NickInTheNorth
06-Oct-11, 13:15
now as you will all doubtless agree I am a simple minded soul.
So can someone please explain to me the benefit of "quantitative easing". The way I understand it to work is that the bank of england gives a sizeable chunk of non-existant cash to "financial institutions"; in return those institutions give "assets" to the BOE. Those institutions then apparently use the money to buy shares, make loans, and generally spend the dosh to help to create jobs and generally stimulate the economy.
Why would it not be a better idea for the BOE to magically create the same amount of cash, give it to the government, and let the government spend £75 Billion on new infrastructure projects?
So can someone please explain to me the benefit of "quantitative easing". The way I understand it to work is that the bank of england gives a sizeable chunk of non-existant cash to "financial institutions"; in return those institutions give "assets" to the BOE. Those institutions then apparently use the money to buy shares, make loans, and generally spend the dosh to help to create jobs and generally stimulate the economy.
Why would it not be a better idea for the BOE to magically create the same amount of cash, give it to the government, and let the government spend £75 Billion on new infrastructure projects?