THE DAILY TELEGRAPH: The Bank of England has taken pre-emptive action to rescue the faltering recovery by increasing its money printing programme by £75bn.
The Chancellor has cleared the Bank to increase the scale of its quantitative easing (QE) programme from £200bn to £275bn due to the deterioration in the economic outlook.
In his letter of authorisation to Sir Mervyn King, the Bank’s Governor, George Osborne hinted that the Bank could consider using the funds to buy up to £50bn of “private sector assets”, which would potentially transform the way QE has been operated.
So far, all but £1.3bn of the £200bn of existing QE has been used to buy gilts. But with gilt yields now even lower than during the first programme, economists are doubtful that a straight policy repeat would have much effect. Buying corporate or mortgage debt, as the US did in its original $1.7 trillion QE scheme, could help ease the credit strains in particular parts of the economy.
Leaving rates on hold at 0.5pc, Sir Mervyn said in his letter to the Chancellor: “The pace of global expansion has slackened, especially in the UK’s main export markets. Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery. » | Philip Aldrick, Economics Editor | Thursday, October 06, 2011
We are being led by fools! They are clueless: partly because we are in uncharted territory; partly because they sorely lack experience and foresight.
The term quantitative easing (which, by the way, the Chancellor of the Exchequer seems unable to pronounce) is nothing but a modern day euphemism for turning on the printing press. Economics 101 teaches one that this is a road that eventually leads to disaster. The hyperinflation of the Weimar Republic springs easily to mind.
To engage in QE is a shameful and desperate measure. It will send prices soaring, because there will be too much money chasing too few goods. One has to ask oneself one simple question: Where did these idiots learn their economics? They must have been high on something whilst in lectures, because they certainly didn't learn the fundamentals of sound economic policy.
Turning on the printing press is a shameful exercise. Alas the people who will have to pay the ultimate price of this folly are ordinary people – the people who will struggle to feed their families, struggle to make ends meet, struggle to maintain their savings, struggle to maintain their place in this world. Appalling! – © Mark
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