It’s not like politicians mucking with credit ever resulted in disaster before, right? RIGHT? Well anyhoo, it’s happening again, as politicians of all stripes and convictions (or lack thereof) lay siege to central banks with the help of pundits and other economic experts. That prompted a moderately alarming warning from ratings agency Fitch, which notes that the advocates are pushing all kinds of not-really-banking-related agendas on the central banks.
- One popular wheeze is leaving behind inflation targeting, which was admittedly not very successful anyway, in favor of productivity targets, as with Labour’s recent proposals in the UK.
- In the U.S. a new-old idea, “Modern Monetary Theory,” suggests that instead of focusing on raising or lowering interest rates, the government should take a more decisive role in pumping up the economy by creating more money and spending it directly.
- Then, as always, there’s Donald Trump, whose recent attacks on the Fed’s decisions to raise interest rates carry enormous authority because, well, he said so. Also he is a very, very successful businessman who knows about banks and banking things.