Douglas Carswell's Blog

Monetary activism will not produce long term growth

"There is no mystery" writes Peter Oborne in today's Telegraph "about what generates long-term, sustainable growth; domestically financed investment."

And this, he continues, means "stimulating investors to place money in deposit accounts".

Indeed.

But how do low interest rates do that? How does holding down the price of credit encourage saving?

How does Quantitative Easing? Does printing bucket loads of pounds make it more or less likely folk will put aside the ones they already have?

Perhaps it is decades of "monetary activism" of varying intensity under various administrations that helps explain why Britain seems to have had only short-term, unsustained, consumption-led, debt-fueled growth.

UPDATE:  Breaking news just in that retail sales fell last month by 0.8 percent.  In other words, all that monetary stimulus is struggling to produce even a short-term, consumption-led boost.

No doubt various vested interests will be paraded about on BBC studio land to tell us why this proves we need even more cheap credit, more easy money and more monetary stimulus.

Seems we will test to destruction the notion you can engineer prosperity using monetary manipulation .... 

Back to all posts