Quantitative easing, and how to help to avoid the big crash

Just after the Tory party conference, which ended last week, we were told that the Bank of England had introduced a new round of quantitative easing (QE) in the UK  to the tune of £75 billion. This is throwing bad la la money after bad.The bad is the £200 billion already wasted on QE to little effect on the UK economy so far, except perhaps as an increase in inflation. The la la, is that it is made up money which comes from nowhere, so it might as well come to you and me, and I'm not joking, because if it did, that really would lift off our economy. But we all know that is not going to happen. The iron law of capitalism is - "To those that have shall be given".

What we have with this economic crisis is the perfect storm, which was described by Governor of the Bank of England, Mervyn King, in the link above, as:

"There is not enough money. That may seem unfamiliar to people." [he told Sky News.] "But that's because this is the most serious financial crisis at least since the 1930s, if not ever."

All of which makes our current situation potentially worse than the Great  Depression. This is because; we still have a huge amount of debt in the system; we have nation states (like Greece) bust; we have bust banks; and all the economic levers, including record low interest rates, and QE, have been pulled, both here and in the USA. So there's nowhere left to go - not as far that is, as neoliberal economics is concerned - see Larry Elliot's article in the Guardian.

On top of all this, now we hear that yet another bailout of European banks is planned by Sarkozy and Merkel in the EU. This will cost at least £200 billion, but the EFSF could go up to €2 trillion. But  hang on..... where is all this money coming from? Why, from you dear taxpayer, you and your children, and your children's children will have to fork out at least that amount, and possibly more, to bail out commercial banks. And yet, this really is the plan - a kind of madness.

The Guardian have summarised the current situation in their Eurozone graphic - see below:

The Eurozone crisis - source: The Guardian

So what is the answer? Not more QE, that is for sure, and no more bank bailouts. The state has done its bit, now it is time for the market to bear all of the costs of the debt in the system. That sure will hurt bad, it wont be easy for anyone, but it is the only solution. The major banks must be nationalised and the rest written off. Then the nationalised banks need to be turned into national investment banks (with some mutualised). We then need a sustained burst of Green QE, starting with the Green New Deal.The Green Party plan is to start by investing £44 billion in creating one million green jobs, a far better investment than QE. There is much more to be done, including building renewable energy sources, and affordable housing, and a citizen's pension, but this is only  the start. If you want to know more, take a look at our manifesto here.