QE and near-zero rates



Gordon Brown's 'Quantitative Easing' and near-zero interest rates after the Lehmanns crash, by making more money available and loans very cheap, were suppose to save us all from armageddon. They did help other banks and big businesses to stay afloat but have caused a disastrous fall in our living standards over the ten years since, as the Coalition and the Tories carried on Brown's policies.

'Quantitative Easing' is politician-speak for printing money - call it a new name and it doesn't sound so bad. (Same as Corbyn's proposed new business tax on companies with over 250 staff is called a 'Social Dividend'.) QE doesn't print off loads of actual notes like in the Weimar republic, it provides 'liquidity' to large financial institutions. Gordon Brown's theory was this money would 'filter down' from the top of society to the bottom. It has helped businesses to create new jobs - some for our citizens, some for other countries' citizens - but wages have stagnated and not kept pace with inflation. So we're all, even if we're in work, a lot poorer than in 2008.

The worst effect of QE and Low Rates is in housing. We've been transformed in ten years from an owner-occupier society to a rental-house society. Ten years ago, a good way to buy a first home, or move up to a bigger home, was to look for a house needing renovation. You get a mortgage, move in, and then gradually, while living in the property, do the renovation room by room - this is as lot cheaper than buying a home that's already been renovated. Today that's totally impossible. As soon as such a property comes on the market - the buy-to-let landlords leap in faster than you can say 'Ussain Bolt' - and buy the house with cash. Ordinary families who need a mortgage have no chance. The buy-to-let company does the house up while still empty - and then lets it out for an exorbitant rent.

Similarly first-timers can no longer get on the housing ladder in the normal market - only in some special scheme like for those tiny new-build 'starter homes', sprouting up on farmers' fields on the edge of all our cities and towns.