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Mervyn King, Bank Of England Governor, Defends Quantitative Easing

Mervyn King

First Posted: 25/10/11 14:19 BST Updated: 25/12/11 10:12 GMT   PA

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Bank of England governor Sir Mervyn King has defended a move to pump a further £75 billion into the economy at the risk of driving up inflation.

MPs on the Treasury Select Committee grilled Sir Mervyn about whether the decision to restart the quantitative easing programme would increase inflation, which hit 5.2% in September, causing more pain for cash-strapped households.

But the governor said the Monetary Policy Committee (MPC) had unanimously made the decision because they feared inflation was in danger of dropping below its 2% target looking ahead.

Sir Mervyn also came under fire for waiting too long to launch the programme, but he said the committee's view was changed by the marked deterioration in the eurozone and world economy in August.

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novelist2000
veritas non olet
194 Fans
06:09 AM on 10/26/2011
I have said that for weeks, there is no other possibility than print money. When you have x amount of people who the economy cannot absorb, they still need to buy something to eat - and for this you have to give them money, even if you just print it. In former centuries they would ceate a war to distract from domestic troubles, draft the males and send them to their deaths.

The current situation is beyond the theories and models, who haven't worked anyway or we would not have that situation.
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floodberg
Attorney (ret.)
857 Fans
01:40 AM on 10/26/2011
What about the 99% deciding between heating and eating?

King defends the 5.2% inflation, saying they were only shooting for 2%.  That's 2% too much in a country where jobs are short, prices are spiraling along with rental costs, and a massive population of migrants are taking jobs for less money (as well as benefits) and sending a high proportion to their home countries.  UK residents are choosing between heating and eating, facing cuts in benefits and services, and increases in everything.

Take a good look at Russia, 1917; your income disparity has hit that point (gini coefficiant of .36).  I assume somebody in UK knows that's not a good place to be.  People can take only so much economic pain before they fight back...and that applies to all forms of government, including republics.

Of course, thank heavens King nor any of his questioners don't worry about the little people.  QE exists to ease the pain of businesses and banks, not the taxpayers. 

Carry On and Keep Calm.
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