David Miles, External Member of the MPC used the following quote from Milan Kundera, (Testaments Betrayed) in a speech to the CEPR in London:
"Man proceeds in the fog. ....... Yet when he looks back to judge people from the past, he sees no fog on their path. From his present, which was their far-away future, their path looks perfectly clear to him, good visibility all the way. Looking back, he sees the path, he sees the people proceeding, he sees their mistakes, but he doesn't see the fog."
Yes, David, we know that. The future is confusing and the past is clear. Nevertheless, decisions have to be made about the future path of monetary policy. Moreover, the mist seems to be clearing. Recent CPI data has strongly signaled that inflationary pressures are growing.
Adam Posen was a lot more obscure. He gave a recent speech on inflationary expectations and lifted the following gem from Walter Bagehot.
“A democratic despotism is like a theocracy: it assumes its own correctness.”
I can't see the immediate connection with interest rates. Is he hinting that while there is democracy within the MPC, there is no political accountability. Therefore, the UK monetary policy framework is like a democratic despotism? What does "assuming its own correctness" mean? Of course, I know what the words mean, but I don't see the relevance.
Enough of this pretentious nonsense, in monetary policy there is only one quote that matters. It is from Milton Friedman. It comes from his 1970 book The Counter-Revolution in Monetary Theory:
"Inflation is always and everywhere a monetary phenomenon."
If the MPC had remembered this quote, the UK inflation rate wouldn't be four percent and rising.