{"id":27860,"date":"2017-11-11T10:57:26","date_gmt":"2017-11-11T15:57:26","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27860"},"modified":"2017-11-11T10:57:26","modified_gmt":"2017-11-11T15:57:26","slug":"the-promise-of-fiscal-money","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27860","title":{"rendered":"The Promise of Fiscal Money"},"content":{"rendered":"<div class=\"row \">\n<figure class=\"columns image image--lead image--ratio-2-1\"><picture class=\"fbg-image__element\"><img decoding=\"async\" class=\" lazyunload lazyloaded\" src=\"https:\/\/webapi.project-syndicate.org\/library\/03dc0fb8e01e94b00b76a72e7cde8b43.jpg\" alt=\"Bank of England\" data-src=\"https:\/\/webapi.project-syndicate.org\/library\/03dc0fb8e01e94b00b76a72e7cde8b43.jpg\" \/><\/picture><span class=\"image__copyright\">Nur Photo\/Getty Images<\/span><\/figure>\n<\/div>\n<div class=\"row fbg-image article__container\" data-sticky-target=\"interaction-article\" data-page-area=\"article-top\" data-sticky-offset=\"20%\">\n<h3 class=\"small-12 medium-10 medium-offset-1 large-8 large-offset-2 xlarge-7 columns article__title article__title--main u-mb-se\" dir=\"ltr\"><a href=\"https:\/\/www.project-syndicate.org\/commentary\/fiscal-money-end-central-bank-independence-by-yanis-varoufakis-2017-08\">The Promise of Fiscal Money<\/a><\/h3>\n<h3 class=\"small-12 medium-10 medium-offset-1 large-8 large-offset-2 xlarge-7 columns article__title article__title--main u-mb-se\" dir=\"ltr\"><span style=\"font-size: 16px;\">One of the few remaining sacred cows of Western capitalism is the independence of central banks from elected governments. But in an age when fiscal policy has become an essential factor in determining the quantity of money lubricating the system, an independent monetary authority no longer makes sense.<\/span><\/h3>\n<section class=\"article__body article__body--commentary english\" dir=\"ltr\" data-page-area=\"article-body\">\n<p data-line-id=\"ffbf511b8ca046188cf28e8551d72245\">ATHENS \u2013 Western capitalism has few sacred cows left. It is time to question one of them: the independence of central banks from elected governments.<\/p>\n<aside class=\"inlay inlay--slide slide__container show-for-medium editorpick-container\">\n<article id=\"editor-pick-5a05a36178b6c7636c122bc4\" class=\"listing slide \" data-url=\"central-bank-independence-in-question-by-barry-eichengreen-2017-11\" data-page-area=\"editorpicks\"><\/article>\n<div class=\"inlay__controls\" aria-hidden=\"true\">\n<div class=\"flex button__group slide__nav\">The rationale for entrusting monetary policy fully to central banks is well understood: politicians, overly tempted during the electoral cycle to create more money, pose a threat to economic stability. While progressives have always protested that central banks can never be truly independent, because their autonomy from elected officials increases their dependence on the financiers they are meant to keep in check, the argument in favor of removing monetary policy from democratic politics has prevailed since the 1970s.<\/div>\n<\/div>\n<\/aside>\n<p data-line-id=\"b733485d4ca44b8aaa7dc884d8a0e22b\">Setting aside the political controversy, central bank independence is predicated on an economic axiom: that money and debt (or credit) are strictly separable. Debt \u2013 for example, a government or corporate bond that is bought and sold for a price that is a function of inflation and default risk \u2013 can be traded domestically. Money, on the other hand, cannot default and is a means, rather than an object, of exchange (the currency market notwithstanding).<\/p>\n<p data-line-id=\"9926be9d6b6c4c58839e24196658a7a8\">But this axiom no longer holds. With the rise of financialization, commercial banks have become increasingly reliant on one another for short-term loans, mostly backed by government bonds, to finance their daily operations. This liquidity acquires familiar properties: used as a means of exchange and as a store of value, it becomes a form of money.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Nur Photo\/Getty Images The Promise of Fiscal Money One of the few remaining sacred cows of Western capitalism is the independence of central banks from elected governments. But in an age when fiscal policy has become an essential factor in determining the quantity of money lubricating the system, an independent monetary authority no longer makes [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[16969,124,16970,536,8402,6331,2921],"class_list":["post-27860","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-bank-independence","tag-central-banks","tag-elected-governments","tag-money","tag-project-syndicate","tag-western-capitalism","tag-yanis-varoufakis"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27860"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27860\/revisions"}],"predecessor-version":[{"id":27861,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27860\/revisions\/27861"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}