Saturday, June 22, 2013

Why did the bumbling buffoons Osborne and King implement QE?

Why did George Osborne, the UK’s finance minister, and Mervyn King, governor of the Bank of England implement QE? I mean QE has been widely ridiculed: it makes the rich richer, it blows asset price bubbles, etc.

The reasons QE was implemented in the US are simple enough: the bumbling buffoons in Congress refused to do enough stimulus. As Robert Gates, former US defence secretary put it in reference to members of Congress, “Too many are more concerned with winning elections and scoring ideological points than with saving the country”.

So there was some sort of reason for QE in the US
But there were so such constraints on fiscal stimulus in the UK: except for one. And that’s the belief that the deficit and debt must at all costs be reduced – an idea to which the bumbling buffoons in the IMF, OECD and the British political establishment all adhere. Not to mention the bumbling buffoons at Harvard: Rogoff, Reinhart, etc.

As Osborne put it (in colour): "What I've always maintained is that in order to undertake that radical monetary action, in order to undertake policies like QE, you have to anchor it in credible fiscal policies, so the world believes you're not trying to inflate your way out of your debts, you're actually prepared to pay off your debts with a credible fiscal plan," he said. 

"And I think that's why having both a credible fiscal plan, plus the radical monetary action shows that the British authorities at the moment, unlike many of the other authorities in the world, are able to use all the tools available to deal with the worsening global debt storm and ensuring that Britain can ride out that storm."

So the big idea was: “let’s have fiscal constraint, combined with monetary stimulus”.

Of course the above buffoons wouldn’t adhere that belief if they understood Keynes’s little dictum: “Look after unemployment and the budget will look after itself”. Or to put it another way: “Concentrate on unemployment. As for the budget, the debt and the deficit, those will bob up and down. But ignore that. Just concentrate on reducing unemployment in as far as that is consistent with acceptable inflation.”

For a more detailed explanation as to why the deficit and debt are a total, complete, 100% and utter irrelevance, see here.

Hopefully the above collection of overpaid bumbling buffoons will rot in Hell.

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