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| Britain |
| British Chancellor Backtracks On Printing Money Scheme |
| 2009-01-08 |
| Chancellor Alistair Darling has denied he is planning to "print money" in an effort to tackle the downturn. On Wednesday, he told the Financial Times newspaper he was considering a policy of "quantitative easing" to increase money supply to the economy. He has now said he is looking at "a range of measures," but "nobody is talking about printing money". Shadow Chancellor George Osborne said any such move would be "the last resort of a desperate government". According to the BBC's economics editor Hugh Pym, the Treasury could resort to the use of quantitative easing as falling interest rates become less effective at stimulating the economy. Instead of literally printing money, the Bank of England would write out cheques to banks in exchange for assets such as corporate investments. The hope would be that the banks would then lend this extra money to consumers who would in turn go out and spend it. The government could also borrow more from the Bank of England and then use this money to invest in the economy via spending or tax cuts. However boosting money supply like this effectively creates inflation - normally avoided by the government, but in seen as a necessary evil in tough economic times, our correspondent said. |
| Posted by:Anonymoose |
| #2 If the banks are sound, there's no need to give them money. Even if they have a zillion dollars in cash on their books, they won't lend it unless there's something to loend it on. and that's where the guvmint comes in. |
| Posted by: Mike N. 2009-01-08 19:43 |
| #1 The hope would be that the banks would then lend this extra money to consumers who would in turn go out and spend it. But they don't do that, they horde it to make their books look better. We've already been through this in the US. |
| Posted by: bigjim-ky 2009-01-08 15:49 |