No one can deny that the financial markets are in poor health this morning.<\/p>\n
I suspect most, except those who wish for their failure, will welcome \u00a0the intervention of the ECB \u00a0planned today. \u00a0Bond buying will be useful, \u00a0but unless undertaken in a long-term, coordinated fashion, will not provide the stability the markets need.<\/p>\n
Quantitative easing can deliver that stability, but it can\u00a0deliver\u00a0much more than that. Because it is clear that the G-7 have turned their back on growth \u00a0there are only two\u00a0remaining\u00a0ways to repay debt. The first is default. \u00a0The second is inflation.<\/p>\n
Quantitative easing \u00a0provides liquidity. \u00a0It prevents default.<\/p>\n
It is said that\u00a0quantitative easing involves\u00a0printing\u00a0money and this\u00a0delivers\u00a0inflation that washes debt out of the system.<\/p>\n
But more important, if spent into the economy rather than just being given to banks\u00a0quantitative easing can also deliver growth. Which means it prevents\u00a0default\u00a0whilst ensuring deflation is avoided and some inflation is\u00a0delivered\u00a0and by chance it generate\u00a0growth as a by product.<\/span><\/p>\n Nothing else can do that.<\/p>\n Let's have more queasing please - but let's make it the productive sor<\/a>t.<\/p>\n","protected":false},"excerpt":{"rendered":"