Why banks must be independent of ignorant politicians

Four top Republicans write an open letter to the Federal Reserve.

I have just read the dumbest letter ever. I have copied it below. It's a letter from the four top Republicans in Congress to Chairman Bernanke. It urges the Fed to do nothing because: "It could exacerbate current problems or further harm the US economy."

I have never heard such unsubstantiated tosh. It is unclear how lengthening the duration of assets held on its balance sheet could cause harm. This is a bit rich after the ridiculous shenanigans by the Republicans over the debt ceiling, which led to a downgrade. The risk of inflation is diminishing by the hour. These guys really have no idea. This really does illustrate well why central banks need to be independent of ignorant political interference.

Fortunately, the Fed will ignore them and instigate, perhaps, the $500bn Operation Twist today. It probably raised the prospects of the Fed acting as it's likely to have annoyed FOMC members who value their independence.

Dear Chairman Bernanke,

It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals. We write to express our reservations about any such measures.

Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.

It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth, or reduced the unemployment rate . . . we have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy.

Sincerely, Sen. Mitch McConnell, Rep. John Boehner, Sen. Jon Kyl, Rep. Eric Cantor.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

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How Ukip’s Douglas Carswell made himself obsolete

The brightest possible future for him now involves joining one of those sinister US think tanks.

On a muggy day in August 2014, Douglas Carswell, the Conservative MP for Clacton in Essex, defected to Ukip, saying that he hoped to see “fundamental change” in British politics. He won the ensuing by-election comfortably, becoming the first person elected to parliament on the purple ticket. The next day, in a column in the Daily Express, his new leader, Nigel Farage, asked how many more Tory MPs would follow suit: “Two, seven, ten?”

Farage wasn’t alone. There were rumours that other Tory right-wingers were poised to follow Carswell over the top. The bookies started laying odds on who would go next. In the end, just one did: Mark Reckless, the MP for Rochester, who defected on 27 September 2014, donning the chain mail and gormless expression of a particularly unthreatening crusader for an ill-judged Sunday Times photo shoot. (Reckless, unlike Carswell, lost his seat in the 2015 general election; he now fights the good fight as a Ukip member of the Welsh Assembly.)

Not only did Farage’s predicted flood never happen, it has now gone into reverse. On 25 March, Carswell quit the party to sit as an independent. This time, oddly, he seems unconcerned that the “only honourable thing” to do would be to call a by-election. Ukip, once again, is left without an MP.

The party’s grandees are delighted. Farage has dismissed Carswell, without irony, as a “Tory party posh boy”, too much of a wuss to talk about immigration. Arron Banks, formerly Ukip’s main donor, was even threatening to stand against him – an interesting approach to take to the only man ever to win your party a seat at a general election.

It’s hard to imagine that Carswell feels too heartbroken, either. He claimed that he only defected in the first place to pressure David Cameron into promising a referendum and to stop Ukip from wrecking the Leave campaign’s chances of victory. On both counts, he succeeded: the referendum was included in the Tories’ 2015 manifesto; official recognition as the voice of the Leave campaign went to the cross-party Vote Leave group, rather than the Ukip-dominated (and Banks-funded) Leave.EU. In this version of events, Carswell was never really a Ukip man at all: the reason so few Tory MPs followed him is that he made sure they didn’t need to.

So has Carswell won? He has achieved his big goal of getting Britain out of the European Union. Yet there’s a measure of pathos in this victory, because he was wrong. It wasn’t his liberal, free-trading vision of Brexit that swung the referendum. It was Banks’s and Farage’s warnings that 70 million Turks were going to move in and take over.

More than that, the tone set by the referendum has put the rest of Carswell’s agenda out of reach. The Plan: Twelve Months to Renew Britain, the 2008 book that he co-wrote with the Conservative MEP Daniel Hannan, painted a liberal picture of Brexit, all Norway model and free trade. It spoke of other libertarian pipe dreams, too: moving powers from prime minister to parliament, local democracy and (God forbid) more referendums.

This now looks quaintly irrelevant. It’s hard to see Theresa May’s newly authoritarian Conservative Party embracing these ideas. If Ukip is dying, that’s largely because the ideas that it espoused have been adopted by the governing party.

As for Carswell, he has given up any influence he once had. May, not one to forget betrayals, is unlikely to welcome him back. The Tories will probably throw everything at retaking his seat in 2020 to show that they have conquered the Ukip threat.

How the Clacton MP, aged just 45, will fill the second half of his life is an open question. His CV is not one that points towards a career as a well-paid City adviser. He has neither the passion nor the charm (nor, frankly, the looks) for a broadcast career. The brightest possible future for him involves joining one of those sinister US think tanks that talk a lot about freedom while plotting to make poor people poorer.

Carswell joined Ukip to drag it in a more liberal direction. He ended up pushing the Tories in a more Farageist one. Today, he is best described by an epithet that he once reserved for the EU: obsolete.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition