The Not-So-Invisible Hand: Central Banks

Politicians can debate whether big government socialism or free market capitalism leads to better economic outcomes. Their voters may worry about rising prices and diminishing retirement prospects. But neither group is capable of generating money without questioning, manipulating cost prices, or resisting movements in financial markets. Central bankers are responsible — and perhaps that will change.

Even if duly elected leaders strive to make good on their campaign promises, they will face obstacles if monetary regulators, domestic and global, do not agree. What happened in Britain is a cautionary tale for countries that have entrusted central banks with the keys to economic performance. British Prime Minister Liz Trusswith her finance minister, Kwasi Kwarteng, last month announced plans to boost investment and economic expansion by cutting taxes for individuals and businesses. In the days that followed, they were verbally attacked Mark Carneya former governor of the Bank of England, for “working at a number of different purposes” with the nation’s central bank.