In a recent visit to the local library I had a look at this week’s edition of the Economist. There was a forty page section on Central Banks (government, or government backed, authorities that control the money supply – such as the Bank of England, the Bank of Japan, the European Union Central Bank, the Federal Reserve system, and so on) and couple of other articles on the same subject.
In the few minutes I spent looking at the material there seemed to be little on the money supply. Neither proper definitions of the various measures of the money supply, or information on their growth rates in the various countries over time. Of course, as an arch reactionary, I do not support the existence of Central Banks, but if was to write about them I would give most space to the primary function of these things – rather than just writing about interest rates, price rises (the modern definition of ‘inflation’), unemployment and so on. Unsurprisingly the rate of growth in the money supply may well effect these other things, but to write about them, in the context of Central Banking, without much examination of the record of various Central Banks and Central Bank like institutions in controlling the money supply is rather like writing about a room without really dealing with the elephant standing in the middle of it.
Of course there were other things in this week’s edition of the Economist, but some of this content was also rather odd. For example, we were informed that the Democrats were presently taking a harder line on controlling government spending than the Republicans in the United States.
Now it is quite true that over the last few years the Republicans, led by President Bush, have increased government spending wildly. However the Democrats denounced them for not spending enough money on X, Y, Z, over the same period. Also the article was about now, not the last few years, and presently the Democrats are pushing for vastly more government spending. Not just the Democrat candidates for President of the United States, but the Democrat controlled Senate and House of Representatives as well. These demands for more government spending are far greater than what the Republican candidates for President of the United States or the Republicans in the Senate and House of Representatives are suggesting. The article said that the Democrats support a “pay as you go” rule. But this has nothing to do with limiting increases in government spending, all it means is that massive increases in government spending should be matched by massive increases in taxation, and, sure enough, the Democrats support both.
I can only conclude that the person or people who wrote the article either do not know very much about the current situation in the United States, or do not know what the “pay as you go” rule is about – or both.
There does seem to be a basic knowledge problem in the Economist, even on British matters. For example, only last week there was an examination of the pre budget statement. It was not really a big increase in taxation, the Economist declared, – for example there were “many winners” from the changes in Capital Gains Tax.
An examination of the facts should have told the writer or writers of the article that the changes in Capital Gains Tax would mean far higher tax for most payers of it – and that this and the other tax changes did indeed mean higher taxes overall.
Why does anyone buy the Economist when it neither understands the relation of Central Banks to monetary policy or understands the fiscal situation in the United States or even its home country?