"PRINTING loads of money is proving very popular. The US and the UK have passed the habit on to the euro area. They do it differently, but the end result seems to be the same.
Governments can carry on borrowing huge sums. The new money keeps the interest rates down. That hurts savers and undermines pension funds.
Here, the Bank of England presses a button, creates the money and buys up government debt with it. Effectively, it is lending it to the Government.
In Euroland, the central bank lends huge sums to the commercial banks at just 1 per cent. They, in turn, go out and buy government debts.
So far, it has all seemed so easy. It leads people to say: “If we can have all this extra public spending without having to pay taxes, why didn’t we do it before?” Well-run governments have not done this in the past because they fear it will simply put prices up.
If you print a load of extra money but nothing more is produced, the price of everything is likely to go up by the amount of money you print..."
Here, the Bank of England presses a button, creates the money and buys up government debt with it. Effectively, it is lending it to the Government.
In Euroland, the central bank lends huge sums to the commercial banks at just 1 per cent. They, in turn, go out and buy government debts.
So far, it has all seemed so easy. It leads people to say: “If we can have all this extra public spending without having to pay taxes, why didn’t we do it before?” Well-run governments have not done this in the past because they fear it will simply put prices up.
If you print a load of extra money but nothing more is produced, the price of everything is likely to go up by the amount of money you print..."
