{"id":17270,"date":"2012-09-12T09:04:55","date_gmt":"2012-09-12T08:04:55","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=17270"},"modified":"2012-09-12T09:04:55","modified_gmt":"2012-09-12T08:04:55","slug":"how-come-we-can-do-375-billion-of-quantitative-easing-and-not-increase-the-minimum-wage","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/09\/12\/how-come-we-can-do-375-billion-of-quantitative-easing-and-not-increase-the-minimum-wage\/","title":{"rendered":"How come we can do \u00c2\u00a3375 billion of quantitative easing and not increase the minimum wage?"},"content":{"rendered":"

Since 2009 the Bank of England has put \u00a3375 billion<\/a>\u00a0into quantitative easing<\/a>. In general I've supported this move: it has in effect, cancelled more than a third of\u00a0government\u00a0debt meaning that the vast majority of the impact of this recession will not fall on future generations,\u00a0despite\u00a0all Tory\u00a0fear mongering\u00a0to the contrary. The simple fact is QE cancels\u00a0government\u00a0debt by printing money, and that exercise has had no impact on inflation and as such that debt will never be reissued. The whole process has been neat, effective and to a very large degree successful.<\/p>\n

Well, \u00a0successful in macro-economic terms; that is in keeping debt under control and the money supply working. In\u00a0micro\u00a0terms the story is very different. Banks\u00a0ended\u00a0up with most of the QE cash. They haven't lent it on: they've used it to bolster their balance sheets. And they've also used it to speculate, which is one reason why we had\u00a0commodity\u00a0prices booms and inflation in 2010\/11. That\u00a0resulted\u00a0in a \u00a0remarkable\u00a0recovery in bank profits and a\u00a0return\u00a0of bank\u00a0bonuses\u00a0would no one would\u00a0have\u00a0expected that to happen so soon after the crash.<\/p>\n

To put it another way, he benefits of QE went pretty much one way: to the most rich.\u00a0Pensioners\u00a0suffered to some degree as interests rates and pension annuity rates crashed (although I'd add, low interest rates always pay an economy and\u00a0requiring\u00a0high rates to pay pensioners is absurd; state pension provision should cover that job: that's called predistribution\u00a0in current jargon). But most of all, the gap between richest and poorest increased. Those on minimum wage have seen no\u00a0benefit\u00a0from QE. Public sector employees on pay freezes must wonder where \u00a3375 billion has gone and how it\u00a0passed\u00a0them by.<\/p>\n

And they'd be right to do so: QE has missed them altogether. And until we change QE so that it provides the finance to get the economy going again it will continue to do so. That's possible. I called the alternative Green Quantitative Easing<\/a>. There's more on it here. The demand it would create would increase real wages, and that's exactly what our economy needs right now.<\/p>\n

QE worked for some few at the top: now it's time to do something for everyone else.<\/p>\n","protected":false},"excerpt":{"rendered":"

Since 2009 the Bank of England has put \u00a3375 billion\u00a0into quantitative easing. In general I’ve supported this move: it has in effect, cancelled more than
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