Gordon Brown and Quantitative Easing: A Missed Opportunity To Bridge The Inequality Gap.
A great mistake which has consigned the Labour party to the political wilderness for a generation and led to the Brexit vote.
The world in September 2008 was on the brink of cataclysm, with the banks having woken up to the reality that it was perilously close to having zero liquidity. This problem was brought on by the irresponsible gambling of the hedge fund managers, arbitrageurs, speculators and above all, the audit agencies and the big insurance companies, who knew fully well, that the numbers did not add up.
The CEOs of the investment banks, who had for a very long time disdained politicians, government oversight and regulation of any form, were forced to go to the very people they loathed for money, to keep the system afloat.
The solution recommended by the Bank of England, which was sanctioned by the government of the day, came to be known as quantitative easing (QE).
So what exactly is quantitative easing?
According to Wikipedia, Quantitative Easing is the monetary policy, which entails the scale purchase of bonds and financial assets in order to inject money to expand economic activity. In practical terms in 2008, QE entailed the printing of money, in order to fuel liquidity, which these banks desperately needed to stay afloat.
Quantitative Easing did also allow the United Kingdom government to purchase the likes of the royal bank of Scotland, which had been left fighting for its life, when it inherited the toxicity of the Dutch bank — ABN Amro, that it purchased, in 2007.
From March 2009 until 2012, the government had spent a grand total of £375 billion in printing money to nationalize the banks, pay mortgages and keep SMEs functioning.
But QE failed abysmally in its objectives, further entrenching inequality in Britain. why this was the case and how it came about, we will see.
What Was The Missed Trick of Quantitative Easing?
Based on a number of accounts, ranging from Charles Ferguson’s “ Inside Job” documentary to Michael Lewis, the author of “ The Big Short” and Jacques Peretti’s “Done”, we learn that Ninety-Five percent of the QE…