Article by Jeremy Warner for the Telegraph 07.08.21 - The big test of central bank independence is fast approaching
If it looks like a duck, swims like a duck, and quacks like a duck, then...Uncharacteristically, Andrew Bailey, Governor of the Bank of England, almost lost his cool when announcing his latest economic forecasts last week on being challenged over whether “quantitative easing” amounted to monetary financing of the Government’s increasingly insatiable borrowing needs.
With the lessons of the Weimar, Zimbabwean, Argentinian and numerous other hyper-inflations seared on every central banker’s consciousness, to be accused of printing money for government spending is for a central bank to be charged with a form of original sin.
Once the central bank goes down that road, it’s essentially all over. Markets will soon clock what’s going on, and vote with their feet. The consequent flight of capital will cause the currency to collapse, driving up inflation and interest rates in a way that eventually renders the means of exchange all but valueless.
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