So we’re going to ‘inject £140 billion into the economy,’ are we? Wow. Who knew it was that easy? Why not inject £280 billion and be twice as rich? Why not a trillion?
I can’t believe I keep having to write this, but we got into this mess in the first place because there was too much debt: too much private debt, too much corporate debt and too much government debt (don’t click on this link unless you want to be depressed). For a decade and a half, the Bank of England, in common with other central banks, kept interest rates artificially low, blowing up a credit bubble that was bound to burst sooner or later.
Since that burst came, four years ago, Mervyn King has been frantically working the bellows to reinflate the bubble. Interest rates have been slashed even lower and repeated spasms of quantitative easing have created new money equivalent to a fifth of our GDP. Having screamed at banks for lending too wantonly, ministers now scream at them for not lending wantonly enough. Yesterday, the Bank of England announced that it would simply give banks money to lend.
Thus do we penalise thrift and reward debt – precisely the approach that brought us to this wretched condition.