This cartoon was copied from http://hackcartoonsdiary.com/
“In very simple layman’s terms, the central bank creates new money out of thin air. It then uses this money to buy what is essentially an IOU, usually from the government. This money is credited to the bank account of the seller of the IOU. The bank can then use this money as a basis for creating more new money by increased lending.”
The term “quantitative easing” has such a wonderful ring to it. It sounds like something that Monty Python might have made up.
The day on which the British Government decided to flood the country with Monopoly money (aka QE) was also the 25th anniversary of the start of the miners’ strike. Political activist and musician Billy Bragg blogged about both events in today’s Guardian. I quote:
“There is a bitter irony in the fact that the Bank of England chose the 25th anniversary of the beginning of the miners’ strike to fire off it’s weapon of last resort in an attempt to damp down the conflagration currently sweeping through global capitalism. The wry smile that passes across the lips of those who opposed the naked selfishness at the heart of the Thatcherite experiment will be mirrored by the disconcerted frowns of those who, having wholeheartedly embraced the free market, never thought that it would lead to this. Like Frankenstein’s monster, Thatcherism has turned on its creators.
Is there anybody out there willing to stand up – on this, of all days – and raise a toast to the wilful destruction of our manufacturing industry and its replacement by the financial services sector? Yes, there were unions who were resistant to change, but whoever came up with the idea that the solution to this problem was to import cars rather than make them ourselves sacrificed more than just the entire engineering skills base.
The forces that Margaret Thatcher unleashed in order to defeat the NUM [National Union of Mineworkers] destroyed whole communities before leeching into our society. Untamed by successive governments, these same forces now threaten to devour us all.
The housing bubble that has been source of so many of our recent difficulties, was kickstarted by Thatcher. Selling off council houses to their owners was a popular idea at the time, but by refusing to allow councils to build more stock, it ultimately forced up prices as demand rose. When the Tories slashed the state pension and people started looking around for a way of ensuring financial security in their old age, bricks and mortar seemed like a sound investment.
Without powerful unions to protect them, the wages of ordinary workers were held in check while the cost of housing began to spiral upwards. As it became increasingly difficult for first-time buyers to get on the property ladder, a newly deregulated banking sector began offering ever more “attractive” loans. And we all know where that led.
Would any of this have been different if Thatcher had lost that titanic struggle in 1984?
She would have still been in power for another three years, but she would not have tasted blood. A chastened Conservative party might have realised sooner, rather than later, that the ultimate price of Thatcherism would be the brutalisation of society.”
Mr Bragg has his detractors but he gets my vote. Britain back then had serious economic and social problems. Instead of solving them, Thatcherism had a snowball effect that has left the country staring into the abyss.