Corbynomics and Carneylogic

Here’s the Governor of the Bank of England’s response to People’s QE:

The issue would be imperilling potentially the achievement of price stability. The consequence of that of course would be inflationary. The people who tend to get hurt the most by inflation are the poor, the elderly, those that can’t hedge themselves – that’s been the experience throughout history and I’m sure that will be the experience in the future if the Bank of England were not to conduct policy not consistent with achieving its mandate from parliament.

Look at the first two sentences.

‘Potentially’ in this context seems to just mean ‘possibly’. ‘Imperilled’ in this context means something like: ‘to be in danger of being lost’. A loss of price stability seems to refer here to inflation (central bankers often use ‘price instability’ as a synonym for ‘inflation’, ignoring deflation as a possibility). And So Carney’s first sentence, translated into non-Central Banker language, means: ‘People’s QE might possibly create a danger of inflation’, which is a very cautious claim, hedged by many qualifiers.

Next, Carney states that a consequence of this will be inflationary. I’m not sure what the ‘this’ is meant to refer to, but the only plausible candidate in the previous sentence seems to be: ‘imperilling potentially the achievement of price stability’. So Carney is saying that a consequence of there possibly being a danger of inflation is (‘of course’) inflation.  Compare:

(1) Doing X might possibly put your house at risk of catching fire.

(2) The consequence of there possibly being a risk of your house catching fire is, of course, that your house catches fire.

From this we could conclude that:

(3) If you do X, your house will catch fire.

And so you’d better not do X, if this argument goes through, which of course it doesn’t because premise (2) is insane (the reassuring words ‘of course’ notwithstanding). Carney’s argument is parallel in terms of consequences and logical form.

You might say: ‘Ok, but Carney was just fumbling his words; what he meant to say is just that People’s QE could potentially cause inflation.’ But if he meant to make that relatively weak claim, why instead did he make one weaker one (‘imperilling potentially’) and another much stronger one (‘of course would be inflationary’). The answer is that he’s engaging in the sort of double-speak that central bankers seem to be required to perfect as part of their training. And throwing in a sort of bogus logical operator, ‘the consequence’ (it can’t be a matter of causal consequence unless potential perils can be causes), is meant to bamboozle you into thinking there is some sort of logic behind the whole derangement of utterances.

However heterodox Corbyn’s economics, it will never be as heterodox as Carney’s logic. The consequence, of course, would be claptrap.

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5 thoughts on “Corbynomics and Carneylogic

  1. mrkemail2

    “The people who tend to get hurt the most by inflation are the poor, the elderly, those that can’t hedge themselves – that’s been the experience throughout history”
    Really. Wow. Must explain the massive support from the rich for William Jennings Brian and soft money then!
    Actually there is a very good argument rich are hurt most from inflation (except land bubbes) because it creates uncertainty almost by definition for today’s “winners”:
    http://www.interfluidity.com/v2/5561.html

    Reply
  2. oblomovIII

    He’s a political animal is Carney. It goes with the job.
    It’s not an elegant argument, but then the proposal is nothing more than ‘we might try that, a bit’, which is likely less risky than £375bn QE.

    Reply
  3. Brian Stobie

    Carney’s ‘derangement of utterances’ (love that…) is what the job is all about. It’s the exact opposite of ‘fumbling his words’ – the whole derangement (or perhaps chunks of it) is carefully pre-crafted to provide a strong impression without actually saying anything that is factual. It’s aimed at economically illiterate people, i.e. 99.999% of the voting population or mainstream media reporters. It works.

    Reply

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