NEWS
New ASI paper "Sound Money" features on CapX and CNBC
The latest ASI paper "Sound Money" has featured on CapX and CNBC. From CapX:
The paper which “applies a free market approach to monetary theory to critically assess recent UK monetary policy” was published by the Adam Smith Institute today.
In particular, it advocates reforms that allow: i) Punitive but open access market operations (OMO) ii) A NGDP average growth target of 2%, and iii) Free banking.
Although each of these proposals is progressively less feasible (both politically and technically), Evans argues that they are progressively more desirable.
And from CNBC:
The Bank of England (BoE) should scrap its rate-setting committee and use quantitative easing as its main monetary tool — before losing its monetary powers altogether, according to a new study.
The bank should also cease targeting inflation and instead focus on nominal (non-inflation adjusted) gross domestic product, "dissident" economist, Anthony Evans, added in the report. This was published on Monday by the Adam Smith Institute (ASI), a U.K. free-market think tank.
The time is right for sound money | Anthony J Evans writes for Conservative Home
Anthony J Evans, a senior fellow of the Adam Smith Institute, has written for Conservative Home on his latest paper Sound Money.
Should we expect policymakers to be any more successful at planning the monetary system than they are at planning other parts of the economy?Many economists fail to consider this question, so it should be little surprise that elected MPs, civil servants, and the general public have a blind spot on the issue. But the 2008 financial crisis has made matters of monetary policy highly pertinent, and there is plenty of room for improvement.
Today the Adam Smith Institute have published my new policy paper, “Sound Money: An Austrian proposal for free banking, NGDP targets, and OMO reforms”. It is a comprehensive plea for more radical thinking at the Bank of England.
New ASI paper Sound Money features on the front page of City AM
The Adam Smith Institute's latest paper "Sound Money" has featured on the front page of City AM.
A leading free market group has proposed scrapping the Bank of England’s Monetary Policy Committee (MPC) and replacing it with a rule that would trigger policy action.In a radical new paper out today that is likely to raise eyebrows among many economists and policymakers, the Adam Smith Institute (ASI) says the Bank should get rid of the MPC, use quantitative easing (QE) instead of interest rates to conduct normal monetary policy, and abandon the existing inflation target in favour of targeting nominal Gross Domestic Product (GDP), instead.
ASI report Sound Money features as lead story in the Daily Telegraph (Business)
The Bank of England should abolish the Monetary Policy Committee and dump its inflation target because the regime has been responsible for creating a century of boom and bust, a think-tank has claimed.
The Adam Smith Institute (ASI), a free market think-tank, has said in a report that the central bank’s monetary interventions have made the UK more prone to banking crises, and have caused the wider economy to become less stable.
At present, the nine-strong Monetary Policy Committee (MPC) decides on UK monetary policy. Eamonn Butler, the ASI’s director, said this group of experts had “done a very poor job of managing our money”.
ASI report "Sound Money" features on Bloomberg and the IBTimes
The latest ASI paper, "Sound Money" has featured on Bloomberg and the IBTimes. The paper, written by Anthony J Evans, calls for radical monetary policy reform. From Bloomberg:
The Bank of England should tie monetary policy to the total amount of spending in the economy and quantitative easing should replace interest rates as its main tool, according to a new research report.
In a call to scrap the Monetary Policy Committee and eventually remove the central bank’s power to set interest rates, the London-based Adam Smith Institute said the performance of nominal gross domestic product, which doesn’t strip out inflation, should become the focus of the Bank of England.
From the IBTimes:
Major public policy thinktank the Adam Smith Institute has urged the Bank of England (BoE) to move towards a 'free banking system'. The Institute has said that ultimately, the Bank should be stripped of its monetary policy powers.
Press Release: BoE must abandon inflation targeting to avoid another banking crisis, says new report
For further comments or to arrange an interview, contact Head of Communications Kate Andrews: kate@adamsmith.org | 07584 778207.
- The Monetary Policy Committee should be scrapped and replaced with a simple rule for the Bank of England to target nominal GDP automatically.
- Quantitative Easing should replace interest rates as the Bank’s main tool for conducting policy.
- In the long run, the Bank should be stripped of its powers to control monetary policy and private banks be given currency-issuing powers instead.
The Bank of England should abolish the Monetary Policy Committee, use Quantitative Easing instead of interest rates to conduct normal monetary policy, and switch from an inflation target to targeting the total amount of nominal spending in the economy, also known as nominal GDP, argues a new paper from the Adam Smith Institute released today.
The Bank should prefer a rules-based system like this to the discretionary system it currently uses but, the paper argues, it should ultimately look toward ending monetary intervention altogether. The UK’s monetary regime should eventually aim towards the ‘free banking’ systems that brought financial stability to 18th and 19th century Scotland and elsewhere.
The paper, Sound Money: an Austrian proposal for free banking, NGDP targets, and OMO reforms, is a comprehensive critique of the flaws in the way the Bank of England currently does monetary policy and offers a superior means of achieving their goals of macroeconomic stability.
Quantitative easing should be extended to the market generally rather than being an interaction with a few preferred dealers, so as to minimise distortions caused by buying from select financial institutions, it says. It should be made open-ended, with the purpose of stabilising the growth path of nominal GDP—the total amount of spending in the economy—letting the market determine how much of that nominal GDP is real output and how much is inflation.
Author of the report, Prof Anthony J Evans, concludes that, after a century of failure, it may even be time to strip central banks of their powers over monetary policy entirely entirely, and let private banks issue their own notes.
The paper takes inspiration from the free banking systems of the 19th century, especially those in Switzerland and Scotland, but also from the monetary economics of Nobel Prizewinners Milton Friedman and Friedrich Hayek, who both argued that central bank discretion tends to push the economy away from rather than towards stabilisation.
Friedman showed how the central bank’s unwillingness to accommodate massive spikes in money demand in the late 1920s and early 1930s led to the US Great Depression—and how industrial production rocketed at the fastest pace in history when Franklin Delano Roosevelt raised the money supply to meet market demand by going off gold in 1933. This has played out again in the recent financial crisis, where a free banking system would have seen less fanning of the pre-crisis flames and more water afterwards—tighter policy in the run up and easier policy during and following the crash.
The paper’s author, Prof Anthony J Evans, said:
Since the financial crisis The Bank of England have made important changes to how they conduct monetary policy - such as the introduction of Quantitative Easing and Forward Guidance - and the government have made bold interventions into the banking system. However these drastic measures have failed to identify the root cause of the problem, which is the monetary regime.
Whilst inflation targeting has been discredited, and all but abandoned, it has not been replaced by a coherent and consistent strategy. This paper not only provides constructive advice on how to reform current policy, it places this in the context of a more comprehensive programme for sound money.
If you're going to engage in QE, make it adhere to Bagehot's law. If you're going to target a macroeconomic indicator, target NGDP. But if you want to stop central banks from introducing monetary distortions in the first place, move to free banking.
ASI Director Eamonn Butler added:
The Bank of England – and America’s Federal Reserve – have done a very poor job of managing our money. They have created artificial booms, followed by genuinely painful busts, through decades of following their unreliable ‘discretion’. You cannot fly a modern economy by the seat of your pants: it's time to replace the Bank’s bumbling with rational rules.
ASI Head of Research Ben Southwood added:
With oil price shocks that lead the Bank of England to ‘look through’ first above-target, then below-target, inflation for dozens of consecutive months, inflation targeting has become extremely flexible.
We should go from this de facto abandonment and make it de jure as well, with a simple, clear goal that’s easy for markets to understand and plan based on.
Notes to Editors:
To read Sound Money: an Austrian proposal for free banking, NGDP targets, and OMO reforms click here.
The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.
Kate Andrews takes part in junior doctors debate on The Big Questions
Head of Communications and research fellow at the ASI, Kate Andrews, was on the BBC's The Big Questions debating the junior doctor strikes. Kate argues that the doctors strikes are not only unethical, but potentially dangerous.
New ASI paper "A Garden of One's Own" features in the Financial Times
New ASI report A Garden of One's Own: Suggestions for development in the metropolitan Green Belt featured in the Financial Times:
David Cameron’s efforts to raise the rate of home building will fail to solve the housing crisis, raising an urgent need to build on greenbelt land, a free market think-tank said on Friday.The greenbelt, which limits development in and around Britain’s cities, acts as a “green noose” around urban areas, the Adam Smith Institute said, pushing up the cost of living, reducing the quality of lives and harming the environment.
While acknowledging the value many people put on greenbelt land, the think-tank’s report sought to find areas of land in and around London that were close to existing transport links and of little use in providing green recreational space for residents.
The new ASI report, “A Garden of One’s Own: Suggestions for development in the metropolitan Green Belt“, seeks to provide location-specific examples of land under green belt protection which, if built over, would provide enough housing to solve the current crisis and meet all additional housing need until 2030.
ASI paper "A Garden of One's Own" featured by Bloomberg Business and IBTimes UK
New ASI report A Garden of One's Own: Suggestions for development in the metropolitan Green Belt has been featured by Bloomberg Business and the IBTimes UK. From Bloomberg Business:
Soaring demand means London and its surrounding counties will need at least one million new homes in the next 10 years to meet demand and prevent values and rentals from spiraling higher, the Adam Smith Institute research group said in a report on Friday.
Building on less than 4 percent of the city’s Green Belt, the spaces around the city where development is limited, would provide the homes needed, the report said. Almost all of the homes could be provided within 800 meters of a commuter train station, it said.
From the IBTimes UK:
Build on the green belt around London to end the housing crisis and take the heat out of rising rents and house prices, argues a new report from the Adam Smith Institute, a free market think tank.
House building in London is running at around half the level needed to meet demand as the city's population grows ever nearer to 10 million. House prices and rents have spiked because there are not enough homes. The average London house price is £531,000, says the ONS. For England, the average is £300,000, including London. Rents in the capital are up by over a fifth since 2011, well ahead of wages.
The new ASI report, “A Garden of One’s Own: Suggestions for development in the metropolitan Green Belt“, seeks to provide location-specific examples of land under green belt protection which, if built over, would provide enough housing to solve the current crisis and meet all additional housing need until 2030.
Exclusive: ASI report "A Garden of One's Own" features in the Evening Standard
The Evening Standard ran an exclusive piece on the ASI's new paper: "A Garden of One's Own: Suggestions for development in the metropolitan Green Belt".
London will turn into a “Dubai on Thames” dominated by skyscrapers for the wealthy unless restrictions on building homes on the Green Belt are lifted, the author of a report claims today.Tom Papworth, of free-market think tank the Adam Smith Institute, said the “unsustainable” policy of protecting Green Belt land from almost any development would lead to further high-rise blocks having to be built in the capital, and house prices continuing to soar.
Currently, more than 260 towers of over 20 storeys are being built or planned in London, with most providing flats for professionals and investors.
Mr Papworth said there were only enough brownfield sites left in the South-East for about a third of the estimated 1.8 million homes needed for the region by 2030 — and some open green space will have to be sacrificed.
The new ASI report, "A Garden of One's Own: Suggestions for development in the metropolitan Green Belt", seeks to provide location-specific examples of land under green belt protection which, if built over, would provide enough housing to solve the current crisis and meet all additional housing need until 2030.
Media contact:
emily@adamsmith.org
Media phone: 07584778207
Archive
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- January 2021
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- September 2013
- August 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- April 2008
- March 2008
- February 2008
- November 2007
- October 2007
- September 2007
- May 2007
- April 2007