The Market is servant, not master because Sterling is a public monopoly and monopoly rules apply. Whether the government pays interest is entirely a policy choice. There is no reason at all for government to continue to issue Gilts or Treasury Bills, nor pay interest on them. Stopping interest payments will eliminate the interest income and forward pricing channels, causing inflation to decline faster. Moreover, it would make the implementation of a Central Bank Digital Currency that much easier. After all, there are no interest payments on physical cash. So why should there be any with digital cash?New Wayland
HM Treasury sets the price, not The Market
NeilW
1 comment:
Theoretically correct, except central bankers tend to follow what the market dictates. At least the Fed does and most other central banks follow the Fed's lead. The only one that doesn't is the BoJ.
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