Crises Managed: Monetary and Fiscal Frameworks for the Future
Michael Bordo and Harold James
View Press Release
Economic Policy has become dangerously politicized, warn Politeia's authors Michael Bordo and Harold James. Effective controls are needed to prevent inflation, spiralling public debt and public spending.
In Crises Managed: Monetary and Fiscal Frameworks for the Future Michael Bordo and Harold James explain that the problems which led to the crisis continue or have returned. Global imbalances, manipulation of interest rates, loose monetary policy, potential banking failures and public finance insolvencies threaten stability and recovery. Central banks and the financial sector as a whole are under increasing political pressure, and, because monetary and fiscal policy have become politicized, our systems are now less likely to overcome the problems than before. Moreover, high levels of public spending and activity have become the norm, but the evidence is that they cannot be financed in the long term.
The authors propose a series of robust measures for a reliable monetary order, long-term rules for the size of government - and its balance sheets - and an independent fiscal council to counter the ever greater demands of the interest groups to which governments today fall victim. The UK now has the opportunity to lead change, as it did under Margaret Thatcher in the ‘80s, and set a model for the industrial world.