Cover of MoneyWeek magazine issue no 659

Merkel's back

27 September 2013 / Issue 659

Buy European stocks


  • Tax evasion isn't Britain's problem - spending is
  • Can the Scots afford to go it alone?
  • Skip the housing-market queue


Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

Addicted to QE

I met an expert on drug addiction this week. We talked about the extent to which addicts can be functioning members of society, and what it is that can push them over the edge from functioning to non-functioning. I’ll write some more about this and on the economic consequences of our drugs policies on the blog at some point in the coming weeks (those who want a head start on the subject can read Dr Max Rendall’s Legalize).

But, rather like many other things, the conversation made me think of quantitative easing (QE) in Britain, and in particular in America. For a long time now we have been almost drowning in newly created electronic money. It has had some pretty trying side effects – not least the astonishing transfer of wealth from poor to rich, thanks to regular inflation and soaring asset prices. But so far, our economies are putting up a good show of producing a degree of normality.

Sure, London house prices are behaving rather oddly, the American stock market is hitting uncomfortable highs, and emerging markets are more nervy than usual. But overall, a Martian landing here at any point over the last couple of years, who didn’t know and wasn’t told that the only thing keeping the show on the road was massive QE, might have come away thinking that things were mostly just fine. A functioning economy.

• Read the full editor’s letter here: Addicted to QE