As we have seen in recent months, the British pound has had a rough time trying to maintain any semblance of strength of late. But the Bank of England has now adopted the practice of printing some more cash to hopefully get us out of the recession a bit faster, and to give us better figures on our currency converter. You can read about this event on the CNBC website here – http://www.cnbc.com/id/29596176.
But is it such a good idea?
The strategy has been used in the past as well, but it hasn’t always had the results that were desired at the time. The process can lead to the danger of deflation if it isn’t kept firmly under control. The Bank of England no doubt assumes that it can do just that, but so did every other country that tried to achieve that aim in the past.
However if you read all the current news and views regarding this move by the Bank of England, the general consensus is that this is a good move. And these aren’t just opinions given by the general public – these are points of view of those people who are experienced in the ways of the financial markets.
Obviously the problem here is a complex one. The idea of throwing more money at the problem by quite literally making more money sounds deceptively simple. But it is a tricky balancing act that the government and the Bank of England must keep a firm hold on if it is to succeed.
The process of printing money is known as quantitative easing. It is supposed to ease the problems being felt, but the main problem is that we won’t know until it is too late if it will work or not. If it doesn’t work, it isn’t something we can suddenly back out of in the hope that we’ll get away with it. This is a strategy that really does have to be played out the whole way, so it will be interesting to see what does happen.
There are some detractors out there of course. And it should be said that the last thing they want to be saying is ‘I told you that wouldn’t work.’ Because if it doesn’t have the results that the Bank of England is looking for, it could leave Britain in a far worse position than it is in at the moment.
It’s true that this recession is looking much more severe than the previous one we had. But it is also the case that the powers that be seem to want to get out of it as quickly as possible. That is understandable, but it is also a dangerous move to throw everything you’ve got at it rather than thinking things through first. You can almost sense the panic behind this move to implement quantitative easing, and it doesn’t bode well for what could happen next.
It’s certainly worth keeping a close eye on the news in the coming weeks and months, as the results of this exercise start to be felt. Will the results be good or bad? We can only speculate at this point in time, but we’re hoping for the best.
Whether we will get it or not is quite another matter.
Printing money is never a good idea in my opinion. It always starts cautiously and they always say they won’t print very much. They also put a limit on it which they invariably go sailing right over before very long.
We’ve seen this fail in other countries so why did the powers that be think it will work in the UK? I just hope they don’t make things even worse than they are already. The pound is having enough troubles without them adding to what is going on.
That’s just my opinion though – does anyone else agree with me?
Yes I agree. It is nuts to print money when things aren’t working. I don’t see the point of doing it personally. That’s like me saying, ‘oh I haven’t got enough to pay back the loan you gave me, so I’ll just print some more’. It doesn’t make sense and it could make the whole country so unstable it will lead to even more problems.
I don’t like the current government but I have to say I am losing hope with the Bank of England too. What’s to say they won’t muck things up completely? It could happen – I just hope it doesn’t!
I’ll stick my own two pennies in here as well, because I agree. I surfed the net the other day and found some instances where printing money has got that government and that country into untold trouble. Why should it be any different for us in the UK? I hope it all works, I really do, but I have serious doubts. And if it does all go belly up that will give us some serious problems to try and clear up. I have no confidence in this government, and now my confidence in the Bank of England has gone too.