You might think this was not the most auspicious moment to be robbing pensioners to funnel more billions into the banks. Yet that is what the authorities did last week — and hardly anyone seemed to notice. Dominic Lawson read the full article here The Bank is behind the real city scam.
Nice article from Dominic Lawson on QE in the Sunday Times today and nice to be referenced - As the economist John Ashcroft observed in April: “Far from injecting liquidity into the economy and increasing the supply of money, the Bank is mopping up new debt issues to ease the funding requirement of central government. [QE] is morphing into debt monetisation, a two-step process where the government issues debt to finance its spending and the central bank purchases the debt to fund it.” As a form of self-dealing, this monumentally eclipses the claimed manipulation of Libor.
Instead, in the House of Commons, government and opposition were convulsed by an increasingly arcane dispute over whether, in 2008, ministers in Gordon Brown’s administration had encouraged officials from the Bank of England to allow Barclays to “rig” the capital markets. This is the so-called London inter-bank offered rate (Libor) scandal.
The irony is that at the time the banks were not lending to one another anyway. Yet the announcement by the Bank of England that it was to launch a further £50 billion of so-called quantitative easing (QE) — on the same day when George Osborne and Ed Balls were noisily disputing what might or might not have happened four years ago — should be a matter of much more debate.
Over the past three years the Bank of England has in effect printed £325 billion of “new” money by the stroke of a key on a computer in Threadneedle Street. This has been used to buy government bonds held by investors, including the banks, thus flooding cash into those now despised institutions. The proclaimed idea was that the banks in turn would lend the cash to businesses small and large up and down the land, thus boosting the economy. Trebles all round!
Ostensibly the principal difference is that in the case of Barclays it was (allegedly) designed to keep a private bank afloat, whereas this financial prestidigitation is done for the nation as a whole. But if the consequences are that those living on savings are forced into penury, annuities are trashed and pension funds are plunged into deficit, while the only obvious beneficiaries are the banks, one might be forgiven for wondering which is the real scandal.
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