Look at this look; “The MPC needs to have a Plan B up its sleeve, just in case its expected strong recovery doesn’t materialise next year,” said Colin Ellis, economist at Daiwa Securities SMBC.” quoted in the FT today.
Hmmm. Perhaps an over-optimistic assessment of the situation. The MPC, in my view, haven’t shown any evidence of a plan A yet, let alone a plan B. The whole output of the QE exercise has vanished into the black holes the banks have where their reserves ought to be, as I suspect will any more monies they’re given. If we want to get money into the broad, real-life economy, we need a distribution network independent of the existing private banks. I’m still waiting for someone to tell me whether the CDFA banks are properly licensed, ie can operate fractional reserve banking, as if they can’t they’ll be worth FA in terms of CD.
Also, from the same source, “Mervyn King, the governor of the Bank, has said that he would like to see the money supply growing at a similar pace to the 6-9 per cent rate it was before the financial crisis”.
I bet he would – why doesn’t he just wish for world peace while he’s at it?