More Quantitative Easing is expected this week. It is likely that the Bank of England will click on their computer mouse to issue another £50 billion, to add to the £325 billion that has already been poured into the banks .. never to be seen again.
Rather unfortunate timing given the weekend’s revelations about Libor-fixing banks.
What the Federal Reserve is up to, and how we got here.
Feb 1, 2012
The bears are back to discuss the latest doings by the Federal Reserve and The Bernank.
ThinkLeft’s Is ‘Austerity’ intended to increase unemployment and suppress wages? outlines the same system operating in the UK.
QE obviously isn’t working in the way it is intended. The credits given to banks are not finding their way into the real economy. QE is simply not stimulating growth in the money supply in the way it is intended to.
So what has gone wrong? In short – bankers greed. Banks demand a 15% return on equity to enable them to support their “business model” of spending over half their turnover on pay packets that average £350,000 . This level of return is so high and greedy that banks have no interest at all in lending for mortgages or to small businesses – the returns are too small.
‘The Tories and their backers want high unemployment and household debts to rise as this lowers wage demands and increases corporate profits. They are deliberately engineering a slump in order that the banks who provide 50% of their funding and the donors who can afford the £250,000 dinners with Cameron can slightly increase their profits.
Business is sitting on £700 billion of retained profits, banks are rich enough to pay an average of £350,000 to their staff. So what does Cameron do? He abolishes the bankers bonus tax, drops the 50p highest tax rate, lowers corporation tax and exempt overseas subsidiaries of multinationals from paying tax. The rest of us get a 5% hike in VAT, trebling of university tuition fees, youth unemployment raised to 20% and once again (as with Thatcher) unemployment knocking on 3 million people.’
A sensible government would announce that the money supply is shrinking, that the £325 billion in the Asset Purchase Facility can be safely monetized and that public sector cuts are cancelled and a £175 billion stimulus package can safely be afforded.