Wednesday, February 08, 2012

QE: White Vanilla or Green?

We have been fed Quantitative Easing (ordinary White Vanilla) since 2009 but Professor Richard Werner says it is not effective - money is just not flowing into the UK economy. He says that the last measure of money supply M4 for Q4/2011 was down 3-4% which is the worst on record. (Posted on: Policy News Vol 3, Issue 1. 7 Feb 2012   See also the Centre for Banking Finance & Sustainable Development). The food is not getting to the patient and the patient is not recovering because of it. It is not  surprising that the economy is languishing when, as Werner says, the banking system is 'moribund' and is a 'bottle neck passing as a banking system'. White Vanilla QE is just building up banks' reserves - too bad about the economy.  

Werner has much insight into QE. In Japan a decade ago  he coined the phrase to mean 'credit creation' putting money purposefully into the productive parts of the economy to boost growth. The Japanese authorities first ignored the idea, then did what the Bank of England are doing now. Werner said it wouldn't work in Japan then, and he said it wouldn't work in 2009 when the BofE started it in the UK, and it hasn't. Werner hopes, along with Caroline Lucas MP for Brighton who made a plea for Green QE in a speech in the House of Commons yesterday, that Green QE will be taken seriously by the Coalition Government and the BofE. 

Werner outlines energy efficiency measures and Photo-Voltaic roof panels as just two measures to be used for 'Kick-starting the Govt's Green Deal'.  This should lead to growth in the economy, more jobs and help the environment at the same time. 
posted by Charles Bazlinton. Visit the website to hear Caroline Lucas' House of Commons speech (See: Audios)

No comments: