In the 1970s temporary Bank of England rate-setter and permanent central-banking legend Charles Goodhart wrote about how as soon as monetary policymakers tried to adopt one particular measure as a target, the said measure had the nasty tendency to lose its value as a signifier of what was going on in the economy and quickly became obsolete.The phenomenon, now known as Goodhart’s Law, came about in an era when officials struggled to bring inflation under control through various measures to tighten the amount of money sloshing around the economy. These monetary aggregates were notoriously slippery and no sooner had the Bank decided it would try to influence a particular measure of money than that measure’s value as a gauge of underlying price pressures in the economy seemed to disappear.In
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In the 1970s temporary Bank of England rate-setter and permanent central-banking legend...