How resilient would an independent Scotland be to wholesale markets?
Should George Osborne find himself Chancellor of the Exchequer in three years hence, with an independent Scotland having emerged from political and fiscal turmoil at the heart of the Westminster and the City of London system, whatever the first Scottish PM’s decision is it should not be the consideration of either a monetary or debt union with England. The equivalent enfranchisement from H.M. Treasury and the Bank of England (BoE), as the late Sir Neil MacCormick had envisioned in his magnum opus, the Questioning Sovereignty: Law, State and Nation in the European Commonwealth, that past a critical point (of independence) control over its entire economy future could at once be guaranteed so as long as England retains specific areas that were rooted in its economy. The paper money is backed by the BoE, but Scotland, as it did during the union, backs its Scottish version of the currency with its own reserves not held in the vaults on Threadneedle street.
So this brings us to a small, but effectual and incredibly important question of a Scottish working currency, not considered since before confederation in 1707. After finalizing a fiscal divorce through the first Scottish Exchequer in 2016, Scots will still with our counterparts in England, Northern Ireland, and Wales, continue bedding a mistress that has appeared since the days of Walter Bagehot’s ground-breaking book, Lombard Street, when Bank of England held an intractable and undemocratic power to govern every road, nock and cranny to include Edinburgh and Glasgow. With just one representative in the executive committee against twelve other Oxbridge and LSE trained English economists, they will again twist the screws of inflation or deflation for the sake of a country whose population is ten times that of Scotland, resulting in the little or no bargaining power, less the creation of an independent currency or the adoption Euro, and perhaps bringing on the same socio-economic that made independence and referendum possible in the first place.
For example there’s exists a small, but effectual and incredibly important detail of a Scottish working currency. By 2016 Scotland, finally divorced from its counterparts in England, Northern Ireland, and Wales, we still have to bed the same mistress in the days of confederation in 1707 when, the only now aptly named Bank of England as laid out by Walter Bagehot’s profound 1873 book, Lombard Street, had purported with its intractable power to regulate every street, nock and cranny of Edinburgh or Glasgow when by that point none of those places were even represented by its board; and only a century later we have one Scotland on a committee of as many as 12 Oxbridge trained economists who may turn the tide by means of policy of either inflation or deflation over a developing Scottish economy. The end result is that we shall have little in the way of defining an independent financial future less it develop a Scottish currency developed or adopt the Euro.
It’s as if Britannia, represented by Melvyn King would be smiling back at us while we were are all riding on financial markets of Perseus’ wings. King displaying his fine line of yellow teeth pushed back like a fence falling on itself, while Scottish Finance Secretary John Swinney must feign a deep, profound affection for his English southerly neighbour if the two can issue a joint-bond. Despite the BoE’s insipid and idle vanities, raising a great deal of money within the same monetary union, and above all, within the same debt market would be good for both countries. It would be a sign that past digressions have been forgotten, that the two are cooperating for the long-term for long-term growth, which as Lord Robert Black, the former Auditor General of Scotland said means, ‘without strong growth the long-term health of Scotland’s public services with a budget short on funds would send the economy in financial free-fall.’ Perhaps this might be a remedy.
