Printing money is not the answer

Quantitative Easing with known qualities and quantities

There are some who would have us believe that “quantitative easing” (the printing of money amongst a few other measures) is a leap in the dark, a journey into the unknown, and a risk of final resort worth taking. All of these statements are of course a load of baloney, but the Chancellor, Alastair Darling, and the Prime Minister Gordon Brown are prepared to make this final throw of the dice toawrds the end of their government’s period of useful purpose.

This inflation of the money supply had been tried previously in Japan after their banking crisis of some years ago resulted in interest rates of 0%, it didn’t work and recovery took almost ten years! It was tried before that in Argentina and eventually resulted in hyper inflation after three years of deflation, and of course we all know how many noughts both the Germans (in the 1930’s) and the Zimbabweans in the 2000s, needed to add to their banknotes before loading wages into hand carts.  There is historical empirical data which suggests these measures can eventually blow up in your face and totally ruin a nation’s economy.

I somehow cannot imagine that Angela Merkel will be advising her EU colleagues to be following the British example, the Germans will be very wary of the consequences!

As even far eastern economies attempt ‘stimulate’ themselves markets have become nervous yet again having learned the history of failed attempts to reinflate.

In our case, there is even greater worry, the young men charged with leading the Conservative Opposition appear ready to go along with Brown’s plan for now, instead of steadfastly setting their faces firmly against it by calling for a return to sound money. We should be up front and honest with the public, telling them the brutal truth that things will get worse before they get better, the first period of an incoming Conservative government and possibly the next, will be fully occupied with trying to right the economic wrongs of Brown’s disasters. The public finances cannot sustain the madness that we now see, the books will need to be balanced and it will be painfull, public spending will need to be harshly reigned back, the government knows this but will be ready to assault the Tories with charges of wrecking public services. The message needs to be made plain now that this will be the consequence of Labour’s failure to grapple with it’s own self made problems.

As in the 1970s the boundaries of the state will need to be rolled back so that the private secor can have room to breathe, room to grow again and provide the tax revenues that will sustain a smaller public sector, There is little point at all in hiding from this unpalatable truth. Right now it feels as though ALL of our politicians are prepared to obfuscate and delay the inevitable, there is a bitter pill out there and it needs to be swallowed, NOW, not 12 months down the line.

As we approach the next election one of the biggest qualities that the Conservatives could offer the public is honesty and integrity about the state of the nation’s massive debts and inherent weaknesses, they owe us nothing less.

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