The FT calls it "shock and awe" as the Bank of England, unelected guardians of our economic well being, launch a second tranche of "quantitative easing" (hence QE2) in a desperate attempt to improve market confidence and pump more money into the economy.
For those unsure of how quantitative easing works The Guardian has published a simple guide. The basic rule is that the Bank of England buys assets from commercial banks, giving them more money to lend to businesses. At least that's the theory. In effect the Bank of England is printing money and the bankers are profiteering. It will take some time for the real impact to trickle down into the economy. As a tactic in 2009 it may have had some traction as a one off. In 2011 it begins to look desperate.
Everyone I meet in business at the moment tells me how slow things are. Unemployment is rising. Businesses are closing. We are all feeling the pinch. The economy certainly needs a boost but QE2 seems to be the only feeble official response.
Meanwhile, my local newspaper tells me that Sandwell Primary Care Trust is to shelve plans for six urgently needed health centres. This follows the coalition government pulling the plug on a far reaching programme to improve local schools. It seems the Bank of England can print money to profit the commercial banks, but it can't print money to build public assets.
In Sandwell, as elsewhere in the West Midlands we now have horrendous levels of unemployment. People are sitting at home running out of money to spend in the shops whilst their time and talents are wasted. Electricians, plumbers, brickies, carpenters, heating engineers are all there ready to work. It is possible to replace money, but it is impossible to replace time. John Wesley was fond of telling early Methodists about the folly of wasting time.
So why not do the obvious? Let's use the money the Bank of England is printing to build those health centres and schools. Take people off the dole, give them a living wage and let them spend in local shops. That will liven up the real economy. It will by pass the commercial banks and go straight into local shops and stimulate demand. Lots of customers have a greater and more positive impact on a business than extra loans to stave off bankruptcy. Its time to get rid of monetarism and become a little more Keynesian. Sadly we have a government at the moment that is bigoted against anything that smacks of public spending.
For those unsure of how quantitative easing works The Guardian has published a simple guide. The basic rule is that the Bank of England buys assets from commercial banks, giving them more money to lend to businesses. At least that's the theory. In effect the Bank of England is printing money and the bankers are profiteering. It will take some time for the real impact to trickle down into the economy. As a tactic in 2009 it may have had some traction as a one off. In 2011 it begins to look desperate.
Everyone I meet in business at the moment tells me how slow things are. Unemployment is rising. Businesses are closing. We are all feeling the pinch. The economy certainly needs a boost but QE2 seems to be the only feeble official response.
Meanwhile, my local newspaper tells me that Sandwell Primary Care Trust is to shelve plans for six urgently needed health centres. This follows the coalition government pulling the plug on a far reaching programme to improve local schools. It seems the Bank of England can print money to profit the commercial banks, but it can't print money to build public assets.
In Sandwell, as elsewhere in the West Midlands we now have horrendous levels of unemployment. People are sitting at home running out of money to spend in the shops whilst their time and talents are wasted. Electricians, plumbers, brickies, carpenters, heating engineers are all there ready to work. It is possible to replace money, but it is impossible to replace time. John Wesley was fond of telling early Methodists about the folly of wasting time.
So why not do the obvious? Let's use the money the Bank of England is printing to build those health centres and schools. Take people off the dole, give them a living wage and let them spend in local shops. That will liven up the real economy. It will by pass the commercial banks and go straight into local shops and stimulate demand. Lots of customers have a greater and more positive impact on a business than extra loans to stave off bankruptcy. Its time to get rid of monetarism and become a little more Keynesian. Sadly we have a government at the moment that is bigoted against anything that smacks of public spending.
