Saturday, March 7, 2009

Ex-lax for the economy.

We're in QE street now!

Barring a last minute attack of caution, it looks like the Bank of England will move today out of the realm of interest rate cutting and into a strategy known as Quantitative Easing. Having spectactularly failed to predict the credit crunch, I can at least claim to have predicted this, for in early October I said on Newsnight: "If the bank bailout does not work the only thing left is to cut taxes and print money". And so it has come to pass (though more on taxes below). The essential point about QE is that the bank invents new money and uses it to flood the banking system with cash: it's a bit like putting a power hose down a blocked drain. Eventually the water pressure moves the blockage.

Posted by charlie brooker @ 09:40 AM (785 views)
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2 thoughts on “Ex-lax for the economy.

  • Post 11 in the comments:

    What if every bank or building society that needs a government bailout had to write off all debt owed to them. In other words many people would now own their house outright and have their debt from loans etc. cancelled.

    I have a mortgage with Abbey National who have not been bailed out by the tax payer and so I would not benefit from this, however let’s suppose I did benefit; then I would have �700 per month more AND I would own my house. This would seriously encourage me to spend. As a start I would immediately put a new bathroom in my house.

    This may seem like a crazy idea and it most certainly needs a wiser set of eyes than mine but what if it could work? Right now we need fresh thinking and from people open enough to consider ALL the possibilities rather than simply dismiss without a “what if it worked?” perspective.

    Dear oh dear. This person actually believes that their scheme which basically amounts to give me a free house! is viable and socially just.

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  • @Paul – I have heard lots of people who think that printing money is the solution to this problem – i.e. print as much money as is needed to pay off all the debts in the world. Oh dear.

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