Fraser Nelson

The Bank can’t print a way out

The Bank can't print a way out
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Today's latest move from the Bank of England is straight from the Dale Winton school of economics: the team (ie, the Monetary Policy Committee) has been given £75 billion to spend in just three months. How will they manage? Time starts... now!

Although plenty predicted today's announcement that Quantitative Easing will now be started few predicted the scale - £150 billion "maximum". The MPC's decision to spend half of it in 90 days makes the whole exercise into some kind of fiscal Supermarket Sweep.

"It is likely that the majority of the overall purchases by value over the next three months will be of gilts" says the Bank of England - handy, that, seeing as Brown has so much debt to issue. They are now out of ammo on the monetary side, having halved base rates to 0.5% where they are likely to stay until at least 2011.

So will this persuade the banks to start lending? Of course not - we seem caught in this Groundhog Day of multi billion pound spending programmes bailing out this, guarantee that. It will fail. Billions will still be promised at the budget, and the pattern then repeated.

Would anyone be so bold as to say this £150bn maximum is really a maximum? Just wait until Budget day on 22 April, and see what the latest bailout will look like. Seriously, I have counted 15 bailouts since Northern Crock blew up, and we'll probably see another 15 before election day. And now they have started to print money, where will it stop? As Jeff Randall put it a while ago, from here all roads lead to Harare.

Written byFraser Nelson

Fraser Nelson is the editor of The Spectator. He is also a columnist with The Daily Telegraph, a member of the advisory board of the Centre for Social Justice and the Centre for Policy Studies.

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