There are sophisticated arguments to be made, I’m sure, regarding the Bank of England’s decision to launch two new stimulus packages. But the Chancellor is intellectually lazy ideologue George Osborne, so here I suspect is the bottom line:
- We now beginning to realise that in a deep and wide recession, austerity doesn’t work and the state must step in to get the economy back on track
- Because I’m a politician, I won’t actually admit that in so many words
- Because I’m a Tory, I will only act in such a fashion as to channel state funds through private sector financial institutions, which makes easy money for my kind of people
There remains the concern that in a liquidity trap, additional liquidity may not solve the problem. However, the Coalition approach to the leading dissenting economic opinions from the likes of Paul Krugman, Joe Stiglitz and Richard Koo is not to acknowledge them at all. And the media is probably not so much biased against such views, as it simply dislikes anything that might be difficult to explain in an entertaining fashion.
So I guess it’s good the continued recession is seen as a problem. But I’m not at all convinced we’re considering the full range of possible solutions, as I’d like to have seen during the worst economic crisis in my lifetime. Today’s move may be a good one, but I fear that would be as much by coincidence as by deliberate, thoughtful process.