Printing More Money: Compounding Failure

"Quantitative Easing" is without a shadow of a doubt the most dishonest recession policy that has ever been conceived. Why? Well, there is a whole host of reasons. QE, launched by the Bank of England to pump liquidity into an economy that had run out of bank credit, was never intended to fund insane levels of government borrowing, itself required to prop-up failed banks, to pay for the ever-expanding public sector bill and to pay for the interest on the same, ever-expanding government debt. But that's exactly what's happened: Gordon Brown, in some back room deal to which the taxpayer is not privy, is gobbling up this cash with the result that none of it is getting through to what we were told was its intended target, namely businesses and people. It is surely no coincidence that within two days of announcing yet another, £30Bn bail out of two failed Scottish banks (HBOS and RBS), the Bank of England announces a rise in QE of £25Bn to £200Bn. Do they really think we are that stupid? Obviously.

What is more, all that has been achieved so far is not GDP growth and an economic recovery but a new asset bubble in the City. The FTSE is seriously overvalued as those who benefit from government bond sales use that money simply to gamble on the stock exchange. To put it bluntly, Brown couldn't give two hoots, however, so long as the Bank of England keeps his credit line going (paid for with fake cash) until the next election. The reason why Cameron and Osborne's blanket bank loan guarantee scheme, a great idea that really would have stabilised the economy, was rejected by Brown was purely party political. I regard this as strong evidence of Brown's true motives all the way along - not to help Britain but to help himself. Nothing more.

QE, which has Brown's grubby paw marks all over it, is a totally failed policy and that failure is being compounded by a Bank of England management that is clearly in no way independent of his bankrupt government, itself absolutely hell bent on throwing the kitchen sink not at the recession it helped to create, but at re-election. It won't work. This is like a starving person now burning fat and then muscle just to stay alive. Eventually, the body will run out of these and begin to burn its vital organs - and die. The only cure for this is food and medicine. Regaining control of the public finances is the medicine and genuine growth in the form of wealth and job creation with private capital (not "stimulus" fake growth paid for with government debt, itself created with funny money) is the food.

That economists all over the place are willing to support Brown's lies and incompetence is simply unforgivable. We did not require these experimental measures in previous recessions to recover strongly. We do not need them now. The effect of it all in the long run is predictable: devaluation, price inflation, wage inflation and extremely slow growth. The point is that even the fashionable economists nowadays do know this. And they also know that there is nothing we can do now to stop it. Gordon Brown is prolonging Britain's misery with these ridiculous "policies". We will be paying for it for decades to come as Britain limps along, once again the sick man of Europe.

The problem is called "stagflation" and we've been here before. In 1976.