http://www.themoneyillusion.com/?p=29425
Britmouse is back blogging with lots of interesting new posts. A short one that caught my attention discussed this story from 2010:
I saw the governor of the Bank of England [Mervyn King] last week when I was in London and he told me whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be,” Hale said in an interview on Australian TV reported by Reuters.
Of course the Conservatives were recently re-elected, and indeed slightly improved their standing because they no longer rely on support from the Liberal Democrats. BTW, I agree with this comment from Britmouse:
. . . sad to see so many true liberal voices leaving Parliament. You’ll be missed, Vince.
King headed the Bank of England in 2010. So why was his political forecast incorrect? Perhaps he thought the economy would do poorly during the period of austerity. But why would he think that? Perhaps because he’s a Keynesian, like Ben Bernanke and most other central bankers. Maybe he doesn’t believe in monetary offset. Of course there are other possibilities, maybe he thought austerity would be unpopular even if the economy did fine. But I think it more likely that he was making an implied forecast of slow growth and a weak job market. In fact growth was weak, but during 2013 the job market began improving dramatically: