Central Banks are not independent and often get it wrong

Please see below the slides from my lecture at All Souls College, Oxford, titled ‘There is no Independent Central Bank’:

Slide 1 – Three common propositions

The main Central Banks are independent.

They are staffed and led by experts in economies and markets which means they will get it right.

Were the politicians and government departments to have more of a role in the conduct of monetary policy it would be badly run.

The last 30 years experience demonstrates all three of these propositions are false.

Slide 2 –  Policy changes affecting the Bank of England

1997 – The Bank of England is said to be made independent. It loses control of regulation of individual major banks to the FCA. It ceases to issue UK government debt which is given to the Treasury.

1998 – new Bank of England Act to confirm changes and keep Bank of England under Parliamentary control and supervision.

2003 – Chancellor of the Exchequer changes target for inflation from RPI at 2.5% to CPI at 2%, a looser target.

2008 – Chancellor of Exchequer overrides Bank of England interest rate setting, ordering a reduction in rates as part of a concerted G7 action to rescue collapsing markets.

2012 – New government legislates again through the Financial Service Act, confirming Treasury powers of direction over the Bank in Part 4.

Chancellor signs off successive programmes of Quantitative easing which are under joint control.

Treasury guarantees Bank of England balance sheet risks in bond portfolio.

Slide 3

The government plays politics with the Bank and the Bank plays politics for the government.

The government exercises its right to select a new Governor of the Bank when needed and uses the appointment process to employ someone compatible with their aims.

The Bank usually keeps its economic forecasts close to those of the Office of Budget Responsibility and Treasury, despite these often being wrong.

The Bank backed Remain heavily in the referendum campaign, producing forecasts that were so one sided it lost a lot of support from the majority Leave side.

Slide 4 

The Fed has a dual mandate to support employment and keep inflation below target.

The Fed Chairman has to report regularly to Congress and is therefore under pressure to respond to their priorities.

The Administration appoints the Board members, subject to ratification by Congress.

The Biden Administration is busily appointing Board members that reflect Democrat priorities.

President Trump took the Fed on in  public and forced a change of policy from monetary tightening to promotion of growth.

Slide 5

The ECB does not have a single country sovereign to report to, which could make it more independent.

However in practice it is very conscious that it is a major driver of European Union and therefore has to be  very political to assist integration.

ECB President Draghi’s ‘’Do whatever it takes’’ saved the Euro and Eurozone.

The ECB’s development of the Target 2 balances system has allowed the big cash transfers needed within the Eurozone without them going through a much bigger EU budget.

Slide 6

The Bank of Japan works closely with the Japanese government.

Its long standing QE programme and low rates has been part of the government’s 3 arrows policy to boost the economy.

It has continuously failed to get inflation up to 2%.

Slide 7

The Peoples Bank of China makes clear in all its policy statements it is an arm of government

It openly supports the thought and policies of President Xi

It takes direction from  the Communist party representative on its Board and fits into the successive government Plans.

Slide 8

Slide 9 – Current inflation rate against 2% target

USA  – 7.5%

Eurozone – 5.8%

UK – 5.5%

Japan – 0.5%

Slide 10 – Three major economic disasters inspired by Central Bank advice and thinking 1990-2021

a) The Exchange Rate Mechanism collapse 1992

b) The Great Depression and banking collapse 2007-9

c) The Euro crises 2011-14

And now the Big inflation 2021-3

Slide 11

The consequences of political intervention have been mixed. Clearly Turkish override of the Central Bank and changes of Head have led directly to currency collapse and rapid inflation. Governments have debauched currencies in countries like Venezuela, Argentina, Zimbabwe where central Banks have not been able to exert more control.

In western societies the political intervention in the 2008 banking crash turned round the disastrous situation the Central Banks had created by deflating their bubble too quickly

President Trump was probably right that Quantitative tightening was too tough when he talked the Fed into a more neutral policy

Governments were right to encourage Central Banks to be very accommodative as an offset to lockdowns during the intense period of the pandemic

It is clearly true that governments are more likely to intervene helpfully when Central Banks are being too tough than when they are being too easy and risking too much inflation.

Slide 12 – Why do Central Banks often get it wrong?

The Western Banks base their work on a model of output and capacity. These concepts are flawed and difficult to measure in a complex globalised economy.

The Banks are too influenced by the consensus. The consensus rarely spots turning points.

The people on Bank Committees rarely have superior insights into markets.

Seeking judgements by Committees rarely gets it right, as Committees tend to an average or blended view. Often in markets you need to choose between two more extreme options to get it right.


  1. Mark B
    March 6, 2022

    Good morning.

    We have all heard of saying; “It’s the economy stupid !” by former President, Bill Clinton. Politicians and their parties reputations stand and fall on this simple maxim yet, but the financially incontinent have no concept of this and have no regard to the ruinous nature of their lack of control. Yes I am talking about, Alexander Johnson MP, but I equally could be talking about Gideon Osborne or Presidents, Maduro or Erdogan.

    Every politician, I argue, would like to have a Deutsche Bundesbank. And every politician would like to have an economy like Germany’s and be in power and lauded like former German Chancellor Merkel. Such is their vanity. But the truth is, like so much else, they think they (the political class) are their to lead and bask in the reflected glory of their respective economies when they do well – Witness Gordon Brown. In truth the success of Germany is down to its business and the political class their knows this. In short, I argue, the key is not about controlling interest rates, money printing or tax, it is about maintaining an environment that is good for business.

    It is business that creates jobs and wealth, not the political class. The sooner we realise this, the better we will be.

    1. Lifelogic
      March 6, 2022

      As you say the key is indeed about “maintaining an environment that is good for business. It is business that creates jobs and wealth, not the political class. The sooner we realise this, the better we will be.”

      Business just needs peace, law and order, property rights, low simple taxes, minimal regulation, small government, cheap reliable energy, a government that largely keeps out of the way… Boris, Carrie, Sunak clearly have the opposite agenda on all points and they are getting worse by the day.

      1. Everhopeful
        March 6, 2022

        I often wonder what could possibly make people act in such an irrational way.
        Group think? Mass hysteria? Fear? Several other possibilities…
        But is the controlled demolition of one’s country ( and the pain thereby inflicted) truly MORAL?
        Moral enough to allow outraged preaching to other regimes??

        1. lifelogic
          March 6, 2022

          Other influences are vested interests, paid political lobbying and often pure & outright corruption very often. Politicians who are often not remotely interested in doing the best they can for their voters just for themselves alas.

          1. Timaction
            March 6, 2022

            Indeed they are. They often exempt themselves from legislation that normal people would be prosecuted.e.g. Misconduct in Public Office. So many examples of corrupt practice over many years. Expenses, employing spouses, family etc. The whole political class and voting system needs radical reform e.g. fptp and the Lords. We deserve better. Off topic. We need a referendum on Net Zero as the fools will bankrupt us.

          2. Everhopeful
            March 6, 2022


          3. Everhopeful
            March 6, 2022

            LL Agree.

      2. glen cullen
        March 6, 2022

        We need ‘less’ government intervent, less subsidy and less tax credits

      3. Lifelogic
        March 6, 2022

        It seems, according to the Sunday Times, that the government still intend to concrete up the fracking sites we have. There is no need to do this whatsoever. Far, far better to keep the option of using them open at the very least. Better still start fracking again now. It they really do concrete these up we can safely assume the people making our energy decisions (Boris, Carrie, Hands, Kwasi…) really are totally deluded fools or perhaps just completely insane.

        1. glen cullen
          March 6, 2022


        2. Sea_Warrior
          March 6, 2022

          I hope that the Press will be there to record that act of stupidity, which would be just a week or so before energy prices leap up again. Mine will be going up by 58%! Frackable gas should be seen as our strategic gas reserve, with the taps turned on whenever open-market prices spike.

        3. Timaction
          March 6, 2022

          Indeed they are. Madness. After Russian actions we need energy independence urgently. National security trumps net zero.

        4. The Prangwizard
          March 6, 2022

          The decision to force the concreting of fracking pipes is an act of national betrayal for which someone, in this case the PM, should pay by losing his position.

          1. Lifelogic
            March 6, 2022

            +1, it is totally insane, even if they do not use the any fracked gas permanently closing of the option with loads of concrete is pure vandalism.

        5. Fedupsoutherner
          March 6, 2022

          L/L. They really are deranged. Anyone would think they don’t want to stay in power. Well they probably won’t.

      4. Ed M
        March 6, 2022

        ‘It is business that creates jobs and wealth’

        – To an important degree.
        1) The American gov played an important role in helping to create the conditions for Silicon Valley to emerge and thrive
        2) The German gov plays a role in the German car industry being able to produce great cars (at least cars that people perceive as great and buy en masse)
        3) The Israeli gov set up a special hedge fund that’s helped turn Tel Aviv in to a major world high tech hub
        And of course we need gov to support key infrastructure and to help our kids be as practically well-educated as possible (in particular, in Maths and English and practical education directly related to jobs). Also, for gov to help support the arts as the arts and business are inextricably linked (in so many different ways – both direct and indirect).

        1. Ed M
          March 7, 2022

          Also, leaders have a duty in taking leadership to protect a country’s heart & soul (including sense of patriotism which isn’t the same as nationalism). A strong economy and money (and s-x and power) are or rather can all be great but we also need a country with a heart and soul that people would be happy to defend say if we got in to a war (God forbid) like Ukraine. The Ukrainians might be a lot poorer than us but boy do they love their country! They love their people (how many in the UK actually love each other? How many people love to talk to their extended family or to their neighbours etc), land, history, culture – and religion. I know not just from seeing the news but also because I visited Ukraine few years ago – loved it.
          I want the best of both worlds (and it is possible), strong healthy economy but also a country where lots of people really like each other, where there’s a strong culture (arts, literature etc), and so on. And both are NOT mutually exclusive. No time is perfect, but look at how say the Venetians had strong family values, beautiful culture and strong economy (sure, I know they did dodgy stuff too but group of people from a particular era or place get this right either – but they were certainly more family-minded than modern man in the Western World not just the UK and had a much richer culture. Similar for Florence, Salzburg, Oxford in the old days.

          1. Ed M
            March 7, 2022

            Also, I enjoy wealth (staying at great hotels etc) but the best holiday I ever had was riding a clapped out old moped around Vietnam on like $10 a day .. We need a strong economy but at same time we need to maintain our culture etc

    2. Nottingham Lad Himself
      March 6, 2022

      Re your last line, I’d say that it’s more the will and ethos among the people in general to become educated, to skill themselves, and to be politically engaged, so as to elect governments which enable them to crystallise their potential.

      Why would anyone think that the Tories were interested in promoting that?

      They have other, far higher priorities, which conflict with it if anything.

      1. No Longer Anonymous
        March 6, 2022

        SAGE is being disbanded btw. They said relaxations against Covid would result in disaster.

        Still wearing your mask, NLH ?

        1. Nottingham Lad Himself
          March 7, 2022

          I do in shops and on public transport, like many civically-minded people.

          110 people died of covid19 during the last recorded 24 hours.

          That’s an annual rate of around 40,000.

          What has that to do with either the topic or the comment?

          1. Paul Cuthbertson
            March 7, 2022

            NLH – and you trust this info/figures!!!!!

          2. Peter2
            March 7, 2022

            Over 500,000 people die every year in the UK.

          3. Nottingham Lad Himself
            March 8, 2022

            PC, I personally knew four people who have died of covid19 before their time.

            I knew no one who has been killed by an immigrant.

    3. BOF
      March 6, 2022

      +1 Mark B

    4. Peter Wood
      March 6, 2022

      Sorry, off topic.
      To show the difference between leaders:
      Israeli PM Bennett: Statesman, getting the job done quietly and without fanfare.
      Bunter Boris: showboating, boasting and talking too much to little effect, mostly for his own benefit.
      We should have learned by now, anybody who believes and trusts Bunter is going to be disappointed.

      1. Mark B
        March 6, 2022

        An empty vessel makes the most noise.

      2. Dave Andrews
        March 6, 2022

        Russian president Putin – waging a war of genocide with a peaceful nation. That’s the different leader to be concerned about.

        1. Richard II
          March 6, 2022

          Dave, would you care to look at what your ‘peaceful nation’ was doing to its own people a few days before the Russian attack:


          This is the OSCE report of 18th Feb. 2022 on the conflict in the Eastern Urkraine. You might want to look at the maps, and consider who was being subjected to the shelling. The little blue dots show where the explosions took place.

          1. Nottingham Lad Himself
            March 7, 2022

            There’s been some trouble in recent history between two communities in Ireland.

            Fortunately, even the Tories had the sense and decency not to bomb and to shell the whole place to rubble.

  2. Ian Wragg
    March 6, 2022

    True Mark B only this government is rapidly anti business.
    They could make us all more prosperous by having our own energy supplies.
    One stupid politician said that fracking wouldn’t bring down gas prices has he not seen what’s happening in America.
    They are delighted at the high energy costs as it will bankrupt more business and reduce CO2.
    Just watch how prices will never reduce.
    They’ve learned nothing from Putin.

    1. Everhopeful
      March 6, 2022

      They’d make us more prosperous if we could prepare sandwiches in our kitchens and sell them on the streets.
      But the web of revenue-stealing and monopoly-preserving regulations ( where’s the bonfire?) make certain that many people have to rely on the State.
      Crushing enterprise, gathering in all the assets.

      And meanwhile, apparently, PP spends ££££££££s on boat(s) to rescue newcomers!

      1. glen cullen
        March 6, 2022

        They’re still coming everyday on those small boats….all young men !
        Has anyone in opposition or indeed any backbencher questioned why the government doesn’t any longer publish the daily figures ?

    2. Lifelogic
      March 6, 2022

      Which stupid politician was that? Of course it would bring down gas prices as transporting gas is very expensive. energy wasteful and produces more CO2 (if that concerns you). Anyway at least profits would be largely in the UK and the jobs in the many rich UK shale gas areas.

      But the deluded dopes Boris and Kwasi seem to think the way to reduce reliance on Russian energy supplies is more unreliable and expensive Wind and Solar!

    3. Ian Wragg
      March 6, 2022

      I see Farage is coming back into politics. Today in the MoS he makes some very important points about the net zero zealots being largely the remainer croud and how they want to destroy western democracy.
      He’s onto a winner as usual.

      1. oldwulf
        March 6, 2022


        ” …… Farage is coming back into politics’

        At last ….. someone to vote for.

        1. glen cullen
          March 6, 2022

          Hopefully….he’ll get my vote

      2. glen cullen
        March 6, 2022


      3. Mark B
        March 6, 2022


        So long as he does not stand down his candidates at the last minute, something I find hard to forgive, it is welcoming news.

      4. Nottingham Lad Himself
        March 7, 2022

        You righties really are suckers for Identity Politics, aren’t you?

    4. glen cullen
      March 6, 2022

      Businesses are very apt at reducing costs, improving efficiencies and seeking new innovations – Solar power, mini wind generators and electric vehicles have been about for the past 3 decades, but haven’t been adopted by business without taxpayer subsidy and other incentives…. renewable just aren’t cost effective…renewable are a political intervention and have no business in a capitalist society
      Comrade, I’d say they’ve learnt a lot from Putin, every day under the Boris ‘green revolution’ we turn more communist

      1. Dave Andrews
        March 6, 2022

        Renewables have their place. Hydroelectric power is very effective where it can be implemented. We have solar power right now in our living room – the sun is shining and it does a good job of warming up the house. Unfortunately the sun doesn’t shine enough in the UK, which is the problem with solar farms.
        Wind power has of course been around for centuries, but it fell out of favour when people discovered diesel engines were a more reliable source of power.
        Researching renewables is a really good idea, but until the technologies are mature, can we exploit our own fossil fuels rather than importing them?

        1. glen cullen
          March 6, 2022

          Its okay for domestic use ….not for business application

      2. rose
        March 6, 2022

        And it is very worrying, Glen, the way Comrade Gove is setting a precedent for the Labour Party when it gets in and wants to take people’s houses and money.

        Rich Russians buy nice houses, nice pictures, nice looking women etc and fast cars; but the Chinese are making serious purchases, such as ports, nuclear power stations, colleges etc. and the comrades aren’t panicking about that. Too often the comrades let the left dictate their policy to them.

        1. Mickey Taking
          March 7, 2022

          and the Russians and Chinese learn tradecraft, infiltration, hacking, theft of intellectual copyright, planning control of the stuff of technology – rare earth and minerals, invest and control in poor countries in return for an ever growing hold over them…..
          Eric Blair’s 1984 & Animal Farm becoming reality year by year. The warning of Road to Wigan Pier increasingly accurate with successive governments not taking heed.

    5. BOF
      March 6, 2022

      +1 IW.
      I heard that and stupid is not nearly strong enough with gas prices in USA only about 1/3 of ours!

  3. DOM
    March 6, 2022

    We are all conscious of the fact that politics is a cancer and politics has taken hold of CBs rendering them almost neutered and impotent in relation to their true purpose.

    Going forward, we must all become our own Central Bank and act to defend our own patch and interests in the face of Socialist onslaught that threatens to erode and finally steal our soul, our income, our assets and our home to feed the Socialist State monster that has become a threat to our very existence

    1. Lifelogic
      March 6, 2022

      The current head of the BoE while at the FCA decided to control personal overdrafts and in effect (by having a one size fits all rate of circa 40%, even 78% at one point, regardless of credit risk) virtually banned private overdrafts for sensible customers. This moronic decision alone surely shows that he is totally unfit for his job (as he clearly does not understand banking, fair competition or credit risks) the FCA is so too. The same banks only charge these absurd rates in the UK not over seas total insanity from the FCA. So just the UK tax payers who rescued them who get ripped off then.

    2. Everhopeful
      March 6, 2022

      Well said as ever!
      Will there be actual physical money though?

  4. oldtimer
    March 6, 2022

    Germany’s post WW2 recovery was helped by decisions by Erhard to provide its industry with a more favourable rate on conversion to the DM and the bonfire of regulations and controls. In the USA the rot set in when Nixon suspended convertibility of the USD to gold c1970. In 1980 US national debt was cUSD 1 trillion. Now it is close to USD 30 trillion. We have seen huge expansion of national debt in the UK and the EU. Gordon Brown sold a large chunk of UK gold reserves at the bottom of the market. It is obvious the growth of national debt has ballooned driven by political expediency to fund pet political projects and to buy votes. Central banks do as they are told to support the politicians.

    1. Nottingham Lad Himself
      March 7, 2022

      The Tories sold all our infrastructure and utilities at less than the bottom of the market.

      The difference was that they knew that, whereas no one could predict what would happen with gold.

      1. Peter2
        March 7, 2022

        You could easily predict the price of gold of Gordon’s sale because he told the market what he was going to do before he did it.
        Classic error.

        1. Nottingham Lad Himself
          March 8, 2022

          So do you think that the executive should keep secret from Parliament its intentions then?

          1. Peter2
            March 8, 2022

            He pre announced it publicly.
            He should have informed the Cabinet but not the while world.
            Seems obvious to most people.

        2. Nottingham Lad Himself
          March 8, 2022

          Only the marginal short term effect was predictable.

          1. Peter2
            March 8, 2022

            The effect was predictable and obvious.
            It was a huge error of judgment.
            It isnt a political point I am trying to score.
            If a Conservative Chancellor or PM had made those decisions I would say the same things.

  5. Everhopeful
    March 6, 2022

    Bring back Drummonds! ( Did they really have a museum? I’d love to know what happened to the contents). And banks issued their own notes..that’s independence surely?
    Banks were meant to look after physical wealth. Provide a service to those with gold and silver plate. That’s all…not to inflict misery and uncertainty on us all.

    1. miami.mode
      March 6, 2022

      Eh, even though Drummonds was based at the southern end of Trafalgar Square, it used to have a drive-in cashier point, now plastered over, with the access via Spring Gardens. None of that uncivilised queuing at an ATM! They also used to have a doorman if you felt the need to attend personally.

      1. Everhopeful
        March 6, 2022


  6. Denis Cooper
    March 6, 2022

    I realise that some might regard it as irrelevant, and others might say it is no longer any of my business now that the UK has left the EU – even though we still have various other treaties with the EU, also available to be broken by either side – but it is worth repeating that the eurozone bailouts breached the EU treaties.

    As Christine Lagarde openly admitted in an interview with the Wall Street Journal, December 17th 2010:


    “We violated all the rules because we wanted to close ranks and really rescue the euro zone.”

    “The Greek and Irish rescues – €110 billion and €67.5 billion, respectively – and the creation of the bailout fund were, Ms. Lagarde said, “major transgressions” of the Lisbon Treaty that is the European Union’s governing document. “The Treaty of Lisbon,” she says, “was very straightforward. No bailing out.””

    Even David Cameron came close to acknowledging that in a reply to Bill Cash in the Commons on December 20th 2010, from Column 1193 onwards here:


    Bill Cash:

    “Does the Prime Minister share the concern of many of us that the present financial mechanism is unlawful … Does he therefore think there are serious grounds for challenging the unlawfulness of it … ”

    David Cameron:

    “… He may have a good point. Article 122 of the treaty refers to help in the case of natural disasters and other emergencies. There are some people who question whether it should have been used in this way to support eurozone countries. That argument was had and was conceded under the previous Government … ”

    The solution was a retrospective treaty change, to which David Cameron referred here, Column 36:


    “The very limited treaty change that is about to be debated in, and hopefully passed by, the House of Commons, gets us out of the bail-out mechanism that the previous Government got us into.”

    That led to the European Union (Approval of Treaty Amendment Decision) Act 2012:


    At Angela Merkel’s urging the member state governments agreed to amend Article 136 TFEU in order to provide a secure legal base for a permanent bailout facility, the European Stability Mechanism, which treaty change was then approved by the national parliaments including the UK Parliament.

  7. Mike Wilson
    March 6, 2022

    Why are there no limits on the creation of new money?

    Let’s say, on any particular day, Bank A creates £1,000,000,000 of new money and lends it as mortgages. The people selling the properties in question all happen to bank with Bank B.

    On the same day Bank B creates £1,000,000,001 of new money and lends it as mortgages. The properties this time all happen to be owned by people who bank with Bank A.

    That night, when overnight settlement takes place, Bank B needs to pay Bank A a billion and one pounds and Bank A needs to pay Bank B a billion pounds. So Bank B settles up by paying Bank A £1 – of actual money.

    Two billion pounds of new money has been created by spending £1. That is why we have endless property inflation.

    Why are there no controls on the creation of new debt? Ever increasing house prices demand ever increasing wages (or, (given we are already globally uncompetitive), as we have seen for the last 10 years, ridiculously low interest rates.) No matter how you look at it, the unlimited ability to create money out of thin air and lend it is simply stupid. It is a short term solution that creates booms – and busts. Why do governments allow it? Because they have not hit the competence to run an economy properly.

    It is interesting to note Japan’s growth in GDP over the last 30 years compared with ours. Makes a farce of the obsession (often mentioned here) with ‘growth’. The growth we have is always fuelled by increasing consumer and government debt. It is unsustainable in the long rein and we at the end of a long run.

    1. Nottingham Lad Himself
      March 6, 2022

      Oh, so not immigration after all, then…

      1. No Longer Anonymous
        March 6, 2022

        10 million unexpected arrivals in the last 20 years, NLH.

        No change in demand for just about everything, of course. Silly me.

  8. Nig l
    March 6, 2022

    I look forward to your next presentations.

    How your Cabinet got lockdown so wrong accepting nonsense unchallenged numbers from Sage

    Ignored Putins concerns over Ukraines treatment of its Russian minority band and continued to threaten NATO encirclement

    Gave up our energy security and failed to plan leading to energy bills increasing by 50%

    Allowed an unreconstructed NHS to pour money down the drain. Read Lord Ashcrofts book.

    These would be more examples of getting things wrong for people that expected and deserved better.

    1. glen cullen
      March 6, 2022

      Its been a pretty poor decade for the Tories….and I fear its only going to get worse

  9. Atlas
    March 6, 2022

    Sir J.,

    Thank you for posting your slides – they make interesting reading. I suspect Mr. Ricardo would have agreed with you!

  10. Original Richard
    March 6, 2022

    “The people on Bank Committees rarely have superior insights into markets.”

    It has nothing to do with better governance or better decision making.

    The Civil Service and elected politicians love quangos, which includes the Central Bank, as they both use it to subvert democracy by enabling decisions and policies to be made without a democratic mandate.

    The Civil Service use quangos to give them power without the need for a democratic mandate or the need to be accountable to an electorate and the politicians use quangos to implement policies for which they have no mandate or even for policies which are contrary to their manifesto.

  11. Denis Cooper
    March 6, 2022

    Here’s an interesting article:


    “The EU should borrow together once again — this time for common defense”

    “The pandemic’s recovery fund offers a model for strengthening Europe’s military capabilities.”


    “The war in Ukraine is a turning point. It has given a new sense of purpose to NATO, reaffirmed transatlantic unity and shown that Europeans can step up in solidarity and support an embattled democracy. This moment should help us move beyond old taboos. A strong and sovereign EU is an asset for NATO, and the Biden administration should embrace tangible European ambitions. It’s time for the EU to act.”

    1. Denis Cooper
      March 6, 2022

      And here’s a chap who reckons this is sheer insanity:


      “I think all the trouble in this case really started in April 2008, at the Nato Summit in Bucharest, where afterward Nato issued a statement that said Ukraine and Georgia would become part of Nato. The Russians made it unequivocally clear at the time that they viewed this as an existential threat, and they drew a line in the sand. Nevertheless, what has happened with the passage of time is that we have moved forward to include Ukraine in the West to make Ukraine a Western bulwark on Russia’s border… Nato expansion is the heart of the strategy, but it includes E.U. expansion as well, and it includes turning Ukraine into a pro-American liberal democracy, and, from a Russian perspective, this is an existential threat.”


      “NATO welcomes Ukraine’s and Georgia’s Euro-Atlantic aspirations for membership in NATO. We agreed today that these countries will become members of NATO.”

      That would have been under Gordon Brown.

      1. Hat man
        March 6, 2022

        Yes, revealing. But I fear we can expect that NATO link to be wiped, Denis. Truth is the first casualty….

        1. Denis Cooper
          March 8, 2022

          A former British military chief asks, according to numerous sources including this:


          “does Nato fight him now or fight him later?”

          How about the third choice, avoid fighting him?

      2. Original Richard
        March 6, 2022

        Denis Cooper :

        I believe Putin is using the possibility of Ukraine becoming a member of NATO as an excuse for the invasion of Ukraine.

        The real reason is because the westernisation/democratisation of Ukraine – turning it into a capitalist country, even without EU membership, will improve the living standards of Ukrainians above those of neighbouring Russians and thus demonstrate to his own people how communism is a failure and worried this would lead to regime change.

        He therefore wants to destroy Ukraine and its economy.

        1. Philip P.
          March 7, 2022

          Living standards of Ukrainians would first have to catch up with Russians’, OR. The kleptocrats in Kiev reduced the economy to a basket case, aggravated by huge military spending to finance their war on the Eastern republics.

      3. No Longer Anonymous
        March 6, 2022

        So NATO takes in all comers – some right dodgy nations. This is effectively the West making mutual defence pacts with nations on geopolitical fault lines with some right trigger happy people in them.

        Ukraine is WW1’s Sarajevo waiting for a rogue fighter pilot from anywhere in the Eastern European area to do something silly against the Russians.

        The expansion of the EU too.

        Both NATO and the EU were only ever meant to have had compatible nations in them, away from tripwires and trigger points.

        1. Nottingham Lad Himself
          March 6, 2022

          It was the UK Thatcher government which pushed hardest of all for EU enlargement to the East.

  12. John Miller
    March 6, 2022

    Sorry to be boring, but every cloud has a silver lining.

    The defects common in the scenarios outlined in your post are models.
    What led to the (yet to be seen) disasters of Sage? Models.

    What is leading to the end of democracy proposed in 2030? Models.

    Be in no doubt that the measures proposed to enact “Zero Carbon” will change the future of humanity, but not in the way the zealots hope. People will not respond well to having their lifestyles reverted by 200 years.

    1. glen cullen
      March 6, 2022

      All based on dodgy data, false accounting and biased forecasting and prejudiced modelling……but it fits Boris green revoluition

    2. Narrow Shoulders
      March 7, 2022

      I recall that models showed that unfettered, easy immigration of low paid labour did not hold down wages too.

      Jonathan Portas – take a bow with Niall Fergusson

  13. majorfrustration
    March 6, 2022

    All good stuff but how can you support this Government – what a shower

    1. Everhopeful
      March 6, 2022

      + several trillions!

    2. Timaction
      March 6, 2022

      Indeed. That’s what shocks me. The Spartens should be far more active and vocal and demand change from Bunter to act or get out!

  14. agricola
    March 6, 2022

    I know little about central banks or the nuances of economics. However I can see banks indebting the population by printing money with little of substance to back it up. I also see them using the peoples wealth for no return while lending that same wealth to others at usuary interest rates. Banking like taxation is ready for radical reform.

    The elephant in the room today is the cost of fuel. Government is perfectly placed to do much to alleviate it, but to date does nothing. I would add that subsidies to the poor is not the answer.

    At least 20% of the domestic fuel bill is taken in Green Tax to subsidise the few who can be part of the windmill electricity generating nice little earner. Additionally VAT at 5% on ever increasing bills produces more for the Treasury.

    This is what government could do.
    1. Remove the 20% Green Tax subsidy on domestic fuel bills.
    2. Make domestic fuel VAT free.
    3. Expand gas production from our maritime gas fields
    4. Frack territorial gas fields
    5. Increase gas storage to 50% of annual usage.
    6. Sell domestic gas to all UK users at extraction cost plus a small profit. It is not there to make the big oil companies fat profits in times of crisis.
    7. Mine our own coal to serve the needs of the steel industry and electricity generation for as long as is necessary.
    8. Put in place a scheduled programme for the introduction of Modular Nuclear Reactors to generate the electrical needs of the whole of the UK.
    9. Minimise to eventual elimination of all continental interconnectors while at the same time laying one to our Channel Islands.
    10. Slowly but systematically erode all European ownership of our domestic and industrial fuel supply. It is strategically dumb, witness Germany.

    If I can work this out between a kipper breakfast and ironing a few TShirts what are our 650 MPs going to do to end this cause of major social unrest in the next six weeks, never mind the electoral suicide of 2024.

    1. agricola
      March 6, 2022

      I note that in the MOS Nigel in essence agrees with me, so what is the thinking in the RGB and the Spartans, you do not have long to make up your minds.

    2. SM
      March 6, 2022


    3. Original Richard
      March 6, 2022

      agricola :

      11. Slowly but systematically erode all Chinese ownership of our untilities, starting with with our nuclear power – the currently being built Hinkley Point C and the still to go ahead Sizewell C and Bradwell B

    4. glen cullen
      March 6, 2022

      Gets my vote and works for both the people and business in generating growth..win win win

  15. William Long
    March 6, 2022

    I wish I had been able to hear this lecture. In particular I would have welcomed an expanded expalanation of the failings of the ‘Model of output and capacity’ referred to in the first paragraph of slide 12.
    Regarding the third paaragraph of the same slide, I have always been amazed that there was apparently no better candidate available for the leadership of the Bank of England, than a former regulator with a questionable record in his previous role.

  16. Iain Gill
    March 6, 2022

    the FCA and FOS are certainly wrong

  17. Fedupsoutherner
    March 6, 2022


    Good on Nigel Farage. At least there’s someone else apart fom you John who thinks net zero is nuts and the UK can’t afford it. Worth a read.

  18. Everhopeful
    March 6, 2022

    I see that a famous Crowley car factory is shuddering to a halt because its electrical wiring comes from…………

    1. No Longer Anonymous
      March 6, 2022

      Grain soon too.

      1. Nottingham Lad Himself
        March 8, 2022

        The UK is 90% self-sufficient in grain.

    2. glen cullen
      March 6, 2022

      While we might assemble vehicle in the UK a great many of their components are sadly imported ….even if we can’t compete on staffing costs we could remove the burden of the bureaucracy of the EU rules & regulations

  19. forthurst
    March 6, 2022

    So Central banks can harm economies but not help them and by attempting to help them they frequently harm them.

    1. glen cullen
      March 6, 2022

      Classic catch22….a bit like government everytime they intervenue they make things worse

  20. XY
    March 6, 2022

    “The Western Banks base their work on a model of output and capacity. These concepts are flawed and difficult to measure in a complex globalised economy.”


    Economics is nowhere near to being an exact science – in fact it is not really deserving of being called a science at all. Even what they do have is poorly understood by those who need to understand it most (think: “productivity” and “MPs”).

  21. hefner
    March 6, 2022

    At least Sir John is consistent: 2008/03/20 ‘The banks: lend them the money’
    2008/03/29 ‘Mortgage rates’, 2008/03/31 ‘Regulators and central banks think again’,
    2008/07/16 ‘More economic pain’, then every day between around 2008/10/05 and 2008/10/13 … a delight of some kind …

    O/T Interestingly when it was a Labour government in charge we had very ‘incisive’ questions from Sir John: just taking a week in November 2007, we had them on people leaving the UK (20/11/2007), incompetent government (21 and 24/11/2007), immigration (27/11/2007), on big money politics (27/11/2007).
    Has he lost his teeth? as it looks to me that some of the problems of those days are still very much present now, and … with a Conservative government.

  22. Mickey Taking
    March 6, 2022

    off topic.
    The Archbishop of Canterbury has challenged former prime minister Tony Blair on how he handles feelings of guilt, in a series for BBC Radio 4.
    Mr Blair, a Catholic, told the Most Rev Justin Welby his faith had helped him cope with knowing people disliked him. The programme, part of The Archbishop Interviews series, included questions about the Iraq war, Afghanistan and negotiating the Good Friday Agreement.
    “I had to do what I thought was the right thing,” Mr Blair said.

    Oh!- that’s alright then.

  23. Margaret Brandreth-
    March 6, 2022

    Give business and a central bank totally free reign and it will all be about business and not people yet a few perceptive people who could see turning points and not simply safe yes people might as the words suggest turn things around. I wonder how the dynamics of money , markets and exchange can have precedence when the volatility surrounding the many scenarios needs personnel who are both business people and politicians and furthermore …listened to.

    1. Margaret Brandreth-
      March 6, 2022

      Could be the still point of the turning world.

  24. oldwulf
    March 6, 2022

    “Central Banks are not independent and often get it wrong”

    So ….. it is now time to abolish the B of E, get rid of its overpaid economists and bankers (and save ourselves a load of money) and transfer the B of E responsibilities to the Treasury.

    What could possibly go wrong ?

  25. anon
    March 7, 2022

    All for Swiss style referenda and rights of recall. Wonder why that never happened.

  26. Julian Flood
    March 8, 2022

    Abandon EPRs
    Crash programme SMRs
    Research road/rail/waterborne use of CNG.
    Current policies will fail, probably catastrophically. The only chance of getting support for Net Zero is by the gas/SMR transition.

  27. Anan
    March 11, 2022

    It looks very informative to me. Thanks a lot for that this piece of information with us.

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