We seem to take it for granted but this post by JP Koning on his Moneyness blog is a useful reminder that the reliance on Central Bank independence and interest rates as our main tool of monetary policy is a relatively new phenomenon.
The post discusses some economic policy experiments undertaken by some European countries post WW2 that took a radically different path. He also identifies some interesting parallels with the challenges we faced as we emerged from the COVID lockdowns.
Here is a flavour of the post
“In times past, central banks tended to lean heavily on changes in the supply of money, which may explain why in 1945, their main response — in Europe at least — was to obliterate the public’s money balances rather than to jack up interest rates to 25% or 50%.”
Read the whole post here
http://jpkoning.blogspot.com/2024/11/setelinleikkaus-when-finns-snipped.html
In the interests of full disclosure, I am an avowed fan of economic history but this is worth reading.
Tony – From the Outside
From the outside 