I read a Will Hutton Observer article once every ten years. The decade came round again today and I thoroughly welcome his incisive economics article entitled: Printing money is the right way out of this mess:
What we have needed is more measures to put a floor under the economy next year; for if confidence can return, the upward movement may be quite sudden.
Last week we got one such measure. The Bank of England's announcement that it will buy £75bn of government securities over the next three months out of its own reserves, then spend another £75bn in the same way on a combination of government securities and commercial paper, was in many respects more important than the autumn's £15bn VAT cut. This is "quantitative easing": doling out Bank of England cash in vast quantities at negligible interest rates to boost lending and spending on an epic scale.
...Although everybody is rushing to say how unusual the approach is, in fact it is only a variant of the way Britain used to run the financial system until it fell into the hands of the market fundamentalists. We used to siphon quantities of cash out of bank balance sheets in booms, making them sterilised reserves at the Bank of England; and in downturns release the cash back. It is still how most banking systems in Asia are run, and when the European Central Bank was established- to derision in London - it retained the facility.