Friday, December 05, 2008

Let the presses roll!

I have been hearing many people talking about "quantitative easing" including on Newnight last night. It appears that the government and treasury are considering it and indeed modeling it.

Of course "quantitative easing" is a nice bit of jargon, but what it actually means is printing money. It is as simple as that. On the upside at least there will be no chance of deflation, on the downside, the value of the cash and savings you have will fall through the floor.

Well Guido has noticed an odd clause in the banking bill before parliament. It removes a clause from the 1844 Bank Charter act. That clause requires the Bank of England to tell government how much money it has printed, and also to publish that information. It makes the Bank of England transparent.

The only reason I can see for removing that clause is so that the Bank of England can let the presses roll and try to print our way out of this economic hole.

It won't work, it will be dire. What is more, the mere fact that that clause will be removed will damage confidence in the pound even if the Bank does not print any new notes.

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