So I've read some comments saying that it's a problem that the world's central banks have a monopoly on interest rates as this means a lack of competition. Maybe/maybe not, you could argue that these only come into effect at times when they act as lender of last resort and most banks trade with each other at different rates in normal times.
What this did get me thinking about was the way in which central banks set rates and how the people who do this get there.
All central bankers are political appointees, there are no elections. And looking around the world, central bankers are cast in the same mould everywhere, the Greenspan mould. Which means adhering to the following precepts: cut interest rates as soon as things go wrong, keep them low enough to stimulate the next bubble, then clear up this bubble by lowering interest rates even more; in the meantime, ignore debt levels as they have no bearing on the economy; also de-regulate as much as possible and allow the markets to take care of everything.
Which is fine, except that Greenspan himself admitted he got it wrong on de-regulation. And it seems the current ongoing crisis is a result of his repeated efforts to clear up the previous crises by creating ever larger bubbles and ever higher levels of debt. We now have a global debt crisis.
And yet politicians are going to carry on choosing the same type of academics to decide monetary policy who created the problems. It's probably the only option they have unless we imagine that Sarkozy/Berlusconi/Merkel are going to sit around discussing the relative merits of the Austrian/Neo-Keynesian/Minsky school of thought. So the dogma perpetuates itself and it's difficult to bring in outsiders who aren't attached to it. At least in politics, you can look to eject a party which has been blatantly unsuccessful, for monetary policy, I would say it's impossible.