Man in a Shed: Will the Bank of England's printing presses be turned off soon ?

Thursday, February 04, 2010

Will the Bank of England's printing presses be turned off soon ?

Rumours are circulating that the Bank of England will soon stop funding the government debt by printing money. ( We'll if you ask them or a Labour Treasury minister they will say the same thing, but with a hole load more guff ).

Anyone want to buy long term UK debt at low interest rates with the prospect of a hung parliament and no clear action to reduce the deficit being undertaken till yet another general election can be held ?

The risks are real as Greece is showing.

This will be interesting ... if you excuse the pun.

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The pound in your pocket

"We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists." James Callaghan

“The trouble with theoretical economists is that they don't understand that when you have a deficit, you can only finance it by borrowing, and you've got to persuade people that it's worth lending money to you and that they'll get their money back... there's no way of escaping it.” Dennis Healey during the 1976 Stirling Crisis.

"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens ... Lenin was certainly right. There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." John Maynard Keynes, 1920.

"To preserve [the people's] independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty, or profusion and servitude." Thomas Jefferson, President of the United States of America,1801-1809.

Inflation is taxation without legislation .. Milton Friedman