08 December 2008
British government may be getting ready to run the printing presses
Martin Meenagh has been considering government economic policy and makes two points that should be enough to slacken a few sphincters.
The first is that the government now has the power to seize bank accounts that have been dormant for 15 years or more. However, as Martin also points out, what this act does is establish the principle that governments can seize accounts, and that means that they can then move on to just about any other deposit. The second is something that Guido Fawkes has also clued in on: namely that the Bank of England no longer needs to announce how many notes it prints.
Martin reckons that this is part and parcel of a "last ditch effort to print money to fight deflation on a global scale". However, your friendly old Exile is dubious about the global bit if only because that many institutions are buying dollars at the moment that the USA may get by on that basis alone. So much debt is denominated in dollars and so much of it is being called in that the rest of the world is having to buy dollars just for that end - and that helps Washington avoid this nuclear option.
However, as part of a British strategy too stave off meltdown the wheeze looks an odds-on cert. The Bank of England would print money like buggery and use it to buy back their own debt. That would have the political effect of making people believe that government borrowing was not as high as the Tories claim - rather a good point to be able to make in the run-up to an election. The ability to grab funds from bank accounts would be brought into play as a backup funding reserve.
Will it work? This writer reckons that it will, probably, but he also thinks that the USA will be involved as well. The simple truth is, folks, that we are in uncharted waters so tossing a coin is as good a way as any of predicting the outcome of this little wheeze.
How bad will it be for individuals and families? Let's be honest about this - if you are able to follow the three golden rules that I set out here, then all this will pass you by. I am not saying that you won't take a hit, and I am not saying that things won't get bumpy, but if you have lived within your means then you will survive.
If you haven't, and if you tried to finance a lifestyle with credit, then you are going to be fucked.