The central banking system that the western world uses to manage its currency is a favorite target among the more libertarian-leaning wing of the Republican party, but in the case of both America and now Britain, the central bank is the only force capable of preventing the economy from imploding after those same ideologically-driven conservatives gain legislative control.
LONDON (Reuters) – The Bank of England will spend 75 billion pounds ($114.8 billion) more of newly-created money to shield Britain’s economy from the euro zone debt crisis and keep a faltering recovery going, opting for an early, dramatic move to maximize the impact.
Thursday’s decision by the BoE to expand its asset purchase program to a total of 275 billion pounds highlights the precarious state of Britain’s economy as global growth slows, government spending cuts and tax hikes bite, and consumers face high inflation and slow wage rises. [...]
Analysts in a Reuters poll had reckoned there was a 40 percent chance the central bank would restart its asset purchase program, or quantitative easing, this month, though most had only expected an injection of 50 billion pounds.
Sound familiar?
It should, as the Federal Reserve has been forced to engage in quantitative easing twice already here in America and is currently contemplating a third round. (for an explanation of quantitative easing go here)
In both cases, conservative ideologues are preventing the government from taking the necessary steps to improve the economy.
In Britain, where conservatives currently enjoy total legislative control, steps taken by the government have actually made things worse because the solution they chose to employ was austerity. Not stimulus. And because of this, the Bank of England has been forced to act independently.
Fortunately for us, the Democrats still maintain control of the Senate and the White House. If that were not the case, we would most likely be in worse shape now than we otherwise would be after the Republicans implement their "starve the beast' austerity agenda. And up to this point, President Obama and the Democrats have used every trick in the book to prevent the Republicans from achieving that.
Don't bother using Britain as an example of the failed austerity agenda though. You will be told they simply didn't cut spending deep enough.