QE+ is the wonderful name of the new ship of economics: Quantitative Easing.
Like all ships there is always the danger of it foundering on the rocks or hitting a glacier or simply being hit byanother ship, like the Euro.
Like all contemporary vessels of its kind, QE is dependent on the trust of the passengers in the skills of the captain and his crew. No confidence and soon there will be no cruises.
Until recently there has not been much confidence in Capt. Oz (borne under-water) but in December he announced a truly spectacular and most imaginative way to improve the ballast on his ship.
Captain Oz had agreed with the Bank of England that interest payments created by the QE program would become temporary receipts for his Treasury with no fixed date for any eventual return. These interest payments of £35 billion over the next year and a half could help fuel the ship of state and help to keep the increasingly restive and poorly paid crew on-board.
Recognizing that QE is another expression for printing money which, admittedly, is a skilled craft, paper notes are a solid means of exchange and in the German hyper-inflation of 1923 were used as toilet paper. However such paper dollars and pounds are far more real than the electronic blips of billions of pounds sterling and trillions of dollars being circulated daily by traders. No wonder those floating in that fantasy world of currencies tend to lose their sense of proportion, balance or value as revealed at the recent conference in Davos.
The exceptional opportunities raised by introducing interest on QE+ could provide the funds necessary for all kinds of public projects. The rosy prospects are tantalizing. Why cut back on the arts, on education, on aid to the voluntary sector, not to mention health care, defense, or the police, when one can use the interest payments on vast sums borrowed from interest payments to the Bank of England?
We keep on hearing in the media about the dangers of economies falling off the cliff, or collapsing, or imploding.The implication is that the entire fictional financial construct is no sounder that. The unending economic crises one hears and reads about are mostly unreal but the fears and frightened reactions of the people are genuine.
With a bit of flair, confidence and optimism our prospects could improve dramatically. The equally unreal but dim prospects of recession, depression, and collapse could be reversed overnight with just the right control of new resources from QE+. Like life, the economy is what you make it. The true art, which regrettably is not being practiced by either economists or politicians, is how to make the very best of the largely fictional financial world we inhabit. The highly discreet (secret) use of “derivatives” from Quantitative Easing+ could provide the funds necessary to put an end to the recession in the UK as well as in the USA. Don’t worry about the repayment of the interest moneys borrowed, Oz and the Bank of England didn’t fix any date either.
For further reading turn to : The Future of Money , Oliver Chittenden (editor) ; Yorick Blumenfeld, Dollars or Democracy (2004) .; and Quantitative Easing in Wikepedia.