Are we really to think QE and AT have done this country any good
This is a blog for a friend on the cost of QE to Britain, a cost being justified by the BOE by a speech this week that he doesn’t buy , I don’t buy and pensioners don’t buy.
I am in correspondence with DC savers who were in lifestyle programs in the second decade of this century that went nowhere and blew up in the 2022. I am in correspondence with pension mangers who saw their DB pension funds lose a third of the value of their value in 2022 when they had to meet the borrowing bills for loading up on gilts by selling what they had left in growth stocks. Here is my friend talking about QE not from the perspective of pension savers but from that of the tax-payers.
Nearly £900bn of QE into the system and it achieved eff all apart from inflating a various asset bubbles – great for the top 10% but with virtually no impact on the real economy or industrial growth.
Imagine if that injection of funds had been allocated to actual tangible investments such as transport infrastructure, R&D spending, new homes, new hospitals.
QE has been a grotesque failure – and in the same time period since it began China has done exactly what I’m talking about (massive fiscal stimulus with coordination between central government and China’s financial institutions) – and just look at the difference in outcomes
When will the penny drop that monetary policy (fiddling around with interest rates and QE) doesn’t work, what we need is Keynesian fiscal policy.
Now we are having to reflate the economy with the money we have saved in DC and the much diminished capacity of DB plans to buy growth stocks as they try to run on.
Should we forget that the Governor of the Bank of England was the CEO of the FCA before hand. He can not be oblivious of how QE worked against our pension system , requiring it to borrow to stay solvent in the ludicrous valuation system it had adopted. To say as Bailey says this week that QE had benefits to the country , is a nonsense. I may have my differences with Arun Muralidhar but I know him as an economist who isn’t batting for the Bank of England, HMT or monetarism.
This nonsense from BoE forgets to mention the enormous cost low rates imposed on individuals saving for retirement. Will send you my UK SeLFIES historical price index in case you want to make a post on it.
It will go into another blog I will write from my hospital bed about the impact QE had on savers who had DC lifestyling (see above).
The Reuters version that Aron has sent me is worth reading, delusional as it shows BOmE and Bailey (deliberately or nonsensical I can’t make out)
There is an FT version of the BOE’s version of QE and what it is doing with QT in the Financial Times. If you are an early bird on Wednesday 12th you can read a free version on this link,
If you have time to read the comments on the FT article , you will get some idea of the strength of thinking financially educated people have for having later in the month to have to pay higher tax because of QE and the payback of QT, which translates into higher taxation for ordinary people.