Brown’s big punt on Britain
When it comes to monetary policy, Britain has become the Evil Knievel of the developed world. This week the Bank of England began printing money to ‘save’ the British economy. I can’t understand why anyone would believe ‘quantitative easing’ (QE) is a good thing. And when I was chatting to some of the City experts who regularly attend our Roundtable meetings the other day, none of them liked the idea either.
One made a particularly good, and deeply disturbing, point. Buying government debt with new money is seen as one of the most extreme forms of QE – it’s a bit like the government just writing itself a cheque. The US, whose central bank head Ben Bernanke has been one of the most vocal advocates of money printing, has quietly backed away from this form of QE. The Bank of England, on the other hand, has dived right in, sending gilt yields plunging.
Why the radical, devil-may-care approach? There is barely a year to go before Gordon Brown has to call a general election…
• Read the full editor’s letter here: Brown’s big punt on Britain