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I don't want the central bank or financial regulator to be doing macroeconomic modelling.

In the case of Ireland and Greece, were capable macro modeling of the sort I suggested performed on the "resolutions" imposed by the ECB and IMF in those cases, it would be clear what an ineffectual disaster the policies would be and that the chief result will be gratuitous damage to the societies involved via a debt-deflation death spiral. Use of such models would only strengthen the hand of the IMF, who, interestingly, seems to have been the voice of moderation in these cases, not having banks for which it is directly responsible which might take a haircut on bonds they hold.

One of the advantages of having useless theories and models is that it facilitates an Alice in Wonderland situation in which everything means exactly what the relevant authority says it means.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Dec 4th, 2010 at 12:41:44 PM EST
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But I don't want central banks to recommend structural adjustment programmes and fiscal austerity. That's none of their business. They're there to kill insolvent banks and print money for the government. That's all I want them to do. The fact that the ECB is the entity with the greatest influence on federal-level EU macroeconomic planning is a disgrace and a perversion of the proper way to run an industrial state.

The IMF is a different sort of story - they should be doing macro, and they should be doing it right. (But they should never have been involved in an internal €-zone crisis in the first place...)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Dec 4th, 2010 at 01:32:45 PM EST
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And I wholly agree with this. We need a reassertion of the political in political economy. But, given the existing presumptions, economics has to be governed entirely by its own internal rules -- no matter that this is bunk, has never an will never really work -- at least for the good of the overall society. Supposedly autonomous economics HAS been a very effective smoke screen for the looting of societies, however.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Dec 4th, 2010 at 05:06:32 PM EST
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