http://www.bbc.co.uk/news/business-16963116

Harry Redknapp offers to look for his old bank books

He's the bit I don't get.
The idea is that they create this money, give it to the banks and the banks then lend it to businesses which boosts the economy through jobs etc.
However as I understand it, the banks have failed to meet lending targets. ie They're holding onto the cash.
So why doesn't the BoE give that money to the government to spend on wages to reduce job cuts in the public sector, or at least delay them. Surely that would help the economy as we wouldn't need to borrow more cash on the international debt markets until that £50bn had run out?

nazi money no doubt, damn those rothschilds

Nothing worse than good Jewish nazis, eh?

Geoirge Osborne speaking about Quantitive Easing in 2009:


http://www.youtube.com/watch?v=Gvds30Rm6p4
(quote around 1:06 in)

He also notes that QE in Japan resulted in the banks hoarding the money and hopes it doesn’t happen here. That was in 2009. What happened here? The banks hoarded the moment. Whose to say that this isn’t going to happen again?

Osborne has previously referred to Quantitive Easing as “the last resort of desperate governments” (http://www.newstatesman.com/blogs/the-s ... sing-round) but has clearly changed his tune in more recent times. I hope he gets to explain his position in regards to that quote.

So, here we go again. A bunch of Old Etonians cocking about with the economy. Where’s that picture? Ah, yes. I think this sums it up rather nicely:


Eton boys leave air-raid shelter by hairydalek, on Flickr

I'm slightly confused by this. I thought that QE measures came from the Bank of England, not the Chancellor, and that the BoE had expressly been set up so it wasn't taking orders from the Chancellor?

Or have I got it completely wrong? (I'm aware that even if the two entities are in theory separate that doesn't stop 'conversations' from happening of course).

The BoE gets to decide yay or nay but I assume the Chancellor can tell them he thinks it would do some good. Mind you, given some of his previous decisions, he probably also thinks the moon is made of cheese.

Jon

Handy that, the BoE appearing to be independent to the government. However, I suspect the arrangement is slightly more cozy.

Nothing is given to banks. When BOE buys a bond from somebody that somebody will have more money than before. Also money suply has increased because that money wasn't available before, BOE has had it in its safe (not really in the safe but for illustration it sufficient to say so). More money sloshing around => lower interest rates...


Lending just for the sake of lending is stupid...

This isn't lending for it's own sake (not that that would be wrong in a capitalist economy but anyway...). It's lending to stimulate the economy by promoting growth. It's the flip side of the austerity measures. Government cuts the amount of money it ploughs directly into the economy through public spending and the private sector fills the hole so the economy doesn't deflate, if you'll excuse the mixed metaphor. However without finance the private sector can't grow, so the economy ends up stalling.

In fact, the justification is kind of irrelevant. The banks agreed to a certain amount of lending in the Merlin agreement as a condition of the government bailout. The rumour is they're not at all meeting the commitments they made in the Merlin agreement. It will be.... instructive to see if the government does anything, if this turns out to be true. In a 'which is the monkey and which is the organ grinder' sense.

Jon

Less stick more carrot.