Quantitative Easing Propaganda From the Bank Of England

   I happened to come across the Bank of England's (BOE) website yesterday and saw an interesting article titled "Quantitative Easing: Putting more money into the economy to boost spending." I am always fascinated by how much contempt central banks have for the general public. They talk to us like children in an Orwellian police state. The purpose of the BOE's article is to convince the British public that inflation is a good thing. If the public wants a strong economy they should also want inflation. Of course to the rational person, inflation is a great evil and represents an illegal confiscation of purchasing power. It has ruined the middles class in western economies because wages never keep up with inflation, which results in a decrease in the standard of living. But lets see the Bank of England's propaganda in action:

    Low and stable inflation is crucial to a thriving and prosperous economy. The    Bank of England aims to keep inflation at the 2% target set by the Government.
   You can tell by this statement that the British public are already dumbed down to the point where they do not even understand what inflation is. The British government is so arrogant that they can openly announce that they are going to steal 2% of the public's purchasing power every year with impunity. At least the criminal Federal Reserve says it wants "price stability." The report goes on to state that the BOE has to supply more money to the financial system to help the economy. But notice how they phrase their money printing operation:
The MPC’s decision to inject money directly into the economy does not involve printing more banknotes. Instead, the Bank buys assets from private sector institutions – that could be insurance companies, pension funds, banks or non-financial firms – and credits the seller’s bank account. So the seller has more money in their bank account, while their bank holds a corresponding claim against the Bank of England (known as reserves). The end result is more money out in the wider economy.
   The reason the BOE tells the people they are not printing money is because at a primitive level the public still understands that money printing causes massive inflation and steals their wealth. So the central bank is careful to conceal the fact that QE involves electronic money printing. They tell the public that they are just buying assets which creates bank reserves. Next the bank attempts to explain why money printing..err I mean asset purchases help the economy:
Asset purchases increase the supply of money directly into the wider economy which should boost spending. For example, if a pension fund or life assurance company sells an asset to the Bank this boosts the amount of money in the economy. The seller of an asset to the Bank can spend the new money it receives on goods and services which directly adds to overall spending or it can purchase other assets which will tend to boost asset prices more broadly and provide an indirect spur to spending.

Purchases of assets by the APF should also provide confidence to private sector investors that they can sell assets, reducing concerns about liquidity and stimulating trading activity. That should make it easier for companies to borrow directly from capital markets. The availability of new finance allows companies to make new investments which again will add to aggregate spending.
 Wow after reading all of this how could you not yearn for Quantitative Easing? Why has the BOE not tried this before since it strengthens the economy, boosts asset prices, and increases private sector confidence. Using the Bank of England's specious reasoning they should be printing 10's of trillions of pounds (instead of just 200 billion pounds) because it would create perpetual prosperity for all without any negative consequences. And don't you worry--the BOE is always keeping its eye on inflation and would never let things spiral out of control:
The Bank of England is committed to low and stable inflation. Together, large cuts in Bank Rate and quantitative easing provide the economy with a substantial boost, and reduce the risks of inflation falling below the 2% target.
   The most disturbing part of this propaganda is that the UK inflation rate has been consistently above the government's official 2% target. In fact in his May 2010 inflation report to Parliament, BOE Governor Mervin King noted that inflation was running above 3%. The only time the number has ever dipped below 2% was for a very brief time in the early part of 2009.  So while the BOE tells the public that they are implementing QE to help achieve the 2% inflation target, the truth is that inflation is already above the government's target. The reality is that British government is broke (same can be said for the US) and can only pay their bills by printing money. The UK's annual deficit is so large that the bond market cannot absorb all of the supply, which forces the Bank of England to buy the bonds with (electronically) printed money. But in the Orwellian doublespeak world we currently live in the government never wants to tell the people the truth. Instead they tell them fantasies which keep them pacified and compliant and so far it seems to be working--in the latest BOE survey on inflation 56% of respondents thought the UK's inflation rate was "all right." Ignorance really is bliss.

One last statistic to leave you with. Having a 3% inflation rate means prices double every 26 years. Is this considered price stability?



1 comment:

  1. Theirs no end to the QE'S all the central banks have this disese.