UK Bank Decision: Print More Money

It seems that there is no place left to go but to introduce fresh money into the UK economy. The Bank of England is making fast moves to gain approval to begin quantitative easing (QE) in order to ease the flow of credit and cash in the market. By buying corporate and government bonds, this measure is designed to improve company buying and for the banks to increase lending.

So, in essence, what they will do is print new money. Sound familiar to anyone? Sound like a risky move? Anyone who remembers the history classes at school, with images from the Weimar Republic of children playing with stacks of cash might wonder if increasing inflation will lead to similar situations. Others may look towards Zimbabwe, where the reckless turning on of the printing presses has led to sustained levels of inflation and corruption. But is this panic-inducing thought or does it carry weight?

Hard to tell, and really the only way of dealing with this is to sit and wait. The Bank’s governor, Mervyn King, has been described as throwing caution to the wind by one analyst, and many believe that his action in light of the deepening recession has been slightly on the wild side – but he has commented before that he will do whatever it takes to try and slay the beast and stave off deflation.

So what about the poor pound? It took a further knock on this latest announcement from the Bank, and there are many who worry about its future in light of there going to be an awful lot more of it around. Who wants to buy british pounds when the value becomes more depreciated?

It’s certainly going to be an interesting time to come. There’s not much else we can do now except sit and watch – and hope for the best..

Explore posts in the same categories: Economy, News, UK Media

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