Don’t
tell the boffins, but matter can be created after all. What’s more,
doing so ensures that confidence will not be destroyed. The Slog offers
a Dummies’ guide to the mathematics of conjuring something from
nothing.
By John Ward: A couple of days ago, the Bank of England did nothing. I don’t mean that everyone turned up for work and played backgammon. I mean the Bank kept both the interest rate and QE programme level completely unchanged: the rate stayed at 0.5% (almost nothing in the first place) and the level at £375bn (untold riches to you and me, but the efficacy equivalent of trying to revive a dead rhino by fanning it with a stickleback).
So with everything at close to nothing, the Bank did nothing; and within 27 minutes, the FTSE had risen 0.1%.
A proposed future role for central banks
Extrapolate that market rise forward for a given day, and the market would rise 1.6%. If a central bank can raise the capital available to business that much by doing nothing, two hypotheses land on the surface of the brain like two giant Salmon being slapped onto a fishmonger’s counter:
By John Ward: A couple of days ago, the Bank of England did nothing. I don’t mean that everyone turned up for work and played backgammon. I mean the Bank kept both the interest rate and QE programme level completely unchanged: the rate stayed at 0.5% (almost nothing in the first place) and the level at £375bn (untold riches to you and me, but the efficacy equivalent of trying to revive a dead rhino by fanning it with a stickleback).
So with everything at close to nothing, the Bank did nothing; and within 27 minutes, the FTSE had risen 0.1%.
A proposed future role for central banks
Extrapolate that market rise forward for a given day, and the market would rise 1.6%. If a central bank can raise the capital available to business that much by doing nothing, two hypotheses land on the surface of the brain like two giant Salmon being slapped onto a fishmonger’s counter:
- We do not need central banks.
- Central banks should do nothing more often.