Skip to main content

Central Bank independence

It was my twitter feed that first alerted me last weekend to the news that Zambia's President had forced the central bank head in that country out of office and vowed lower interest rates.

Good for twitter! this is proof of its value -- the value of net based social media generally -- in tailoring news.


In old-fashioned dead-tree newspapers, whence most of my news used to come (until very recently) the goings-on in Zambia would have been tucked into a small item very deep in the paper, if it was deemed fir to print at all by the papers in the "developed" world.

But in fact, I deem it an important, perhaps the biggest one coming at us that day, and I'm glad to have received it when I did.

One of the significant facts about the story is that it dramatically demonstrates that central banks are only independent of the executive offices of a country when they are allowed to be independent by those executive offices. In other words, they aren't really all that independent. This in fact was the gist of the first tweet I encountered on the subject. Allen Mattich tweeted, "Does anyone every [sic] have any illusions about central bank independence in Zambia?" That inspired me to look at the item he was re-tweeting and commenting upon, and eventually to go to an actual news site (Bloomberg's as it happens) to look this up.

Something else that makes this significant is the guy who has stepped in as the new chief central banker in Zambia. The fellow whose photo you see above. Here is the URL to that Bloomberg story.

Denny Kalyalya takes over. He is a former governor of the World Bank. Just in case I have among my readers any developed-world chauvanists who think Zambia is an irrelevant backwater. In the 21st century economy there are no backwaters. Everybody is interconnected, and the new head of the central bank in Zambia is a graduate of the University of Massachusetts who has sat on the board of directors of the World Bank.

So he is not just a central banker of one developing country, made so by the president's fiat. He is a member of the elite crowd of the globe's central bankers.

So who is controlling whom? Does this development show that the president is in control of his nation's central bank, or that the elite crowd of central bankers is firmly in control of the world's various presidents? It is a little as if Zambia is the spot where a curtain has lifted.

Will we hear a booming voice soon saying, "pay no attention to those machinations behind the curtain"?


Popular posts from this blog

Great Chain of Being

One of the points that Lovejoy makes in the book of that title I mentioned last week is the importance, in the Neo-Platonist conceptions and in the later development of the "chain of being" metaphor, of what he calls the principle of plenitude. This is the underlying notion that everything that can exist must exist, that creation would not be possible at all were it to leave gaps.

The value of this idea for a certain type of theodicy is clear enough.

This caused theological difficulties when these ideas were absorbed into Christianity.  I'll quote a bit of what Lovejoy has to say about those difficulties:

"For that conception, when taken over into Christianity, had to be accommodated to very different principles, drawn from other sources, which forbade its literal interpretation; to carry it through to what seemed to be its necessary implications was to be sure of falling into one theological pitfall or another."

The big pitfalls were: determinism on the on…

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.

We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majestic wate…