Monday, 2 March 2009

Quantitative easing

If reports in The Australian are to be believed, the Bank of England is poised to introduce quantitative easing. Electronically created money will be transferred to the accounts of banks to buy up bonds.

Against the background of ever more gloomy financial news, not least bad results from HSBC, this is the last shot in the locker. It effectively undermines the authority of the Monetary Policy Committee which in many ways has been the central economic-policy making institution since 1997.

Is this the end of depoliticisation as a fashionable academic concept? Those who would defend its value would point to its cyclical character. The preferred default position for a capitalist system is an automatic decision rule not tainted by poltical intervention.

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