Central bankers' sophistry and the BoE
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Contrary to the stories we are told about the Bank of England (BoE), it is not "owned" by the Government. The BoE is a private corporation managed by its Court of Directors by virtue of the authority invested in the Court by Royal Charter.
The Government has no power to interfere in the BoE's "business". This can only be done through amendments to its Charter, and the BoE must consent to make the Charter "anew". BoE-related government legislation, such as the 1946 and 1998 Bank of England Acts, are legal constructs which the BoE permits.
The BoE allows the Government to create legislation that enhances its status as a private corporation, one with the "public" authority to make monetary policy—thus affording the BoE immense financial and economic power.
The BoE's Alleged Purpose
The BoE declares:
Our mission is to maintain monetary and financial stability for the good of the people of the United Kingdom. To do this, we provide safe, confidential and reliable banking and custodial services that underpin our responsibilities as banker to the UK Government.The BoE provides services to the Government. It "acts" as the Debt Management Office's "agent" for settlement of its debt securities (government bonds). The BoE also "acts" as the UK Treasury's "agent", holding its gold and other assets.
The current governor of the Bank of England (BoE), Andrew Bailey, has blamed British inflation on many and varied people. He blamed workers and their unions for calling for wage increases. More recently, he blamed businesses for increasing prices, as they try to absorb the rising costs that result from inflation.
The BoE, like the Government, uses the Consumer Prices Index (CPI) to measure inflation. The CPI does not provide a true reflection of the real impact of inflation and only partially records the effect of inflation. Nor does the CPI tell us anything about the cause of inflation.
Inflation is primarily caused by the monetary policy that is firmly under the control of the BoE. In 1951, the economist Ludwig von Mises said:
Inflation, as this term was always used everywhere and especially in this country [the United States], means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term “inflation” to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise.Bailey is among the many modern "financial experts" who conflate the effect of inflation—rising prices—with its cause, monetary expansion. In his most recent letter to the chancellor of the Exchequer, Andrew Bailey wrote:
The increase in CPI inflation in the aftermath of the pandemic mainly reflected large increases in global energy prices and other tradable goods prices. [. . .] Russia's invasion of Ukraine [. . .] greatly exacerbated the rise in energy prices as well as wholesale prices of many agricultural commodities. [. . .] These external factors continue to add significantly to inflationary pressures in the United Kingdom[.]According to Bailey, sterling inflation mainly reflects the impact of "external factors". The BoE's—and Bailey's—eagerness to blame anyone and anything for current inflation, except the BoE's own monetary policy, is utterly at odds with its own stated purpose.
The BoE's Monetary Policy Committee (MPC) lays out its alleged responsibility:
Monetary policy affects how much prices are rising—called the rate of inflation. We set monetary policy to achieve the Government's target of keeping inflation at 2%. Low and stable inflation is good for the UK's economy and it is our main monetary policy aim.Again, according to the BoE, it controls monetary policy and it is this—not so-called pandemics, wars or wage demands—that "affects how much prices are rising". Suggesting that it can control inflation, the BoE declares that managing inflation is in fact its "main monetary policy aim".
While quick to take credit for on-target, stable inflation, the BoE points the finger at everyone else when the situation deteriorates. It both claims that it can control inflation and that inflation is beyond its control.
Currently, the BoE is seemingly failing to "maintain monetary and financial stability". If it can't perform its primary function, what use is it? On the other hand, if it is capable, then perhaps we should entertain the possibility that it is deliberately trying to destabilise the economy. Either way, it hardly appears trustworthy.
The "Public" Bank of England Contradiction
The narrative we are given, claiming that the BoE is a "public corporation", is an attempt to obfuscate using a meld of contradictions. When we examine these inconsistencies, the idea that the BoE is a "public" body becomes untenable.
The BoE was incorporated by Royal Charter in 1694. It is registered at Companies House as RC000042.
A corporation is a juridical person. The BoE is a legal entity, in its own right, able to act in its own interest.
The British Government's central ministry and the de-facto repository of many Crown powers, the Cabinet Office, defines public corporations in its Classification of Public Bodies as:
[. . .] market bodies controlled by either Central Government or Local Government.A public corporation is distinct from other incorporated bodies because it is "controlled by Government". In the UK, the Office for National Statistics lists the BoE as just such a public-sector financial corporation.
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More:
When it comes to fraud, linguistic traps, double meanings, jokers, jests and legal word-play look to the British
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