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Why the Green’s Suggestion to Print Money is Silly

Printing money is a bad idea – Photo Kristina D.C. Hoeppner

Printing money a silly idea. The US and Europe are printing money to dig themselves out of a hole. Therefore we should do the same.

Wrong. The difference between both of those giants and New Zealand is enormous.

Let’s take the easy one first. The US is the world’s reserve currency. Despite best efforts by the Euro and prior to that the Japanese Yen, and that both in hindsight look laughable, the USD remains undisputed king of the reserves with very occasional but ephemeral competition from gold bars only. That gives the US policymakers an edge over every other policymaker on earth.

They can print money and there’ll still be a demand, people have to hold it for international transactions purposes. And contemporary co-conspirators of this monopoly are the Chinese and every other mercantilist regime that wishes to control its foreign trade by pegging its currency to the USD. No matter how much money the US prints the Chinese and others will buy it in order to keep their currencies from appreciating against it. What a luxury for the US – it has financiers of infinite resort. While that lasts the US is different.

Now to Europe. As we all know the bloc is in the dock because it forgot to enforce fiscal unity upon its members when it embarked on monetary union in 1999. Instead, after the GFC the governments stepped in to take over the bad loans of their banking sector thus compounding the track record of fiscal imprudence they’d already established over the previous decade.

Junk bond status was accorded some members’ government bonds. Unable to pay the interest, and unwilling to enforce sufficient austerity and higher taxes, those members won their campaign to have the ECB “print” money by buying their crap bonds for euros, and lending directly to enfeebled banks that remain. This is all in the name of “saving the euro” and in the short term it has bought time.But that is all.

Until Spain and Italy can recapitalise their banks without adding to their already massive sovereign debt then economic growth and fiscal balance will be out of the question and the risk of significant further contraction of those economies is high. Their denial is being funded by Europe printing money but that is a stopgap only, their economies need capital inflows to stabilise, and that’s most unlikely given investors realise insufficient fundamental adjustment is being undertaken.

 if we want more economic growth of a permanent kind we need to have products and services to sell that the world wants

So let’s come to a small and pretty irrelevant economy like ours. Say we unilaterally decide that economic growth just isn’t strong enough so we enter into the race to the bottom by printing NZD and lowering our exchange rate. Foreign creditors and potential investors look at our external debt ratios and simply see they’re of similar proportion to those of Spain, Ireland and Italy. Why would they line up for more? The only reason would be if they thought that by extending our debt we would enhance our ability to service it and pay it back.

Now look at what we did with the last dollop of external debt raising. Into property it went in the main, lifting NZ property prices to some of the highest in the world compared to income. And what are we all aware of again right now in our economy? Isn’t it that the property market is champing at that bit to get going again, the only thing holding it back is our banks can’t get access to easy offshore loans like they once could. Their masters require higher collateral on mortgages.

For us there is little to no credibility in a policy to achieve growth from printing money. It will simply lower our credit rating and raise our interest rates as creditors extract the required reward for largesse.

No, if we want more economic growth of a permanent kind we need to have products and services to sell that the world wants. Only that way will investment or loans from abroad be more forthcoming. Every time this comes back to policies (tax and financial) that don’t discriminate in favour of housing speculation, and that do encourage capital inflows because we have rising sales of products to the world. Remember the commodity boom we had recently?

After 30 years of economic growth fixes being gerrymandered by politicians ordering up the printing presses, global investors with governments around the world owing them trillions, now recognise a sham, a scam, and an also-ran. Economies with intelligent policy settings targeted to deliver better deals for the global customers of their firms will reap the most rewards over the next decade.

  • http://www.facebook.com/ralph.wahrlich Ralph Wahrlich

    On a related note: it would be interesting to have a review of the impact of the fact that all new money is created as an interest-bearing debt. It would seem to be a mathematically closed system : if you need money to pay the interest, AND that money itself originally came into existence as a debt, THEN surely that debt can never be repaid? While printing money is definitely a silly idea, charging interest seems like a much worse thing.

    • http://www.facebook.com/ralph.wahrlich Ralph Wahrlich
    • http://www.facebook.com/fizzboat Brendon Walton

      That would be a great discussion to have Ralph, indeed new money is borrowed into existence. But if it is only the principle that has been created, then where does the money come from to pay back interest portion? That too has to be borrowed into existence. Is this a sustainable system? If it isn’t, does your investment fund have adequate hedges against a systemic monetary event?

    • http://garethsworld.com/ Gareth Morgan

      So you’re suggesting if I lend you money you I shouldn’t be rewarded? Free lunches do not work.

      • Kerry Thomas

        You are still in the paradigm that the money borrowed comes from deposits by savers.

        I suppose it is hard to abandon what is making you rtich.

        In fact most of it comes into being by banks lending between themselves and clipping the ticket each time.

        A service we pay 14 billion a year for. It is banking which gets the free lunch.
        In the end, as we have already seen in places where Keating did not regulate banking, banking will not be able to pay back savers funds/pensions and lose the money they are accumulating because the real finite world cannot cope with infinitely expanding/compounding interest. Especially as it is not invested in increasing sustainable energy and production.,

        Which is fine until they use it to push speculative asset prices up much more than wages, to make their profits, and then try and spend it on real production.

  • http://www.facebook.com/robert.ashe.752 Robert Ashe

    Gareth, you seem to overlook Switzerland, a small country with a very healthy economy that has decided to print money to keep their exchange rate at a fair value. They’ve decided that protecting their manufacturing and export sector is more important than having cheap flat-screen televisions.

    • MrV

      Check the level of reserves the snbhas compared to the rbnz.

  • http://www.facebook.com/robinson.stowell Robinson Stowell

    Doesn’t it depend on what ones does with the money that’s been printed? Assuming we can ignore, for the moment, Govt debt. If we used QE to pay down some of our private debt, and that was lowered still further by a drop in the exchange rate- at the same time boosting exports- it’d start to look pretty good :) That’s NOT printing money to buy Govt bonds.
    If we agree credit is the problem, QE that increases debt is bad. But that doesn’t have to be the case.

    • http://garethsworld.com/ Gareth Morgan

      Robison, all QE creates debt, unless we are in a liquidity trap and people are so scared they hoard deposits. There’d be no recovery then anyway. For QE to work, debt to the banks (credit in other words) has to go up, but when you’re as indebted and irrelevant as we are, foreign creditors simply demand a higher interest rate on their advances to support the currency. There is no free lunch.

  • http://www.facebook.com/steve.baron.900 Steve Baron

    As the global financial crisis (GFC) continues to unravel in Europe and the USA, it’s tentacles have certainly reached here in the South Pacific. Huge amounts of money have been lost in finance company failures, business failures and the sharemarket. This has led to many jobs being lost with the associated consequences. While we wait for our political leaders to come up
    with the economic answers, the prospects are not looking good and answers seem to be few and far between—it’s not a good time to be a Prime Minister or Minister of Finance.

    It would appear to me that our politicians are struggling to come up with an answer—we’ve tried both political sides, with right and left wing governments here in New Zealand and around the world, but history keeps repeating itself. Trying to understanding the international monetary system (IMS) and how it can be fixed is mind boggling to say the least but bear with me while I attempt to make some sense of it and look for some possible solutions.

    As Barry Eichengreen said in his book Globalizing Capital, the IMS is, “the glue that binds national economies together. Its role is to lend order and stability to foreign exchange markets, to encourage the elimination of balance-of-payments problems, and to provide access to international credits in the event of disruptive shocks”. The IMS has changed dramatically since the days of 16th
    to 18 th century Merchantilism. One of the first major developments in the IMS was the Bretton Woods Agreement signed by forty-four allied nations in 1945. This created the International Monetary Fundand the World Bank. This system was seen as a tool to create a stable IMS, which made international balance of
    payment settlements and world trade much easier. The monetary policy adopted
    maintained the exchange rate by tying currencies to the U.S. Dollar. Unfortunately the system started to fall apart in the 1960′s when US President, Lyndon Johnson, started to fund his “Great Society” programme, which produced large deficits and created balance of payments problems—sound familiar? A number of external shocks then brought about a lack of confidence in the US dollar, which markets started to sell off. In 1973 the US dollar came under attack for being over-valued and many countries, including New Zealand in
    1985, allowed their exchange rates to float against it, because it had become impossible for central banks to prop up their currencies. Currencies were then traded on foreign exchange markets, which encouraged the free flow of money which has also opened up trade.

    In 2008 the GFC became apparent. This began with the collapse of investment banks like Lehman Brothers. This mostly came about due to sub-prime loans to people who could not afford to pay them back and consequently defaulted as property values plummeted because a bubble had been created through this toxic lending—it was bad debt that was used to gamble on property continuing to rise—not constructive debt used to grow businesses and the economy. The GFC that has ensued has raised many issues that effect the IMS. It has made the world focus on financial mechanisms, governance, transparency and the threats that economic bubbles pose. It has also made world powers realise just how economically integrated the world has become but few, if any, solutions
    have been found.

    One proposed solution gaining plenty of support is from Economist Steve Keen. His answer is to bail out the public and not the banks—because it was the banks who created the GFC—not the public. For a more in-depth explanation search Steve Keen Hardtalk on Youtube.com.

    Another solution rarely, if ever, considered by Ministers of Finance and
    Reserve Bank Governors is the cost of creating new money when it enters the financial system (not to be confused with quantitative easing). The money supply of a country usually needs to expand as the amount of goods and services in a country expands, so that there is enough money to purchase these good and services. This is a fine balancing act, too much money in circulation leads to inflation (Nazi Germany), but too little also leads to deflation (the Great Depression). However, as this money comes into circulation through government open market operationsand consequently the money multiplier effect
    of the banking system, it enters society as an interest bearing debt. This cost has a compounding effect on debt and must certainly create an unnecessary cost to society.

    If more money is required to keep the wheels of our financial system greased, then governments need to find a way to inject this money into society without this cost. Perhaps there is an opportunity here for a small country like New Zealand to lead the way to show the rest of the world how the IMS can be improved? A basic concept governments should remember and practice, and something that should stay in the back of our minds is that we shouldn’t spend what we haven’t got. If you buy stuff—you end up with stuff-all.

    The Labour/Green idea is not a silly idea if it is done within moderation and does not involve creating a government debt alongside of the creation of this new money. New Zealand simply does not need to print money at the same rate as the USA because we are a much smaller country but expanding our money supply (within reason and by a scientific analysis) will allow our export market to remain competitive. At present the USA and the EU are devaluing their currency to make their exports more competitive, this is little different from the usual beggar they neighbour policies of the past.

    • http://garethsworld.com/ Gareth Morgan

      @facebook-1126091082:disqus, @google-8393f4574910afd4568b694e0e6c0326:disqus, @f993523e572fadd18e0564ec3f5ac734:disqus, @e0d1c27bbd3f4710443c3dd27fad97f4:disqus – People harp back to the 1970’s. They forget that back then the NZD was worth 2 USD. Print money to try and make yourself rich and your currency falls, it’s simple laws of supply. If you’re a creditor nation – China, Switzerland, Japan – so have some scope for that. Heavily indebted nations like NZ do not.

    • John Threlfall

      Money is only a means of exchange for what someone is willing to pay for goods or services for other goods and services,so any exchange rate alterations will not alter that basic reality and so as a country you get what you earn or can sell.As individuals we benefit from natural resources and human efforts and a stable society and trade.Basket case economies have unstable societies.Struggling Western countries have got soft and unrealistic with crazy housing policies and undersupply of house builders,unrealistic remuneration expectations and oversupply of all sorts of occupations that are of little export or local value hence unemployment.When looked at from this stance the National government seems to be making good progress by putting the screws on the productivity of the state servants and by not caving in to the house inflation voodoo economics of printing money.

  • Kerry Thomas

    Borrowing money, “printed money” from foreign banks, and paying 14 billion extra a year for the privilege, is sensible?

    http://kjt-kt.blogspot.co.nz/2012/10/banking.html

    Do I detect a bit of self interest here?

    In fact “printing money” worked very effectively for NZ in the 30′s. So well it was copied by other countries.

    All the howls about Zimbabwe and the Weimer
    republic forget that their productive sectors were first destroyed,
    before they started printing money, When there was nothing to buy with
    it.
    Not a lot different from Nationals present efforts!

    A lot different from lending to ourselves to invest in paying our
    under-utilised and capable construction industry to rebuild
    Christchurch.

    Vital infrastructure which will return the investment many times in future.

    Also we did exactly the same thing from 1935 until the 60?s. Called the
    Development finance corporation for a long time. Worked well for us.

    Got us out of the depression before the US and UK for a start.
    We are still using a lot of those assets. Apart from the ones our idiot
    Governments sold, so someone else could profit from them.

    • Bonash

      Correct! You could add that
      1)the hyper-inflation of the German mark in the Weimar Republic was caused because its bank was privately owned and the board consisted of non-German appointees from Western Banks (J P Morgan etc, I think). That was one of the conditions of German reparations. Some people think the inflation was deliberately orchestrated (read “The creature from Jekyll Island by Edward? Griffin.
      2) the Quantitative Easing being used by the USA is not what was successfully used by NZ Labour anyhow. They used direct loans at very low interest from the Reserve bank to build our State owned building stock. What they are doing in the USA is effectively gifting the money to the banks as a cash reserve so they can lend again, but no-one wants to borrow so it is ineffective.

  • http://www.facebook.com/russelnorman Russel Norman

    The Green prposal has three parts: lower OCR, control housing asset inflation, and carefully targetted quantitative easing. So we covered the housing speculation issue that Gareth raises. I agree that we need to address the fundamentals of creating products and services to the world. But the price of those exports is being artificially inflated by the actions of other central banks intervening on their currencies. If we don’t step in to protect our exporters (and import subistituion industries) they will be driven out of business.

    • Wakatipu Bill

      Dr Norman please learn to use spell check – leave finance alone and stick to your knitting i.e. freeze up the arctic and antarctic and once you achieve that
      have a go at drilling for minerals.

      • Raz

        Bill – you are an A class idiot

    • http://garethsworld.com/ Gareth Morgan

      @facebook-767074530:disqus a competition to devalue our currency more than the next country – in the business called beggar-thy-neighbour policies cannot be won unless you have a massive trade surplus so you have foreign reserves to match the liabilities you’re issuing. This is the China approach. But we’re not a credito nation, you’re suggesting we could become one if we had such a big QE our currency fell precipitously. With respect you have cause and effect reversed. Control your next exports first and then you might have some scope to manipulate your currency. With respect to house price inflation Russel, so long as you’re in denial about a capital tax on housing and/or you allow the RBNZ to issue directives to banks to prefer lending on housing over all other forms of lending, you will struggle to tame that monster I’m afraid. It will beat you every time.

    • Mark

      Hey, lets not forget a higher fuel bill, due to a lower currency ,will kill companies like Air Nz. A company that employs 11000 Kiwis and brings huge returns to NZ directly with airfares and indirectly through the tourism. Racing other countries to the bottom of a currency cycle is shortighted and, frankly, dim.
      Side note; We (left) always quote Sweden as an example to follow. Hang on, the manufacturing is going to China as the labour rates are high (mid-sevens percent unemployment) but they have a fantastic social welfare system and great lifestyle.
      Of course they mine their resources and have a vibrant arms industry. Buy into that will ya?
      Oh, and they’re pragmatic. They’ve long had national standards and 90 day work rule introduced with agreement by political parties instead of our default mode of disagree.
      I’m very centrist but I can see a coalition government coming up which will make me move back to Sweden. And that will be another business gone.

  • http://www.facebook.com/nick.sykes1 Nick Sykes

    It doesn’t matter what Govt’s do since they don’t really know what is going on in the first place. The bottom line is that we have had 70 years of boom (human greed) and now the day of reckoning is fast approaching. If economists really knew how to handle matters we wouldn’t be in this mess in the first place because their skills and knowledge would have avoided it. What is going to happen? A Depression that will make the 1930′s look like a Sunday afternoon picnic, that is what is unavoidable. Watch this space!

  • philip meguire

    Since the northern summer of 2008, the Euro (US$) monetary base has doubled (tripled). If the RBNZ does nothing, the NZ$ will appreciate, and our exports will suffer. The RBNZ will, sooner or later, walk the trail that Switzerland has blazed: the RBNZ will do what is required to bring the US$ exchange rate back to 70-80 US cents. It will monetize a fair bit of the Crown’s debt, which is what “printing money” translates to in our era. Thus QE will come to New Zealand, willy nilly. If there is a surge in retail prices, the Government will look the other way.

    The American property market, and hence the entire household sector, will remain constipated until a burst of inflation raises wages and house prices, and depresses the real value of mortgages. Only then will the avalanche of mortgagee sales, and the death spiral in house prices, cease. QE is Bernanke’s way of igniting US$ inflation.

    • http://garethsworld.com/ Gareth Morgan

      Phillip & Robert below –

      Switzerland is a creditor
      nation so it has the luxury to print money with undermining confidence in its
      currency. NZ is the opposite – a country with one of the highest external debt
      ratios out there. So we need foreign currency inflows year after year to fund
      that. If markets took the view we were trying to generate another credit-led
      recovery (which is what QE is) we would get downgraded. We simply have used up
      all that goodwill, but like a drug addict can’t see it.

  • http://www.facebook.com/utunga Miles Thompson

    Sorry Gareth, you are flat out wrong about this.

    Given that so many other countries are devaluing their currency – yes even the mighty dollar – through their stimulus packages, it’s only good common sense to realise we can and should devalue our own currency so as to keep it in balance with other countries vis-a-vis real or potential trade flows. (That’s why we floated in the first place isn’t it ?).

    If along, the way, we get to spend money on the vital rebuild of Christchurch then all the better.

    This is such a no brainer win-win in my opinion – essentially we would be taking some of the overseas stimulus flows and directing it towards our own Christchurch rebuild and helping to re-balance our trade flows along the way.

    What’s not to like about that?

    While Key and others still hide behind FUD and confusion, I am so glad the Greens had the courage to stand up and point out the obvious here.

    As an NZ Exporter worth noting I am being a bit self-serving here, but that doesn’t make me wrong.

    • http://garethsworld.com/ Gareth Morgan

      @facebook-538560451:disqus your suggestion that all currencies can fall in value needs more thought.

      • Kerry Thomas

        Our currency needs to fall, but also we need an alternative to the cash hemorrhage which is paying interest to foreign banks. Mostly just to bid up farm and housing land prices. For money which the federal reserve is giving them for free.

        Why borrow offshore for the NZ component of re-building Christchurch with its attendant ongoing interest costs.

        Of note is how Belgium is getting out of hock. Not by austerity, though they have had some, but by issuing bonds internally.

  • http://www.facebook.com/john.oneill.129 John O’Neill

    “if we want more economic growth of a permanent kind we need to have products and services that the world wants” . Qualify that central argument by adding “at a price they are prepared to pay” and the whole argument has to be rewritten.

    • http://garethsworld.com/ Gareth Morgan

      Correct. If you can’t match the next guy on price, don’t bother getting out of bed in the morning. That is called productivity and competitive advantage.

      • Kerry Thomas

        No country has had a successful and prosperous economy from exports alone. And no economy has become a successful export economy without a healthy internal market. Which requires some degree of protectionism.

        If the only competitive advantage is low wages then we will all eventually be on a dollar a day.

        • John Threlfall

          Saudi Arabia?

          • http://www.facebook.com/Thomas.Kerry.J Kerry Thomas

            Saudi’s, The more thoughtful ones anyway are extremely worried about their economy post oil.

            It would look very like that of Nauru.

          • John Threlfall

            Good point! I am interested in the resilience of some first world imperialist nations who seem to have leveraged their traditional institutional assets successfully.England with Oxford,Man United and the BBC,Germany with tertiary vocational training,USA with technology and media,France with traditional liberal intellectual nationalistic insularity.Recent Reith lectures on role of Institutions in success of economies was pertinent.For Saudi,Nauru and the rest of us leveraging our assets is the key.How this is done is another discussion but I would suggest a combination of tradition and innovation and industriousness is a good formula.As a socialist capitalist and reader of Dickens it seems the featherbedding Greek situation is the antithesis of a successful approach and should not be emulated!

          • Kerry Thomas

            As the Greeks, like us, worked some of the longest hours for the least money in the OECD, featherbedding is probably not the word.
            Germans, on the other hand have effective Unions and decent wages.

            Tax dodging by the rich was a national sport in Greece. Shipowners, for example paid no tax,

            It seems it is the same here. IRD says half of our wealthiest people pay no tax. Tax fraud is at least 100 times greater than any welfare fraud.
            While I do not agree with Gareth on public banking, most of his ideas make sense. Gareth’s, tax on wealth would eliminate our current borrowing immediately for example.

  • Arie Mai

    What does
    the WTO do for free trade?

    Rigged
    currencies make a mockery of free trade.

    If you
    really want to do something about a free world economy you should be fighting
    against the Chinese government the biggest and other countries rigging the
    value of their currency against the USD. Unlike every other major currency in
    the world whose value floats on international markets, the Chinese government
    unilaterally established the exchange rate for theirs. They have been
    systematically devaluing their currency for years in order to keep the price of
    export goods down. It also makes the cost of goods imported into China much
    more expensive for their people to buy. This artificial reduction in the
    valuation of their currency is a de facto subsidy on everything that comes out
    of China. It makes it impossible for other countries with free floating
    currencies to compete. All countries with floating currencies should impose say
    100 % import duties on countries that rigging their value until they stop. A free trade agreements with a country that
    prints money or is rigging, is like selling your soul to the devil.

  • Narena

    at least the Greens are willing to challenge monetarist orthodoxy. are you Gareth?

    • http://garethsworld.com/ Gareth Morgan

      @125845959d369d68be5f56b463801e76:disqus absolutely, read the Big Kahuna. I have congratulated Russel Norman and Labour actually in the last election, for at least having the acuity to question the status quo.

  • DesignafutureNZ

    Hi Gareth,
    I am surprised at your reaction given you recently proposed your big kahuna concept of a basic income. That could be part of a circuit breaker to enable interest bearing debt to be backed out of the real economy. I note the Greens concept is in line with what Irving Fisher proposed back in the 1930′s as a solution to the GFC of that time. Incidentally his conclusion are being looked at now because economic orthodoxy have obviously run out of solutions.
    Even Professor Steve Keen in his recent tour of NZ draw attention to Irving Fisher’s proposals in a favourable light.
    It has become blindingly obvious that there is no way a debt driven problem can ever be solved with the debt based solutions being used by economic orthodoxy.

  • Luke

    So, it seems the major disagreement in NZ taking control of
    the creation of our own debt/credit is that it will scare off foreign
    investors. Big whoop. Isn’t an ideal economic model supposed to be one in which
    our exports are more than our imports – so foreign investment is redundant
    (unless we are operating a model whereby we are haemorrhaging more wealth than
    is being created within our country – in which case something is terminally
    wrong, isn’t it?). We could use a plan as suggested by the green party to take
    control of our public debt (and could even go a step further by nationalising
    all banks and take control of our private debt) to fund a restructuring of our
    economy to focus on locally providing as much of New Zealand’s needs as
    possible (as in move toward a more sustainable economy – in particular when
    considering distribution costs). If we are so focused on the idea of growth,
    contrary to all natural principles, and so need more money than we can raise
    from exports, then doesn’t it make sense that New Zealand takes control of our
    debt/credit creation rather than relying on private corporations that charge
    way too much interest and hence add to the abundant holes allowing wealth to
    offshore?

  • Robert

    Gareth said and I quote “After 30 years of economic growth fixes being gerrymandered by politicians ordering up the printing presses, global investors with governments around the world owing them trillions, now recognise a sham, a scam, and an also-ran. Economies with intelligent policy settings targeted to deliver better deals for the global customers of their firms will reap the most rewards over the next decade.” end quote.
    I own a business and am an exporter. I have a question. How can “intelligent policy settings” deliver a better deal for my customers global or otherwise when the people (politicians, bankers and economists) who determine such policy are demonstrably morons (statement of fact, not derogatory) who have learnt nothing from monetary history? These people and the monetary system they work within are the problem, not the solution. When will people wake up to the fact that no amount of tweaking by brainwashed keynesian disciples will fix what is happening. Where were these people (and I include Gareth) when people needed to be warned about the inevitable crash and coming depression that we are now in. Why are they still debating tweaking the nuts and bolts and rearranging the deck chairs of a Titanic monetary system when said system is irretrievably destroyed by the debt iceberg? They will all discuss and analyze the destruction after the fact as if though they know what they are talking about but just like the last (warm up) crash, will opine as to how no one could have seen it coming. Why did these intellectual titans not see and warn of the oncoming economic catastrophe and position their followers to protect their wealth in gold and silver, over 11 years ago?
    There are people who saw this coming decades ago. Those who are familiar with “Austrian economics” have known what was inevitable and prepared for it. Those who have followed the mainstream economic charlatans have to date, reaped some of the painful economic consequences but sadly, much worse is to come.
    I implore all to educate themselves about our monetary system and economics through two easy to read books (The Creature from Jekyll Island by G Edward Griffin and Economics in One Lesson by Henry Hazlitt) both instantly available on Amazon.com. It may well save your financial life!
    Best wishes to all and thankyou Gareth for providing this stimulating and informative forum.

  • http://www.facebook.com/steve.baron.900 Steve Baron

    Gareth is right, as it is operated now, QE does create debt when this new money is introduced into the financial system. That does not mean QE is bad, it just means it has to be performed in the correct manner and by the correct amount, to have the desired, not disastrous effect.

    The way around that is to distribute this newly created money directly into society through a national dividend (perhaps Gareth’s Universal Basic Income?). Like most aspects of life,there must always be balance and QE should only be done when it is needed and by the scientifically calculated amount required to produce the desired results. It should also be free from political intervention as we all know how politicians love to spend other peoples money for their own political advantages.