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Monetary Policy Implementation: Theory, Past, and Present Ulrich Bindseil
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There are three good reasons why we should not try to apply a programme of further monetary stimulus to the UK economy in the present circumstances. We can think about monetary policy choosing some level for the output gap, and tell all the stories we want about the past on that basis. (To read this article in pdf format, click here: April 14 2013). First, the UK economy is not as badly placed as the Inflation has averaged around 3.5% in the past three years – and the stimulatory policies pursued by the Bank of England Monetary Policy Committee (MPC) have added to recent inflationary pressures. OK, maybe that is too much – economists are addicted to mimicking supply and demand. Since the crisis central banks have implemented a variety of non-standard monetary policies aiming at stabilising nominal demand in the presence of major disruptions in financial markets. I can almost guarantee you that if you have taken an economics class this formula was on your first page of notes. The M*V=P*Y (the Quantity Theory of Money) framework is what many investors and economists have been working from. Public Banking would save governments hundreds of billions … enough to fund long term unemployment benefits for years … enough with current government expenditures to pay for single payer healthcare. In an Econ-101 world you hold the velocity (V) and, since we're talking about monetary policy here, the output (Y) is also constant, because monetary policy can't change the factors of production. Money as a direct claim is the commodity theory.