Last week, the Bank of England suddenly pivoted. It gave up its inflation fight to rescue its pension funds and bond market. What exactly happened? And what does it tell us about the Federal Reserve’s inflation fight? Peter Schiff explained it all on his podcast.
So, budgets are tight everywhere, right? Even at the Bank of England.
Well, that’s not altogether true. It would be more accurate to say the central bank wastes a lot of money. Some government functionary got wind of it and now there’s a scramble to tighten things up over at the BoE.
Said government functionary came up with one interesting solution that would actually generate a little revenue for the bank. But there was one tiny problem with the plan.
In an article we published last week, Peter Schmidt highlighted what he called the “fatal conceit” of modern Keynesian economics. These economists, central bankers and politicians think they can plan, direct and guide the economy through their great wisdom and application of their economic models. But as economist Friedrich Hayek explained, the central planners’ arrogance ignores the knowledge problem. No individuals or groups of individuals, no matter how many PhDs they have among them, possesses the knowledge necessary to foresee all of the consequences of a given policy.
As financial guru Jim Grant once put it, “We are the prisoners of the very dubious set of pseudo-scientific pretentions that are part of the people who manage our monetary affairs.”
In a follow up to his last article, Schmidt puts an exclamation point on this idea of fatal conceit, recounting the maneuverings of Benjamin Strong, New York Federal Reserve governor from 1914-1928.