Tuesday, 2 July 2013

The advocates of QE are getting desperate.

David Miles, external member of the Bank of England Monetary Policy Committee had an article in the FT on 18th June arguing that QE has brought benefits in that it has maintained asset prices but not caused asset price bubbles.
Er . . yes: but that ignores the elephant in the room, namely why stuff the pockets of asset owners, i.e. the rich as a way of escaping a recession?
I.e. if the central bank is going to print money, why not just spend it bog standard items? As regards the public sector, that would be health, education, roads, etc. And as regards the private sector, the “printed money” can be channelled into household pockets – or to be more exact, the authorities don’t even need to do any “channelling”. They can just cut taxes.
Put another way, Positive Money’s “QE for jobs” campaign makes more sense than traditional QE.

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