Howard Roark certainly didn’t take stability (or more precisely conformism) literally!

Does this suggest the B of E has not already being doing this? Does it suggest that although independent, the B of E has not been following instructions?? I think it is not wise to codify this sort of thing as all the other players in the market, some of whom have far more weight to throw around than the B of E, will just see the B of E coming. Oh, and does it mean we should buy back all the gold reserves that were scandalously sold at the lowest gold price to achieve stability?

It will be very interesting if the B of E does refuse ‘to print’ the money the government requires; stability has different meanings to different players.

What I thought you might be alluding to – and this would be interesting – is the tension between creative destruction, as according to von Mises, and plain old destructive destruction. My hunch is that most of the time we can’t tell the two apart, and that therefore people take a more positive or more negative view of instability generally, depending on their attitude towards von Mises. Rather than going to the effort of looking at the empirical facts of the actual destruction in question, which is hard.

As for the reasons why we don’t, perhaps I should refer you to a recent piece on The Register on the subject, which linked to Engadget’s piece concerning a Guardian article which followed up on a survey conducted by Alexa…

More recently, I consider Gordon Brown to have given plenty of practical demonstration.

See also John Madely’s article in The Guardian at http://www.guardian.co.uk/commentisfree/2009/jan/31/face-to-faith-john-madeley

I see why negative growth is bad. It has been demonstrated repeatedly that you have to use the most brutal means to achieve negative growth in the long term (see for example Collectivist Dung Heap Number Six).

Zero growth is impossible since it implies accurate (or any) control of the economy and this is impossible because because of fundamental epistemological problems (as Hayek explained at length).

But why is high growth demonstrably unsustainable? When and where was that demonstration?

I would do no such thing. Financial systems, the overall economy, its specific growth rate at a moment in time, and the long term growth rate are all different things. If the Bank became so confused as to forget that a primary goal of having a stable financial industry is positive long term economic growth it would be a scandal.

A stable system is one that does not go wildly out of control when subjected to external forces, and indeed subject to minor forces tends to return to its initial state (in the case of an economy, that would be a state of long term growth). So for instance, it is important that we are not vulnerable to economic warfare (or indeed just other countries running themselves badly). A fluid, growing market economy is the best defense.

Historically, market economies do not demonstrate “wild swings” – these do happen regularly but less frequently than the business cycle itself. Bear in mind that chaos is not the enemy of stability you might think. It is when the chaos is reduced, for instance through interconnections between large entities, or asset bubbles growing out of herd behaviour, or executives falling victim to agent principal issues, that problems happen. We find that the apparent chaos is in fact a fragile rigidity that reveals itself in an utterly predictable fashion.

As long as the Bank keeps to the dictionary definitions of stability, as compared to a simplistic or ideological one as you suggest, it is not a bad goal. Good things happen when banking is boring, dull, and predictable. It is when it tries to get overly innovative that the business cycle turns into a financial crisis.

Leave the big risk taking to the entrepreneur.