Jeremy Paxman hit the nail on the head on Newsnight last night, when he asked Danny Alexander, ‘and you really think the solution to debt is to get people to take on more debt to you?’
The budget was announced yesterday and it looks like the government haven’t any big, new ideas. There was a lot of discussion about the Bank of England’s ‘new remit’ when the new governor of the Bank of England, Mark Carney, joins in July. The ‘new remit’ is that the BoE won’t have to target 2% inflation, and could instead target unemployment. That’s great, but it would be even better if they could pro-actively reduce unemployment by another round of QE being spent into the real economy to create jobs rather than into the financial markets.
Generally the budget seemed pretty uninspired, with the government putting £3.5 billion into mortgage lending, to try and get the housing bubble growing again.
On Newsnight, there was also a lot of discussion about ‘printing money’, no one seemed to be clear whether it was a good or bad thing. As per usual the fundamental questions about the current situation were left out, ‘who creates money?’, ‘where does it go?’, ‘how can this be changed to get out of a recession’. The fact the 97% of our money supply is digital, not printed, and that this electronic money is created by 5 corporations, i.e. the 5 biggest banks, when they make loans, and that these 5 corporations decide where in the economy to lend to, was also not discussed.
But with another budget showing that the strategy so far has not worked perhaps we are not so far away from state created money spent into the real economy, and then we are only one step away from stopping banks being able to create money again and cause financial crises.