Inflation targeting and the RBA

The targeting of inflation by the RBA has been in effect since March, 1993, as described in this address given in 1999 by Mr G.R. Stevens, Assistant Governor(Economic), to the Economic Society of Australia, Sydney, 20 April 1999.

In it he describes a bit of the history of inflation targeting as conducted by the RBA, and how the RBA uses a flexible target, rather than a fixed, legislated target. This is really in keeping with the RBA charter, which is also found on their website. The charter states:

The Reserve Bank Board sets interest rates so as to achieve the objectives set out in the Reserve Bank Act 1959 :
• the stability of the currency of Australia;
• the maintenance of full employment in Australia; and
• the economic prosperity and welfare of the people of Australia.
Since 1993, these objectives have found practical expression in a target for consumer price inflation, of 2–3 per cent per annum. Monetary policy aims to achieve this over the medium term so as to encourage strong and sustainable growth in the economy. Controlling inflation preserves the value of money. In the long run, this is the principal way in which monetary policy can help to form a sound basis for long-term growth in the economy.

It was a work of genius to be able to eventually tie the objectives of the Reserve Bank to the relativly simple, and only, mechanism of targeting inflation. As a software engineer, I have to say I am impressed that such a complex system as the Australian economy can be controlled by one variable to such a successful degree.

Furthermore, there is no free will?

I happen to be browsing through some blogs and came upon a story by a neurologist which is from a transcript from The Science Network. The transcript is of an interview with Rodolfo Llinás, and in one part (pg nine) he describes an experiment he conducted on himself using a transcranial magnetic stimulator. In the experiment, he placed the stimulator on top of his head and arranged it in such a way that, when stimulated, his right foot would move inward. So his colleague would trigger the machine, and his foot would move right. In order to be sure that Llinás was not cheating, he said

And we did it several times and I tell my colleague, I know anatomy, I know physiology, I can tell you I’m cheating. Put the stimulus and then I move, I feel it, I’m moving it. And he said well, you know, there’s no way to really know. I said, I’ll tell you how I know. I feel it, but stimulate and I’ll move the foot outwards. I am now going to do that, so I stimulate and the foot moves inwards again. So I said, well what happens? I said but I changed my mind. Do it again. So I do it half a dozen times. [...] So I said, oh my god, I can’t tell the difference between the activity from the outside and what I consider to be a voluntary movement. If I know that it is going to happen, then I think I did it, because I now understand this free will stuff and this volition stuff. Volition is what’s happening somewhere else in the brain, I know about and therefore I decide that I did it. It happens in science as well. You actually take possession of something that doesn’t belong to you.

I find this truly fascinating. When stimulated to do the opposite of what he wanted to do, it seems to me that his brain retracted the intention and then "remembered" that he changed his mind. So the brain re-wrote the past to match with the known present. His reaction is to be startled that, even though he knows it is not him moving his foot, he cannot convince himself otherwise; the brain corrects its recollection of events to square up what actually happened with the intent. So it is possible to have the brain act and perform an action against its will, which is not surprising, but the brain believes it was free will acting. So free will is not free, but retrospectively applied.

Which is why he says:

What do I mean by mind? I mean internal state of the brain. Definable. Somebody tells me you can’t define the mind. And the answer is nonsense. Now you say free will- how do you define free will? But I can tell you I define free will as those activities that happen that the brain know are about to happen.

Sleepy now, but must update tomorrow (today) with some thoughts on Dunning-Kruger given this information. Need to see if the book "The I of the Vortex" is available in libraries.