Description
From the "asset economy" perspective, policymakers appear increasingly trapped by their reliance on the logic of asset-price inflation. In this paper, I shift the focus from housing assets to housing liabilities, in order to better anchor the analysis of infrastructural power. Although the IPE literature has tended to parse the power of debt mainly in terms of liquidity and asset prices, a closer look at the history of UK monetary policy reveals the pivotal importance of housing liabilities. From the 1930s to the present, the power of interest rates to influence the UK economy has been overwhelmingly channelled through the infrastructure of housing liabilities, from the jerry-building boom of the 1930s, to the mortgage cartel of the postwar decades, to the mortgage bills of the post-Thatcher era. To their disappointment, policymakers found again and again that interest rates had little influence over the general demand for credit, or over the general level of business investment -- except as by-products of the effects on the infrastructure of housing liabilities. Opting to calibrate these effects, policymakers honed an unprecedented degree of infrastructural power over the economy.
