The Crime Known as Quantitative Easing » The Cobden Centre

Via The Cobden Centre, The Crime Known as Quantitative Easing, a superb article by Robert Sadler:

Rather helpfully, on the Bank’s website there is an explanation of how Quantitative Easing was supposed to improve the economy.  Quite clearly, the Bank explains that they purchased British Government bonds (gilts) and high quality (investment grade) bonds from private sector companies (banks, pension funds, insurance companies and non-financial institutions).  The Bank’s concern was that there was too little money “circulating” in the economy.  Using this method, the Bank was able to inject the much needed money directly into the economy and the companies that needed it.  The idea was two-fold; a) asset prices increase, wealth increases and spending increases; b) more money, means more spending, bank reserves increase, meaning more lending, spending and income increases, inflation arrives at the magic 2% rate and we all live happily ever after, growing fat off of the magic wealth creation machine at the Bank.  But there is a dark side to this fairy tale and at the risk of sounding clichéd, it is because in this case, more money really does mean more problems.

I recommend the entire piece.

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Comments & Responses

2 Responses so far.

  1. Mark Girling says:

    Very good article – and true.

  2. Come on Mr Pilot,

    how can Quantitative Easing improve the economy, The BOE can prop it up a bit more but it will fail completely if we don’t stop them printing more & more … lol…The Bank of England Nominees Ltd does what ever it likes with your Taxes, Interest [%] and of don’t forget all the Principle we ever create, but generally it goes like this:

    1) We are going round in circles at an ever escalating rate until eventual collapse as its a mathematical impossibility to pay the money back any debt that eliminates from the central banks –

    P + I = DEBT

    Q.E.D. – ‘quod erat demonstrandum’

    It’s just the economy stupid everything else relies on IT..