A desperate gamble fraught with risks
When economists start trying to dazzle us with technical jargon, it’s time for us ordinary mortals to count our spoons.
That moment is now upon us, as the Bank of England applies for permission to try what it calls ‘quantitative easing’.
The buzz-phrase may sound fancy, but its meaning is all too simple: since cuts in interests rates have failed to stimulate the economy, the Bank now wants to print money that nobody has earned.
Unearned: The Bank of England applies for permission to print extra money
Let’s be clear: unlike thousands of economists who failed to predict the credit crunch, the Mail doesn’t pretend to have the answers to the crisis now threatening all our livelihoods.
We are even prepared to believe it possible – just possible – that in these extraordinary times, increasing the money supply in a carefully controlled way may succeed where other measures have failed.
But we must warn that terrible dangers lie down that road.
Indeed, if Margaret Thatcher had one economic lesson for Britain, it was the basic rule of monetarism: the more money we print, the less every banknote is worth.
It was a lesson learned the hard way in the 1970s, when successive governments set the presses rolling at the Royal Mint in a bid to pay off their debts.
The result was the poison of stagflation – soaring prices and stagnant growth. As ever, it was the most vulnerable who suffered most.
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Today, that danger is clearest in Zimbabwe, where inflation is running at several billion per cent (they stopped counting long ago) and unemployment stands at more than 90 per cent.
Nobody is suggesting that Britain will come to that – or anything like it. But Zimbabwe’s desperate plight should set alarm bells ringing for any central banker tempted to hit the button marked ‘print’.
Paradoxically, the current weakness of the pound gives Britain a useful advantage over our competitors, making our exports 25 per cent cheaper than they were a year ago. (And what a mercy we never joined the euro, which would have lost us that competitive edge.)
But if the pound plunges much further, as the presses roll at the Mint, the time may come when confidence in Britain collapses.
Then where will the Government find investors willing to finance its huge borrowing?
Let the Bank beware.
Affront to sanity
Madness is the only word for it. If the Home Office’s fears are confirmed, 11 dangerous terror suspects – including Abu Qatada, Osama bin Laden’s ambassador in Europe – will today be awarded human rights compensation from the British taxpayer.
Never mind that they plotted to rain death on Britain. Never mind that most arrived here on false passports – or that they would have been freed from detention if they’d agreed to leave the UK.
In the Alice in Wonderland world of the European Court of Human Rights, the terrorists are the victims and we are their oppressors.
Why, we are not even allowed to know the names of eight of them, for fear of breaching their rights.
Meanwhile, Qatada has already launched an appeal to the European Court against yesterday’s ruling by the Lords, in an all-too rare display of judicial common sense, that he should be deported to face trial in Jordan.
That case alone, expected to last years, will add hugely to the £1.5million he has already cost us in legal fees and welfare benefits for his wife and five children.