UK Government may start printing money today

They call it quantitative easing and they say they won’t actually be running the prsses at De La Rue where the notes are printed, but this is effectively what is about to be done.

The Bank of England is expected to cut interest rates to 0.5% today and to start ‘increasing the money supply’, ‘quantitative easing’ or ‘printing money’ – it’s all the same thing. The amount concerned is £150 BILLION. We’re using capitals to emphasise this because the sheer scale of Government borrowing since Autumn 2008 has been so vast that we now hardly notice that these days the figures are always in BILLIONS. This itself is – subtly and profoudly – inflationary.

Japan is the most recent country to have tried printing money – around the turn of this century when its economy was facing a deep recession. The impact of this has not yet been fully assesssed but the most that can be said is that it had no more than a limited success. This underscores the sense that the Westminster Government is simply trying anything and that this is Brown’s fiscal version of Custer’s last stand

A serious problem is that the two actions expected today – lowering the interest rate even further and starting to print money – will see the value of people’s savings markedly affected. This tends to hit hardest those who have retired and have no opportunity to make up the shortfall in their slender personal cushions against hardship.

And this matters a lot in Argyll with its population skewed towards the upper age range.