This is why emergency measures have turned into a lifestyle choice. By early 2020, Britain’s QE had climbed to £ 425 billion, more than eight times the original plan.
QE has made the wealthy assets even richer, but housing even less affordable for countless ordinary families. The associated extremely low rates have punished tens of millions of savers, especially those living on modest annual pensions.
QE skewed bank lending in favor of incumbent “zombie” companies, starving dynamic small finance firms – the ones that drive growth. It also created international tensions, with states attempting to “superimpose” themselves for competitive advantage, unleashing a “currency war” for the first time since the 1930s, most notably between the United States and China.
On top of all this, the more QE is used to stimulate financial markets, the harder it is to stop without causing another collapse – with all the economic and political carnage associated with it. Yet authorities around the world, including Britain, continued despite everything.
Covid has seen monetary expansion taken to a whole new level of excess. Since last March, Britain’s QE has climbed to £ 875 billion, increasing more in a year than in the previous decade. Our central bank bought gilts twice as fast as after the subprime crisis and will soon hold nearly half of the outstanding public debt.