A reversal of belief in central banks is healthy
Central banks are reliably good at only two things: creating money to finance panics; and providing cheap finance to the governments of which they are a part. The success of all their other efforts is strictly limited by their necessarily inadequate knowledge of the uncertain, indeed unknowable, future. In the same edition of the FT (“China’s central bank chief breaks silence”), PBoC governor Zhou Xiaochuan says something much more sensible: “The central bank is neither God nor a magician who can turn uncertainties into certainties.” He’s right. Any longing for central banks to be gods or magicians or maestros is vanity and trying to catch the wind.