IslingtonTribune

The independent London newspaper

They could just print the money!

22 November, 2019

• THE political parties are after our votes with promises. At the head of the charge is the Labour Party that proposes to borrow to spend.

They will do this by selling bonds to the public. The proceeds will be used by the government to fulfil promises made during the campaign.

All good – except for the fact that this is a mechanism to shrink the economy with all the misery that entails: fore­seeable but unintended.

In March 2009 the Bank of England began quantitative easing, buying bonds from the public in exchange for newly-printed money.

Some £375billion pounds was printed to maintain demand and avert depression, save jobs and encourage investment.

Labour will reverse this by selling bonds to take money out of the economy, reduce demand and cause interest rates to rise.

It is called quantitative tightening and the purpose is to calm an over-heated economy and it will be the route to recession.

This is what will happen unless the bonds are exclusively sold outside of the United Kingdom, thereby not reducing the UK money supply and liquidity.

Who would buy this stuff and what rate of interest would they pay? Why bother to borrow?

Stop all the cute language and just print money rather than go through the charade of “borrowing”.

Print as much as you want to buy anything you fancy. It will be those least able to cope who will suffer from the ensuing inflation.

The least well off will suffer the worst so no surprise there. I call upon anyone who can make sense of this nonsense to clue us all in.

Meanwhile the European Central Bank is doing the opposite with the aim of achieving the same thing.

They are buying bonds and printing money – a case of euro mad-cappery from people we employ who ought to know better and maybe we should as well. Learn the lesson.

STEPHEN SOUTHAM
Mildmay Grove North, N1

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