The Dangers of Wanton Money Printing

Interesting commentary in the UK on QE:

“The truth is, though, that we have been living in an economic La La Land, induced by perhaps the biggest policy undertaken during the Labour Government’s period in office: printing money, or quantitative easing, to use its economically correct but unlovely name.

The way QE works is like this. The Bank of England is owned by Her Majesty’s Government and the Chancellor has given it permission to create £200 billion of what is known as “central bank money”. Rather than physically print the notes at its works in Debden in Essex, it has simply been buying up Government bonds, or gilts, from investors and crediting electronically the accounts of their bankers.

What happens now? At times like these, history can be a useful guide and I am afraid the precedents are rather scary. Printing money has been used before as an emergency monetary policy: during the Napoleonic Wars; in the 1820s; and during the First World War. On two out of three of those occasions the authorities overdid it and the result was inflation, followed by a second crash, when the printing presses were turned off rather clumsily.”

Worth perusing . . .


Printing money is a game with potentially dangerous results
George Trefgarne
Telegraph, 14AM GMT 30 Dec 2009

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