Quantitative easing explained

The idea behind quantitative easing is this: government prints money, government uses new money to take on other people’s debt, other people say “oh hey, we’ve got all this money now, we can do stuff with it”, money ends up where it needs to be to help people. In other words:

1. Print money
2. ??????
3. PROFIT!!!

The root cause of the problems is that we have reached a level of inequality such that the economy suffers because the average person doesn’t have enough to spend, which is a vicious circle: people have little money to spend, so they don’t spend much, then their local community sees less money coming in, their employer makes less money, and their wages don’t rise. It also means taxable income is low, which means while it is necessary to prop them up with welfare, it is harder to do so. The problem is not that there is not enough money at the top, it is that there is not enough money at the bottom.

It is sad, and worrying, that governments are still favouring the shenanigans of quantitative easing and skirting around the fact that not only is inequality a huge economic problem, but it is also the correct and predictable outcome of capitalism: without correction, money will always concentrate itself in the hands of increasingly few people because those are the people who have the most power to generate wealth (and I mean wealth, not money).


I like blogging

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: