This interesting question about QE is analyzed in the recent blog of Steve Baker, Conservative MP for Wycombe and Co-founder of The Cobden Centre who presented also at Positive Money conference last year:
Of course, if you started to give the cash directly to the people, then they might finally understand that our entire economic system runs on funny money. And who knows what would happen then?
Henry Ford is supposed to have answered their question:
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Maybe or maybe not but therein is the awful unspoken truth about QE: the pound in your pocket was being systematically undermined long before the Bank of England’s QE programme. The money supply tripled between 1997 and 2010 but if not through QE, how?
The economist J K Galbraith wrote:
The process by which banks create money is so simple that the mind is repelled.
Banks lend money into existence at interest when they extend credit. Surprisingly few people know this, even amongst those who really should.
I’m sure that “funny money” — money which can be created on a whim — is undermining the basis of society, just as the economists Keynes and Mises said it would. That’s why I co-founded The Cobden Centre and why I campaign against injustice in the financial system.
I’m glad concerns about funny money are becoming more mainstream, but let’s hope we don’t have a revolution before tomorrow morning. Better things can be done.