Saturday, 12 December 2009

Spare a thought for the poor old banker, Guv'nor!

The Guv'nor of the Bank of England and the Chancellor of the Exchequer have today been explaining 'quantitative easing'.

This is what happens:-

The Bank of England (The bank that we all own) starts printing money, then it uses that money to repay its current debt to other commercial banks (This is called 'buying back Government bonds'). Those banks then charge a commission to the Bank of England (our bank) for repaying that money (that it just printed). They then pay their traders a bonus based on the profits that those traders made simply by being involved in the repayment transaction.

Everyone benefits, because it now appears to taxpayers that the banks are making money again, and will soon be able to pay back all the funds that those taxpayers previously handed out to them.

However, it does not really occur to taxpayers that the money that they are going to get back will look, but not actually be, the same as the money that they handed out - by virtue of the inflation that all of these new transactions (i.e. Bank of England 'repayments') have created.

But, and this is a big but... This is not a problem, because even the middle classes, with their superior educations and their familiarity with wealth accumulation do not in fact have the slightest clue what such money transactions really mean (or where the magician was hiding the coin, as it were)... Even when it is clearly their own, erm... money.

But, let's face it, we are all frankly breathing a sigh of relief that things are stable once more and no-one is queueing up outside banks... or burning them down...

(OK, so the bonuses that the traders get do piss people off. But what can you do? When in doubt, tax, I suppose.)


  1. In fact the one thing that you forgot to add was, "Here endeth the lesson."

  2. Let me make this clear: Saving the world was much more than shuffling the deck chairs on the Titanic. Or was it changing the deck chairs? Or, was it cards that they had on the Titanic?
    Anyway the point is, what I did was save your perception of the world.
    And that is all that counts.
    Apart from the number of deck chairs

  3. Also deck chairs float, which is more than what your policies do.

  4. We dealt with the floating voter.
    For a time at least

  5. Now all that is necessary is to save our perception of you

  6. Call me old fashioned but in my day 'quantitative easing' was a laxative that we used to tease out the hard decaying kernel that was stuck inside the system.
    Glad to see its still working

  7. Ernesto Hemingway12 December 2009 at 12:05

    You have to hand it to the Gordon Brown. If there is one man who knows how to save the world it is surely he.
    It's rather like snatching a big fat lie from the jaws of Armageddon.

  8. I always ask my students on these occasions, what is the difference between people rioting in the streets and people carrying on as if nothing happened? And I suppose the answer has to be a trillion pounds of our own money.
    But then if I was a rioter and some one said to me 'pay me a million quid and then you won't feel like rioting' I'd have to say I would take them up on it, even if they were one of the bankers that ran off with my money in the first place.

  9. Yes, there is no better thing to warm the cockles of your heart than an act of wanton generosity - even if it is directed towards bankers.

  10. Call me old fashioned but in my day 'saving the world', as you put it, was something a chap did every day. Didn't think much about it. Certainly didn't go around telling everyone.
    What a vulgar fellow this 'Brown' is.
    Did you never learn old boy that discretion is the better part of valour?

  11. Well call me old fashioned too old boy, but in my day a man was never thought of as old fashioned, at least not in a pejorative sense.
    Forward thinking, 'modern' now that was what we considered a term of abuse.
    In my day, only sodomites and pinkos were 'modern'.