Douglas Carswell's Blog

More QE?

Corporatist cheerleaders have urged the Bank of England to print more money.  

They seem to think that this will help raise demand and ease the credit shortage – both of which will make the economy grow.

The longer this financial crisis goes on, the more it seems like we are stuck in the middle of Ayn Rand’s Atlas Shrugged. 

It has been public policy to encourage overconsumption, and in effect discourage people from saving (boosts the economy, don't you know).  Because one person's savings are another person's line of credit, this has meant that there is less real credit available.  Keeping interest rates - the price of credit - so low has meant, unsurprisingly, that there is less of the stuff about.

Yet alarmed by the lack of credit, the Treasury now wants to print money and ration the stuff. Perhaps the Treasury could set up a Unification Board to decide who gets their “fair share” of credit?   

Except it will not be real credit – someone else’s deferred consumption. It will be money made by debasing the value of everyone else’s currency. Or by leaving future taxpayers more debt.   

Printing money like this, wrote Rand, is to create a counterfeit pile of paper. It is the equivalent of writing a check against wealth that does not exist. “Watch for the day it bounces”.

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