Douglas Carswell's Blog

Monetary stimulus isn't working

Another day, another set of figures to show that monetary stimulus isn’t working.

UK manufacturing output fell in April by 0.7 percent – even with all the advantages that come from having a floating exchange rate.

Our economy is in poor shape because our underlying competitiveness has deteriorated. Too much taxation, red tape and too many restrictive practices are holding back wealth creation. 

For years, this decline in competitiveness was concealed by easy credit. Monetary expansion masked the malaise, and made us feel our economy was fitter than turns out to be the case.

The Treasury still does not recognise this. They still behave as if the underlying problem is a lack of demand. They still seem to believe that another fix of cheap credit will fix things. It won’t.

While the Coalition is printing money and handing it to the banks (monetary stimulus and QE), Labour wants to print money and hand it to people (fiscal stimulus). 

Guess which policy is starting to prove more popular?

This is not just bad economics. It is bad politics, too.

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