Thursday, August 06, 2009

We're rich!

Over the next three months the Bank of England is giving the country a whopping fifty billion quid that didn't even exist before! That's loads each - let's have a party, whoop!

We're going to need cheering up too because the bank said that the recession "appears to have been deeper than previously thought" which, seeing as it was thought that we were plummeting into the very abyss of Hades means we're probably in the doo.

So let's get on with the part... hold on... the Bank of England is creating this money by buying assets off other banks. Oh. Hope they have some champagne for us then.

4 comments:

ModernityBlog said...

Shame they can't spend a few million on Vestas and create a nationwide renewable energy programme?

Jim Jay said...

Apparently last year in Australia they did the same thing but instead of giving it to the banks they just gave everyone $500 (or similar).

I quite like that system.

Johnobrow said...

"Apparently last year in Australia they did the same thing but instead of giving it to the banks they just gave everyone $500"

Including thousands of dead people. Though which industry they thought that would benefit I have no idea.

Jim Jay said...

The idea of quantative easing isn't to support industry it's to create liquidity in the money supply (free things up and get things moving).

When the money is given to the banks it is supposed to make them more comfortable about lending, but when it's given to the people they are far more likely to spend it - even if it's to pay off debt, which just seems to fit the purpose more snugly.

The dead people is presumably due to those who've died recently and so are still on the electoral register, as long as it gets into the economy is the main thing (if you're for QE obviously).

Investment in industry (creating green jobs for example) has to be done through government spending rather than QE