Has Obama proved a failure as President? | Kate Andrews argues YES in City AM

Head of Communications and research associate at the ASI, Kate Andrews, took part in a debate piece for City AM on whether Obama has been successful or not in his role as president. Kate argues that his failures regarding healthcare and his numerous foreign policy blunders are two of the main reasons he has not been successful.

As a senator, Obama promised “hope” and “change” on the campaign trail in 2007. But as President, he has presided over some of the worst gridlock Washington has seen. His pledge to unite the parties was quickly voided when he pushed through the Affordable Care Act in a direct attempt to avoid any deal with Republican leaders.

Eight years later, Americans look to elect a new leader to solve the problems Obama failed to address, and to fix the problems he has created.

Read the full debate here.

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.

Read the full CapX article here.

Read the full CNBC article here.

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.

Read the full article here. 

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.

Read the full article here.

ASI report Sound Money features as lead story in the Daily Telegraph (Business)

The ASI's latest paper "Sound Money" has featured in The Telegraph as the lead story in the Business section. The paper, which calls for dramatic monetary policy reform, was also featured on the front page of The Telegraph in a teaser for the main article.

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”.

Read the full article here.

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.

Read the full Bloomberg article here.

Read the IBTimes article here.

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.

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.

Read the full article here.

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.