Gary Duncan, Economics Editor and Grainne Gilmore
Feburary 12, 2009
The Bank of England’s Governor admitted yesterday that Britain is now in “deep recession” and signalled that it is ready to start “printing money” as soon as next month in aggressive, last-ditch moves to limit the slump.
Mervyn King indicated that the Bank is poised to move beyond relying on further interest rate cuts to combat recession. It will give a green light within weeks to a strategy of “quantitative easing”, the modern equivalent of printing money, he made clear.
The Governor’s strong hints that the Bank will shortly embark on this radical action to breathe life into the stalled economy came as he unveiled its bleakest assessment yet of Britain’s prospects.
[snip]
Everyone appears to be ready to go into “QE” - it is the new-fangled buzzword of central banking. Japan did it in the 90’s, we’ve been doing it with the Fed’s swap programs, the ECB has done target injections...
And still, there’s no inflation.
This is the power of deflations. They’re rare, but when they happen, the people who kept up the anti-inflation programs do what the Fed did in the 30’s — the wrong thing.