The FT reports this morning that:
Norway's central bank governor has sounded the alarm about the dangers of keeping interest rates very low ahead of any new downturn.
Oystein Olsen, governor of Norges Bank, used his annual speech to leading Norwegian political and business figures on Thursday evening to stress that further negative shocks “would be very untimely” for some European economies, warning: “The policy space available for coping with a new downturn is limited.”
In an interview with the Financial Times, he added: “There is a worry generally that if things should turn around in a negative direction while interest rates in Europe are so low, it is a challenge.”
Sometimes I despair.
Has he not heard of fiscal policy?
Or the Green New Deal?
What we are limited by is the limited brainpower of central bankers.
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I think that we should seriously consider that rather than seeing a lack of intelligence being on display here, we are actually seeing a deliberate muddying of the waters – lies even – in order to promote a certain way of thinking.
It’s the same sort of thing we have seen concerning BREXIT, where the Leave campaign is the actual ‘Project Fear’ component – not Remain.
Of course Olsen has heard of ‘fiscal policy’ and ‘GND’. That is why he must take part in perpetuating what is known to be wrong. Fiscal policy and GND threaten the status quo and his job as he sees it is to protect this.
I agree, I think seeing this as incompetence or ignorance lets him off the hook. It’s the same with the tories’ economic decisions. When people say they’re mishandling the economy, I think they’re making the same mistake. What they’re doing is deliberate and calculated. If,like you say, that is the case, then it allows us to see the actual purpose, like you describe, which is to create a certain view, for self-serving purposes.
What a pity, I always thought of Norway as quite a progressive country. Why bankers there are worried when they have huge oil revenues is strange to say the least, even if there is a global “downturn” or worse…………
Bill,
Norway is a progressive country but for some reason the central banks of Sweden and Norway are persist in being an exception to that tendency.
BTW Bill,
Norway’s oil revenues a re sequestered in a Sovereign Wealth Fund that is dedicated to providing for future generations. It also keeps the revenues offshore to prevent Dutch Disease effects.
https://www.investopedia.com/terms/d/dutchdisease.asp
Marco
I think that most central bankers are of the same view wherever you go. Their job as they see it is to promote conditions for so called ‘free markets’ to exploit. So, by raising interest rates, there is going to be economic destruction and cheap pickings for buyers/vulture funds. That to me is their version of a normal and productive day at the office.
Central bankers are the biggest latent threat in any progressive country in my view. They’re the snakes in the grass and every country seems to have one. For all we know Norway has appointed someone like this who is just signalling to the Davos set that he is one of ‘them’ in order to keep powerful forces away from its economy.
We should always pay particular attention to the people who are appointed to such posts – especially their previous posts which seem to be from the private sector. For example some of those in charge of the ECB were/are ex Goldman Sachs. Our man in London – Mark Carney is GS alumni.
Why? It’s a negation of sovereignty and democracy in my view to have private banking people run a nations’ finances. The question has got to be ‘Who’s your daddy’?
What Olsen is saying is that if you take interest rates out of policy options for dealing with the many and various economic challenges you are removing a key component of strategy formulation. In fact a bit like a Viking forgetting his shield. Given that Norway is a small country in terms of population and overall economic power his country’s situation is very different from those of the major European and other nations.
Look on the bright side….obeisance to papal infallibility is looking a bit shaky nowadays in some quarters.
The enlightenment may soon be upon us.
Anyone wgo saw the recent BBC2 programme “Inside Europe: 10 years of Turmoil” will not be surprised by this.
I watched gobsmacked at what came over as an absolutely classic case of “the economy is run for the bankers, and people are expendable”.
And as regards the treatment of Greece, with Germany demanding the last drop of its pound of flesh, even to suggesting privatisation of the Parthenon, with none of the privatisation funds to be ploughed back into the community = Washington Consensus on crack cocaine or smack – well, remembering ALL Germany’s Nazi- created debts were written off after the War, Jesus’s parable in Matthew 18, vv 23 to 35 comes to mind
You know, the one about a servant who had a debt of millions (10,000 talents) written off, and who proceeds to throw a fellow servant in prison for a debt of 100 denarii sprang to mind.
Germany should hang its head in shame. But, of course, Germany had the World Bank, the IMF and the USA and the whole EU/ECB behind it. Shameful.
PS: apparently, Schäuble wanted to use Greek repayments and other money to pay off the WHOLE of Germany’s National Debt!! The mind boggles.
My God,
Some of them are still persisting with this rubbish of wanting to put rates up so they can bring them back down again in a downturn – without facing the obvious irony – being that putting the rates up might actually cause a downturn.
You can earn a very good salary from being silly apparently.
This bizarre little paradox contest is a pure symptom of denial. With interest rates being near the Zero Lower Bound for 9 years it has become apparent that monetary policy is no longer effective and with monetary policy being core to neo-liberalism, both are fading into extinction.
9 years or not, some of those involved just can’t come to terms with that. So they pop up every now and then and make silly little noises about rate hikes just so we know that they are still there (with or without a purpose).
Staggering, isn’t it?
He could get a job as a fund manager
‘ It is difficult to get a man to understand something, when his salary depends on his not understanding it ‘ Upton Sinclair. It’s quite obvious that the heads of central banks, the world over , have seen their importance disintegrate over the last ten years; unsurprisingly given the fact that we have a zombie financial system as a result of the bail out of the worthless assets of the banks and the backstop of ‘ too big to fail ‘ allied to the fantasy that by financialising anything and everything ( or at least pretending to do ) we would all arrive on the sunlit uplands of the creation of unlimited wealth. Capitalism as a system was effectively dead in 1945, but it has been supported throughout the last seventy plus years by government . I don’t say this as some Lefty damn it . I say it because it’s true.
‘Some of them are still persisting with this rubbish of wanting to put rates up so they can bring them back down again in a downturn — without facing the obvious irony — being that putting the rates up might actually cause a downturn.’
10/10 Marco.