Quantitative easing has raised growth by around £50bn, Bank of England working paper finds, but has also stoked inflation by more than previously estimated.
I reckon, as soon as the easy money is rolled back many of the households and businesses that should have gone bust will go bust. QE has done nothing but support the technically insolvent, once normality returns the technically insolvent will become the actually insolvent!
You have to adjust the created growth for the added debt burden. The small amount of growth that has been created in return for an exponential rise to a record level of national debt is a very poor bargain.
You don’t owe yourself the debt. You owe the debt to the banks. QE is the Bank of England (underwritten by the taxpayer) buying debt (government debt) from the banks. When the state owes debt to the banks – how does it pay it off? By taxes or eroding the value of money – in this case the savings of net contributors to the economy. When the private sector owes debt to the banks and defaults – the state uses taxes to make up for it because it doesn’t want the banks to crash. Debt is “socialised”. Either way you and I, all of us, have to pay the banks for it. Unless you force the banks to write off the debt, but these banks (more generally the lending institutions) may not be in sovereign control. The taxpayer has to pay off the debt created by QE no matter how you look at it. We’re all in it together, whether you like it or not, for the huge liability that has been added in return for little growth.
QE is clearly a game for (a) the state to continue borrowing and spending, and (b) beefing up the ability of the banks to keep on lending. The rationale given to the public for this game is that it will result in the banks lending more to the private sector to encourage growth. Has this lending boost happened? Only in mortgages for the property sector, with the additional support of Treasury’s Funding to Lending/Help to Buy, and this has resulted in dangerous debt and asset price inflation. Has it resulted in growth? Not much and that too is most likely property asset price inflation destined to implode.
|Juno for your news|
|You cannot trust the mainstream media|