Monday, Aug 03, 2009
Can we afford this?
The Times: Bank of England urged to extend quantitative easing (creating money)
The Bank of England’s monetary policy committee (MPC), which meets this week, is under pressure from economists and business to extend its policy of “quantitative easing”, or creating money.
The shadow MPC says the Bank should proceed with the remaining £25 billion and then go further, with between £50 billion and £300 billion of additional easing.
Posted by devo @ 01:07 AM (535 views) Add Comment
5 Comments
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1. icarus said...
There's nothing inherently wrong with governments' printing money. The vast majority of money is created by private banks as credit. The examples we have of governments creating money and by-passing banks suggest that a system with govt-created money and no bank-created money works well.
At the moment the monetisation of debt by governments is not creating excess money. The governments are filling the gap left by banks, which are creating less money/credit than they were because they can no longer sell on securitised loans (because the securitised loan markets have collapsed) and thereby free up capacity to make more loans. In the US at least, the fall in private borrowing is currently more than offsetting the rise in government borrowing.
If there had been a system of government-created money we wouldn't be where we are, and governments' creation of money to fix a broken system isn't ideal - things happen, like a central bank injecting funds into money markets only to see most of that money placed back on deposit with the self-same central bank, with private banks making arbitrage profits.
Just making the point that we shouldn't automatically see government-created money as a bad thing.
2. lambstotheslaughter said...
This is surely a bellwether that things are going to get a lot worse. QE is just fanning the last dying embers of this final tragic phase in the economy and only serves to line the pockets of the wealthy and corrupt.
3. Vacuouspolitician said...
It seems clear to me that the authorities don't know what is happenng from one week to the next. Infact they seem totally clueless...and totally incompetent. The whole concept of QE is just plain wrong and you can be absolutely certain that it will (or will eventally) hurt the ordinary average people of this country . The key question is where is this all going to end? What is the cut off point? It just seems that they look at the data from week to week, month to month...and there is no long term stategy and virtually no direction. I have absolutely no confidence in Penfold. Penfold (King) should have been sacked a long time ago - he's totally out of his depth with modern practices and just seems a bumbling fool and a total lickspittle to this worthless culpable government - he couldn't run a bath let alone the country's finances.
I also don't like the sound of this "shadow MPC"...is it full of shadowy figures...?
4. Philip9134 said...
icarus two questions, do you know of any country in which quantitative easing has worked? Secondly can you think of a large scale project which was or is run by the Labour party, and worked. If the answer to ether one of these questions is no we could be just a little buggered.
5. quiet guy said...
"between £50 billion and £300 billion"
Cripes that's a lot of cash. Surely there has to be some limit to how much debt we can sell ourselves.