Want to know where the £125 billion spent by the government on quantitative easing since February has gone?
Seen this graph?
See that bottom point? It’s February.
Quantitative easing cash has been sued by the banks to dump bonds on the government. That means interest rates fall so stock markets rise.
And let’s also be candid: you wondered where some of the banks made their exceptional profits to pay their exceptional bonuses? By speculating on this process, of course.
Yes, you really are paying for a false stock market boom that heralds the next financial crisis.
And yes, this form of fiscal stimulus really is wasted money. We needed a massive injection into the economy: the real economy that is, the one where real people, not spivvy speculators, work and generate real wealth — not the illusion of it that the above graph represents.
Until we put finance back in its place as the servant and not master of the economy we’ll remain in trouble. And no one seems to have the courage to do that.
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Very thought-provoking. There have been some interesting articles on the Daily Telegraph website by Edmund Conway, their economics editor, criticising QE. I don’t normally agree much with either the Telegraph or Edmund Conway but in this case they may have a point.
What amazes me is the lack of any form of evaluation framework for QE. When policies like the New Deal or Sure Start were put in place in the early days of New Labour there were clear evaluation frameworks, and at least some commitment to evidence-based policy. Now, we’re in a situation where £125bn has been spent, we’ve no real idea what’s happened to it, and to my knowledge neither the Bank of England nor the Treasury have commissioned any kind of monitoring or evaluation of this expenditure. To my mind, that’s reckless.
Agreed