Mark Carney, to take over Governorship of the Bank of England next summer, is the first foreigner to be appointed in the entire history of the Bank. When the post was discussed at the Adam Smith Institute last summer, Carney was the ASI’s favoured candidate, but we dropped the idea when he ruled himself out. It seems he has leaned one thing a Governor needs to know, which is how to use words to influence events.
We supported him as probably the best candidate to perform an impossible job. He had a good record in Canada, which weathered the financial storm better than most. He has sound views on controlling inflation, and on controlling public spending rather than distributing a largesse of newly printed and borrowed money.
His basic problem remains that the system of centralized control of a monopoly fiat currency may not be up to the task of servicing a modern economy without the wild swings induced by political oversight. Competing currencies, some commodity-backed, and with market interest rates, might be a better model. Carney would indeed go down in legend if he were able peacefully to transform the one system into the other. This is unlikely, so given an impossible job, it’s better to choose the man with the right instincts.
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