Morning Line: The BoE now has no choice but to print more money

The BOE are selling the man in the street down the line. All their explanations that each months inflation is a 'one off' are rubbish as is eventually becoming clearer to anyone who goes to the shops and pays household bills knows. Perhaps the MPC members should get out more. In the meantime suppressing interest rates means they are using savers to meet political ends of inflating our debts away.

Quantitative Easing is a gateway drug to currency destruction.

Quantitative Easing always be a "one-off".

Inflation will always be "surprising" when it stays high.

The little man (i.e. everyone in this country who are not banksters!) is screwed.

But worry not. Your government have got it all figured out...!

QE = blowing on a fire

(ie. it will make the flames surge for a while....but the fire is still going to go out!!)

This is inflation by another name.

Aye we're all doomed. our politician's talk a tough game, but in reality they dont have tough guys in charge of the regulatory bodies. The regulatory bodes / auditors dont have a clue and I suspect enough bodies to monitor the dubious activities to see all the scams going on. The bankers / hedge fund managers rolled the dice and the we pick up the tab for the greedy pigs with their noses in the trough.... My idea since we the taxpayer have a large stake these banks is, lets put some civil servants into the banks to kick ass of behalf of the government & taxpayer and kick out the untalented bankers saving billions on bonuses, that we save a lot of dosh and keep some civil servants in jobs.... sorted ;-)

If banks are not lending and cutting staff; if companies are not investing and cutting costs, there is already surplus cash lying somewhere.

Shouldn 't the plan be to get that liquidity into the system, rather than newly printed money? Keynes said go into the shops and spend - yes, but he added - only buy British-made goods. If the new paper money goes to swell cheap imports, the trade deficit will get worse, and do little for an economy which relies for its health on services, whether personal or financial.

They can't print gold. Nor can they print land.

It just proves you cannot keep a good raving lunatic down.

Alan Tonks' comment seems to me the best so far, although I'm not sure if he's alluding to the original article or to previous comments!

What, more seriously, intirgues me is that at present the Government needs to issue loads of gilt-edged to finance the deficit, but the consequence of the Bank's QE and other efforts to inject liquidity is large buying, both directly and from the Banks, and little stimulus percolating into the real economy. If this finally led to greater economic activity, the Bank withdrawing QE and more bank lending, it would be fascinating to see by how much gilt-edged yields would rise........

I see this as a true indicater of how severe the down turn realy is, and yes each new Pound issued eventualy devalues all the others a little.

I beleve they are trying to stave off the true reality of the UK economic performance by moniterising the debt, and keep employment from collapsing by encouraging spending of the newly created Pounds.

Trouble is, this is short term thinking that will drag us deeper into the mire and all the prudent people will suffer along with the rest who have spent and borrowed.

What is the point when it all ends up in China?Loads and loads of Sweat shop clothes, We import all this unnecessary stuff, It could be made here if wages were not so ridiculously high compared with the rest of the world. Nearly every shop locally that serves a wide area is made up of Women's clothes shops. How they all survive is beyond me the mark up must be collosal. I would put a very high purchase Tax on these imports.

Quantitative Easing will do nothing for the economy; it really is about the most stupid moronic way of trying to instil some kind of stability into the economy.

In fact it will do the opposite it will destabilise the economy, because they are using paper with literally no value whatsoever. WAKE UP before we are trudging to the baker with barrow loads of money for a loaf of bread!!

Just returned to the southern hemisphere from a visit to the UK. The BOE story regarding inflation one offs is garbage. I was shocked at the increase in costs since my previous visit last year. Looks like your all headed for stagflation so hang on to your hats!!

If anyone hasn't yet read 'when money dies' by Adam Fergusson please do.

Far fetched? Couldn't happen again?

Really??

Keynsean politicians such as Mr & Mrs Balls vociferously demand a stimulus as the solution, and often the cite the experience of the 30s, when prices stagnated or even fell leading to severe unemployment.

Without Keynes (whose famous book was published in1936), Britain did not suffer the extremes that other countries endured. The peak of 2,995,00 unemployed of Jan 1933 had fallen to 1,276,000 by the autumn of 1937, when 11 million in insured occupations surpassed the figure of 1929.

The most powerful energiser was house-building. In England and Wales 300,000 houses were built in each of the five years ending March 1939.

In 1939.Britain's six leading manufacturers produced 350,000 private cars

What was the secret - a tariff barrier that even Keynes admitted was necessary to develop British industry. This was imposed on the import of steel and cars.

This is officially forbidden for members of the EU, but France, for example, kept out Japanese cars by imposing expensive and totally impractical conditions; for example requiring them to be parked in an inaccessible region in central France. When EDF took over London power supply, all vehicles were required to be French. They have just sold the business to a Chinese company - what will they require?

Further to Bernard's comment: Britain escaped the worst of the 1930s depression DESPITE tariff barriers, not because of them. This was because she, and her colonies and dominions, adhered to "Empire and Commonwealth Preference", which allowed free trade across one third of the world: what we today would call "Globalisation Lite". Keynes was a Liberal, which party always advocated Free Trade.

Peter Jason Taylor doubts my observation that the 1932 tariff helped the recovery. I am not alone in this view.

Professor Foreman-Peck of Cardiff Business School in 1981 used a Keynesian income expenditure model to assess the macroeconomic consequences of the duty and he concluded that it provided a major stimulus to the British economy. The tariff was responsible for a 41 per cent reduction in imports, which, via the foreign trade multiplier, accounted for over 40 per cent of the increase in GDP in the 1930s.

A later study by Nicholas Horsewood, Somnath Sen and Anca Voicu of the

Department of Economics, University of Birmingham evaluated many studies and their results "supported the claims of those economic historians who believe that tariffs did have the desired impact – until of course the outbreak of warr in1939."

Keynes reluctantly accepted the tariff as a temporary measure in face of cheap imports that threatened to increase unemployment and industrial depression.

Imperial Preference of course was a tariff wall against countries outside the

imperial group of British dominions and colonies. Trevor May concluded that it helped them much more than the UK.

Peter Jason Taylor doubts my observation that the 1932 tariff helped the recovery. I am not alone in this view.

Professor Foreman-Peck of Cardiff Business School in 1981 used a Keynesian income expenditure model to assess the macroeconomic consequences of the duty and he concluded that it provided a major stimulus to the British economy. The tariff was responsible for a 41 per cent reduction in imports, which, via the foreign trade multiplier, accounted for over 40 per cent of the increase in GDP in the 1930s.

Later research by Nicholas Horsewood, Somnath Sen and Anca Voicu of the

Department of Economics, University of Birmingham evaluated many studies and their results "supported the claims of those economic historians who believe that tariffs did have the desired impact – until of course the outbreak of war in1939."

Keynes reluctantly accepted the tariff as a temporary measure in face of cheap imports that threatened to increase unemployment and industrial depression.

Imperial Preference of course was a tariff wall against countries outside the

imperial group of British dominions and colonies. Trevor May concluded that it helped them much more than the UK.

Without that solid recovery, especially in the car industry, which also supplied engines for the planes, Britain would not have been able to withstand the German assault.

Anonomous 1 is right. QE is a drug, the same as the urge to buy a new plasma television. The reality is that anybody who has managed to keep their job during the recession has hardly been affected by it. Until we all suffer a material drop in our perceived standard of living (electronic goods, holidays abroad, the next Sky digiHDsports thing, in car satnav, the latest mobile phone - the list of luxuries which now appear to be essenials is seemingly endless), we won't make any headway in turning round the economy. QE has to be an absolute last resort, not a mechanism to sustain an unsustainable life style.

You can talk as much as you like about the early part of the 20th century. But then they were not living in a PC Fantasyland and all the economists of the time hadn’t had a frontal lobotomy, like the present ones seemed to have had.

We had a British Empire and people’s attitudes were different, we also had a gold bullion reserve. Which some stupid berk gave away for practically nothing. If any of you can make sense of someone constantly printing funny money, when they have nothing to back it up with, then I truly feel you are living in another reality even stranger than this one.

Quantitative easing is not the answer. It will merely increase costs down the line. Correct to say that it is a drug.

When the government borrows, it has to pay a commercial rate of interest, and currently the inflation rate, kept artificially low, and in effect they are punishing, just as Labour did, those who have savings.

Better that those who have to borrow pay the true rate of borrowing and allow the savers to be compensated. That would mean that inflation would be much higher than it is at the present time, through no fault of the present government and it is better that they blame those that were responsible and then that elected them (deliberately bad grammar).

Banks are "printing money" because they charge 10 times what they theoretically can borrow at, although in reality it is somewhat higher.

Printing money is only going to cause a lot more pain down the line, and will defer the time of savers getting a proper return on their money, if cash is left in the bank.

Better that the borrowers, as I have said, by the true rate, including businesses and rather they reduce their debt. Not good to the banks, but then if they didn't pay the obscene "bonuses" (reward for failure), they would then be able to pay a proper dividend.

Most people in this country, apart from mortgages, have to live within their means, without having excessive borrowing, and it is about time that businesses also learnt this discipline.

The stories from the acolytes of Brown as to how to stimulate the economy are brown effluent and one of them is now leader of the opposition.

Out of the three front-runners, only one did not really fiddle his expenses, the other two should have been charged with obtaining money by deception and conspiracy to deceive and imprisoned for 10 years and barred from politics for life, with the loss of all benefits, pensions etc and pales and a massive fine to compensate the people for what they stole in the first place.

Mind you, that also goes for the Wintertons, now no longer Conservative MPs and all the other fiddlers, and the savings to the taxpayers would be millions and provide a signal example to any future would be fiddlers.