Charles Goodhart: The State of the Global Economy - A Central Banker's Perspective

Welcome to our new video series called "New Economic Thinking." The series will feature dozens of conversations with leading economists on the most important issues facing economics and the global economy today.
This episode features Charles Goodhart, former member of the Bank of England's Monetary Policy Committee, who offers a central banker's view on the global economy. Why didn't central banks see the financial crisis coming? Charles Goodhart offers a simple answer: "Everything that a central bank ought to be interested in was excluded from the model." And what is his advice for today's policy makers and regulators? He points to the lessons from his famous "Goodhart's Law," which he coined back in 1975. Watch the interview for more!
*The interview is conducted by Marshall Auerback, Director of Institutional Partnerships at the Institute

[@gmshadowtraders]

"A crisis of macroeconomics" - well said Mr Goodhart! He gets right down to the awful performance of economics in predicting the global financial crisis.

[@daniel987878]

The problem with central banking at present is that monetary policy is ineffective because it depends on the lending activities of banks. If banks don't want to lend there is no stimulus and if they lend they can just channel lending into unproductive activities.

[@optionsupdate]

thanks, great interview

[@aishikgupta]

Meaning of exact science : a science, as chemistry or physics, that deals with quantitatively measurable phenomena of the material universe. What I am alluding is that finance can't keep track of the resources that are being consumed at an exponential rate [especially oil, our primary energy resource] . Finance is

[@optionsupdate]

who is the chap doing the interview?

[@fran474747]

Thinking about the notion that there was less prospect of SMEs borrowing before the Bretton Woods collapse - SMEs are generally self financing. It is probably a good thing that they got on with the job without debt finance. Goodhart did not properly answer the question posed - that we better off with tight monetary policy (even the equivalent of being on the gold standard), than we are with lax money and lending policy and consequent indebtedness and slow growth.

[@brownie003]

what do u mean by 'real economy'?

[@aishikgupta]

I would recommend a book : Ecological Economics by Herman Daly and Joshua Farley.

[@aishikgupta]

Contemporary economics doesn't keep any account of the amount of resources that is consumed especially energy resource i.e oil .

[@aishikgupta]

Oh, then I had a misconception ... but I am confident that physics and Chem. are exact sciences. Mathematics is not a science . It is rather regarded as a scientific tool.

[@brownie003]

what u mean by that?

[@geoffreygardiner2100]

Jesse Maurais comments on Charles' Britishness. The Goodharts were New York brokers. Charles' father, A L Lehman was American. The 'L' is for Lehman. . He was professor of Jurisprudence at Oxford and a great writer. Charles was at Trinity College, Cambridge when it was the intellectual summit of the university. Sadly he is not representative of today's British elite. I wish he were.

[@aishikgupta]

Finance is NOT a part of the physical material world where the real economy actually operates.

[@aishikgupta]

Can Finance ever be an exact science ???

[@aishikgupta]

Not like physics, chemistry, bio etc .

[@brownie003]

so what do u mean then? lol

[@aishikgupta]

U mean medicine isn't an exact science ?

[@mrzack888]

this guy looks and talks like an evil bond villain.

[@JesseMaurais]

Could this guy be any more British?