The long-awaited announcement of another bout of money printing in England on this Thursday will prove once again that experience doesn’t modify behavior on the other side of the pond either. The initial round of money expansion, called Quantitative Easing (QE) in the States, of some $320 billion last year in the United Kingdom had little measurable effect.
And so another boost of $80 billion is expected in Thursday’s announcement. This round, according to George Buckley, a UK economist at Deutsche Bank, might not be the last: “If sentiment and activity hold up this could…be the last round of QU, although the fragile nature of the recovery and the situation in Europe could mean [that] the programme continues after May.”
The trouble is that “sentiment and activity” is slowing, pushing England’s GDP into negative territory with downward revisions for the balance of the year expected. The British Office for National Statistics reported “negative growth” (American translation: decline) of 0.2% in the last three months of 2011, and there is little hope for any change in direction for at least the next two years.
Roger Bootle, writing for the British paper The Telegraph, wondered out loud what good additional printing would do. He asked rhetorically three weeks ago, “Once it has completed the current authorized dollop, the Bank of England (BoE) may soon conduct yet more QE. But