliament, in order to convince markets that they should be willing to continue to finance the very large sums of money that will be needed to be raised from financial markets over the next few years, at reasonable interest rates."

Merv, you're the head of a Central Bank, your job is to set the interest rates. Interest rates will neither be "reasonable" or not, they will be where you set them.

This type of commentary from a central banker is very discouraging. He shows little understanding of the true authorities of his civil service position, and correspondingly he is ignorant of the range of actions he can take that perhaps would be in the better interest of the broad population of citizens he is supposed to be working for. Can we get some qualified people in these positions for a change?

The author identifies himself as the economics editor of the Telegraph, he writes:

"It isn’t often one has the opportunity to get such a blunt and straightforward insight into the thoughts of one of the world’s leading economic players. Most of this stuff usually stays behind closed doors, so it’s worth taking note of."

It isn't often one gets the opportunity to witness such butt-kissing of a public official by a supposed editor/journalist. Maybe that is what is necessary these days to gain journalistic access to these public "servants".