Badget's Recommendation to the Bank of England

Badget's famous recommendation was that in a crisisthe central bank should lend freely at a penalty rate. Nowadays we follow only the first half of his advice, in the belief that our system is so leveraged that high rates would kill it. We also neglect the rest of what badget said, and in particular, the emphasis he laid on discretion as opposed to set rules. The ideal central bank would target nothing more precise than an apprehension minimum which no abstract argument and no mathematical computation will teach us. And we cannot expect that they should. But like badgers, i take the world as i find it, and i do not expect to see in my lifetime a wholesale abandonment of