A Get-Together of Central Planners
Christine Lagarde, the well-baked looking leader of the IMF, was recently dragged away from her ultraviolet light arrays to put in an appearance at an event by the name of the “Michel Camdessus Central Banking Lectureâ€. No kidding, that’s what that pow-wow is actually called.
It may be remembered that Michel Camdessus was the longest-serving IMF chief, after a stint at the Bank of France. A quintessential statist establishment globalist/central planner, who would certainly not have looked out of place as the head of GOSPLAN either. He received his postgraduate degrees in economics at the Institut d’Etudes Politiques de Paris (Sciences Po) in Paris and more importantly, the traditional breeding ground of French bureaucrats and politicians, the  École nationale d’administration. He presided inter alia over the Asian crisis, and we wouldn’t be overly surprised if his name has become a swear word in places like Indonesia.
The people getting together at such meetings likely number among the biggest obstacles to sustainable economic growth in the modern age. They would undoubtedly disagree vehemently with this assessment, but the reality of the matter is that their usefulness is indeed not far removed from that of Soviet commissars. They may be intelligent and well educated, but they are tasked with doing what is literally impossible. Leaving aside for the moment that every single major central bank was founded to promote special interests, the modern-day justification of central banking has been thoroughly refuted a long time ago already.
The idea that central planners can improve economic outcomes by interfering in the market economy is utterly misguided. It is impossible for a central planning agency to even come into possession of the information and knowledge that would be necessary for successfully performing its tasks, and even if that were magically possible, it would still not be in a position to know what actions to take. Central bankers are in essence faced with a special case of the socialist calculation problem. In their particular case, the “price†that will forever remain beyond their ken is the originary interest rate.
This interest rate would prevail in an unhampered market economy (on the loan market, a variable agio reflecting the entrepreneurial profit of creditors, a.k.a. the risk premium, would be added to it), which would in turn ensure the optimal allocation of scarce factors of production. It should be easy to see that it is not possible to improve on that outcome by interfering with interest rates and the supply of money and credit. We would know this even if the evidence that central bankers have become serial bubble-blowers that are leading capitalism ever closer to the abyss were not as glaring as it obviously is.
