Print Money To Stimulate Economy

Print Money To Stimulate Economy.

Lord Turner, chairman of the financial industry regulator, the Financial Services Authority (FSA) has made a public statement that the government should do more to stimulate the economy.

In national newspaper articles, he has suggested that the Government should not just pursue a position of quantitative easing (QE) where the Government buys back gilts (pays back its debt) early to banks and insurers to release money into the economy.

Lord Turner argues that other stimulus is needed such as using basic monetary policy (the control of supply of money in the economy) to stimulate.

In plain English, print money and spend it on infrastructure products or increased benefits or more.

Our view
More money in the economy will drive inflation, drive prices up as people have more in their pocket.

The negative side is that there is a risk of the economy overheating, back to boom and bust as it did in the late 1980’s and early 1990’s.  It will also devalue the pound which is poor for us when going on holiday but will make British goods cheaper abroad.