Typography

James Gillray, a popular caricaturist, drew the above cartoon in 1797. In it, England's Prime Minister William Pitt the Younger is fishing through the pockets of the Old Lady on Threadneedle Street -- the Bank of England -- for gold. At the time, England was in the middle of fighting the Napoleonic wars and its bills were piling up. According to its original 1694 charter, the Bank of England was prohibited from lending directly to the Treasury without the express authority of Parliament. Over the years, the Bank had adopted a compromise of sorts in which it provided the government with limited advances without Parliamentary approval, as long as those amounts did not exceed £50,000. In 1793 Pitt had this prohibition removed and in formalizing the Bank's lending policies, imposed no limit on the amounts that could be advanced by the Bank. Thenceforth Pitt made large and continuous appeals to the Bank for loans. Without the traditional Parliamentary check, there was little the Ban...

I entered the fray at a couple of MMT blogs. There was some interesting discussion concerning consolidation of the Treasury and central bank, and how MMT portrays/misportrays the actual institutional details of modern central banking in order to make their message easier. Between Depression and Hyperinflation at Winterspeak. From the comments: technical details on MMT at Winterspeak. The General and the Specific in MMT at heteconomist.com Even with the BoE, the old way by which it could lend directly to government - via its "ways and means" advance/overdraft facility - has been effectively neutered. That facility was frozen in 1997 and has since been almost completely repaid. The upshot is that MMT can't look to the BoE as an example of its idealized "consolidation", and it can't give policy recommendations as if these institutional rigidities didn't exist. Relevant link: The Treasury-Fed Accord: A New Narrative Account by Hetzel and Leach