Mervyn King has turned our leaders into zombie puppets
It must be the biggest confidence trick of all time. It is a cheat, a scam, a fiddle, a bankers' ramp, a revenge of big money against an ungrateful world. It is called quantitative easing, and nobody has a clue what it means. According to the Bank of England, the past four years have seen £325bn pumped into the British economy to kickstart growth, with another £50bn now on the way. This enormous sum does not exist and never has. It is not "printed" money or funny money. It is no money. The one silver bullet on which the coalition relies to pull Britain out of recession is a fiction.
I have spent the last year trying to find this money, if only because it seemed rather a lot – more than an entire annual take from income tax, VAT and corporation tax together. I have asked bankers, regulators, commentators, economists, and even trotted round to the Bank of England. Ask any of them after the £325bn and they stare at the ceiling or look at their shoes. Nobody knows. The money appears in no statistic of cash in circulation or on deposit. Bank balances have not altered. Demand has not risen. Production has not expanded.
Such professional and intellectual gullibility on a matter of national salvation is staggering. When Alistair Darling, as Labour chancellor, "pumped in" £75bn, he said it would stave off recession. George Osborne, then shadow chancellor, derided it as "the last resort of desperate governments", and Vince Cable said Britain was going down the road to Harare and hyperinflation. Yet when these two men came to power, they were overnight converts. They became zombie puppets of the Bank of England and its boss, Sir Mervyn King.
We know what QE is supposed to do. The Bank "buys back" the government bonds (or gilts) that were previously sold to banks. Since gilts are as good as cash, this merely replaces an interest-bearing bond with actual cash on the asset side of a bank's balance sheet. It is a paper transaction, moving sums from the bonds column to the cash column.
http://www.guardian.co.uk/commentisfree/2012/jul/12/qe-bankers-swindle-liquidity-crisis
