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Scottish Independence ...


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I HAVE no wish to argue for or against independence, but as an economist I would like to separate the economic realities of the currency issue from the political bluster that obscures them.

The Chancellor has ruled out a formal currency union, though some say this is just negotiating bluff. Either way, there is nothing to stop Scots continuing to use the pound if they choose. A Westminster government with no jurisdiction over an independent Scotland has no power to stop them.

Several independent countries, including Panama, use the US dollar, without seeking the permission of America's central bank, the Federal Reserve. In the absence of a formal currency union agreement, Panama has no say in the Federal Reserve's monetary policy, which is conducted solely for the benefit of America. Some argue, by analogy, that if an independent Scotland continued using the pound without a formal currency union, Scotland would have no say in Bank of England policy, which could be potentially damaging for Scotland's economy.

Nevertheless, as a result of using the dollar, Panama - a country comparable in population to Scotland - has one of the world's most stable banking sectors. And the economic interdependence between Scotland and the other countries of the present United Kingdom is so deep that the Bank of England would, in reality, have to take Scotland's welfare into account when setting monetary policy. Not to do so would risk damaging the other UK countries just as much as Scotland.

Another suggestion, from Jim Sillars, is that Scotland should print its own currency and tie it to the pound. There is no substantive difference between this idea and using the pound. As the two are pegged, the only difference is the design on the currency. And why (apart from national pride) go to the expense of printing Scottish notes, exactly equivalent to the pound - but which people south of the Border might be reluctant to accept?

The other option, switching to some other currency such as the euro, would be even more costly and difficult, and would raise huge, business-damaging uncertainties. It would also leave Scotland subject to the monetary policy of a country or agency with a very distant interest, if any, in Scotland's welfare.

The easiest solution, therefore, would be for Scotland to continue using the pound, with or without a currency union, safe in the knowledge that, as an important part of the sterling economy, the Bank of England would have to take Scotland's interests into full account when setting policy. The currency problem just isn't a problem.

Eamonn Butler,

Director, Adam Smith Institute,

23 Great Smith Street,

London.

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I laughed at Irvine Welsh's tweet:

Irvine Welsh @IrvineWelsh · Aug 5

"Couldn't give a toss whether Indy Scotland would have pound, euro or new Scot currency. It's who's pockets it's going into that's the issue."

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True but I'm guessing that many others need something more concrete than that.

I agree that when Scotland return a YES vote, the currency issue will be resolved in a currency agreement - madness not too - but how many people are willing to front that uncertainty that out with their vote? |In the debate with Darling, Salmond was very poor on this issue, despite direct requests from the audience to explain what would happen if there was no currency union. He has to have something to say to the sceptics, concerned and undecided on this issue.

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Apparently Miliband, now also threatening that he wouldn't allow Scotland to have the pound if Labour was voted in, admitted on television on Good Morning Scotland that it's as much Scotland's pound as it is those in charge at Westminster.

Many prestigious economists have pointed out that it would be the wisest move to have an Independent Scotland retain the pound, and in the interest of both Scotland and the rUK. This includes Sir James Mirrlees, Nobel Prize Winner, Scotland's Fiscal Commission and the Adam Smith Institute.

There are also many examples where various currency agreements have been made and work well e.g. Panama, Hong Kong, Isle of Man.

The whole currency issue is a ruse. Possibly the best question people could be asking is why are Westminster so hostile towards Scottish Independence. Why so keen to prevent this happening?

Pat Kane has an interesting take and sees a social democracy with the Queen ditched as head of state and bye by to SNP, http://www.heraldscotland.com/politics/referendum-news/if-there-is-a-no-vote-scotland-will-be-a-depressed-place-for-quite-a-while-.24967605?utm_source=headlines&utm_medium=email&utm_campaign=email%2Balert

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The question was being asked by members of the audience - the voters Salmond hopes to convince. He has to address their concerns if he wants to wins their support.

Yes, I know, harper. I think what he answered was correct but it didn't work getting Darling to admit that it was 'logical and desirable' as he said on live tv. These debates are all about tactics. I've seem some suggestions that Salmond was hoping to create a situation where the issue of the currency would be flagged up and how foolish it would be for the different parties at Westminster to insist that they would force this issue. I don't think that's the case. I hope that No voters will cotton on to what's happening but it would have been better if Salmond could have reassured people. What Darling won at was sticking to his guns although he knew that Salmond was quoting him correctly.

The power of the press and their support of the Better Togethers has meant that nothing has been heard about Darling being unable to spell out what new extra powers we would get and today in Mail on Sunda Boris has said he sees no need for extra powers. Apart from for major English cities.

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I am not sure we have reached the tipping point, Pat. Salmond needs to do more to get clear of the tactics. Give the undecided what they need to make a positive shift.

I think Sam is right, Project Fear just got really real. Farage standing for Kent and Boris intending to stand for the leadership - it is too terrifying. What the hell is Labour doing? Nadda. We are totally ****** - sorry, no other word will do.

The people of Sotland have a chance and whatever the uncertainties and risks, I'd grab it with both hands.

Anyone else naffed off with the celebrity love bombing? Quite frankly, I think it is insulting. Oooh, I can feel my dander up today ...

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The prospects are looking very gloomy. We really have to win this, harper. I don't know how much this patronising love bombing influences people. On one hand I sort of think that Scottish people don't like to be told what to do but a lot of the No voters seem pretty intransigent. I hope the undecideds will just wonder why it is they are so keen to hang onto us.

Dan Snow, who organised the letter along with Ben Fogle seems a bit confused: "I'm a huge supporter of people's right to decide the conditions and government in which they live."

He also thinks that: "History is the most exciting thing that has ever happened to anyone on this planet".

I hope he'll soon be able share the experience of a monumental bit of history and that we'll be able to decide who governs us.

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I've een these arguments about food banks being a sign of greater compassion in our society, samsc.

Also had Jackie Baillie and Alistair Carmichael argue that they have nothing to do with government policy.

I've also seen a documentary on people using food banks and how impoverished and desperate they were. The massive increase in the setting up and use of food banks is directly related to benefits cut, zero hours contracts and low wages.

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Don't know if anyone saw the programme last night about how Independence would effect the rest of the UK?

Looks like they have a lot of worries not least of all defense. The loss of Trident could spell out the end of nuclear arms in the UK. Then a lot of divvying up to do - including the aeroplanes and the works of art.

Nigel Farage was dragged on and commented that Ireland, Wales and Scotland should have no say in English affairs, he gave the example of fox hunting!

They are worried and they don't have a plan a or a plan b.

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http://www.edinburghnews.scotsman.com/news/opinion/jim-sillars-roger-mansell-man-who-hurt-scots-1-3507701

Remember this was when the industrial heartland of Scotland was being dismantled.......a generation of skills sacrificed to suit Westminster

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http://www.bbc.co.uk/news/uk-scotland-scotland-politics-28773893

Oh dear, Governor of the Bank of England holes Better Together below the water line.

I don't really understand all the economics issues but Jackie Bird didn't get anywhere with her unbelievably rude interview with Alex Salmond last night. Think she was trying to do a Paxman but backfired and he took his time and responded very calmly. The currency issue look like a bit of a red herring.

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As usual Sam hopes nobody reads the article he links too as his his fellow NatBams never actually read below his headline.

Rather than similarly patronise the readership of this forum here's the relevant paragraph.

Mark Carney said : "I will reiterate that we will implement whatever we're asked to implement and I'll add further, if I may, that we also have responsibilities, as you know, for financial stability in the United Kingdom and we will continue to discharge those responsibilities until they change.

"We will continue to discharge those responsibilities regardless of the outcome of the vote on the 18th September."

No mention of currency union and no mention of Scotland having a say in its currency.

Not that it matters much as the polls continue to show Scotland will be voting No. http://www.bbc.co.uk/news/events/scotland-decides/poll-tracker

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Yes, Max Carney, doing his job and will be prepared, no matter the outcome.

Possibly the major oil discovery the other day at Bentley, predicted 300mill barrels over the next 30 years, will reassure some of the people worrying about the economy. Although, reported on Xcite's own website and small Northern newspapers – the main media appear to have missed this 'massive' oil strike. So Danny Alexander and the other Better Together clairvoyants prediction that the oil in the North Sea is running out has proved unfounded.

"Xcite Energy said yesterday that its Bentley find – one of the North Sea’s largest untapped resources – could produce more than 300million barrels of oil over 35 years." Reported in Energy Voice, the Offshore online news. http://www.energyvoice.com/2014/08/video-north-sea-resource-produce-700million-barrels/

Also interesting to see in The Herald today that the expert Prof McDonald, full of doom and gloom on the currency, http://www.heraldscotland.com/politics/referendum-news/top-economist-currency-union-would-collapse.25052847?utm_source=headlines&utm_medium=email&utm_campaign=email%2Balert

Has been challenged by other experts, including a colleague at Glasgow Uni, Prof Cumbers, to be explicit: http://www.heraldscotland.com/politics/referendum-news/analysts-dispute-currency-warning.25058780?utm_source=headlines&utm_medium=email&utm_campaign=email%2Balert

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As usual Sam hopes nobody reads the article he links too as his his fellow NatBams never actually read below his headline.

Rather than similarly patronise the readership of this forum here's the relevant paragraph.

Mark Carney said : "I will reiterate that we will implement whatever we're asked to implement and I'll add further, if I may, that we also have responsibilities, as you know, for financial stability in the United Kingdom and we will continue to discharge those responsibilities until they change.

"We will continue to discharge those responsibilities regardless of the outcome of the vote on the 18th September."

No mention of currency union and no mention of Scotland having a say in its currency.

Not that it matters much as the polls continue to show Scotland will be voting No. http://www.bbc.co.uk/news/events/scotland-decides/poll-tracker

at least their making plans...as any decent company would do.

are the liebour party and their tory mates in government making any plans?

do they not have any financial or economic responsibility for the future?

no head stuck in the sand like most of their followers B)

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