Bank of England to unleash hyperinflation in a desperate attempt to save capitalism

0
176

REPORTS emerged over the weekend that the Bank of England is on the verge of announcing another massive round of money printing to pay for the cost of keeping bankrupt British capitalism afloat in the face of a double-dip recession.

Economists are predicting that the second partial lockdown will be the ‘final straw’ for businesses leading to another collapse in the UK’s Gross Domestic Product (GDP) – the measure of the value of all goods and services.

Already this year GDP crashed by 20%. This was followed by a small upturn following the Tories’ disastrous ‘reopening’ of the economy but now, with the virus running out of control as a result, a second even deeper collapse in GDP is inevitable.

A double-dip recession represents the UK economy going over the cliff into economic depression with businesses and industries going bust and millions of workers thrown onto the scrapheap of unemployment. In a desperate attempt to ward off the economic crash, the Bank of England is reported to be poised at its meeting this Thursday to announce a £100 billion bond-buying spree.

Under ‘normal’ circumstances, governments issue bonds which are bought by private investors who in effect lend the government an agreed amount of money for an agreed period of time in return for a set level of interest payments at regular periods.

It transpires that these government bonds have recently been bought up immediately not by private investors but directly by the Bank of England using money artificially created by its Quantitative Easing (QE) programme.

Since March 2009 in an attempt to bail out the banks from the financial crash £755 billion was created out of thin air under QE by the Bank of England and used to buy government bonds from banks and other investors.

In the past, the Bank has always pledged that these bonds would be sold back into private hands but it turns out this hasn’t happened, and in March it was revealed that £100 billion of these bonds had reached maturity meaning the government had to pay back the Bank.

The Bank of England then promptly returned these billions to the government and also repaid it all the interest that the Treasury had forked out for the debt. The Bank returned £57 billion in these interest payments which the government used to cancel some of the UK’s massive national debt of over £2 trillion.

In total, in March, more than £150 billion of the national debt was ‘paid off’ by the Tories at no cost by using money artificially created and passed between the government and the Bank of England.

Even these vast sums proved a drop in the ocean, and now the Bank is preparing to unleash another round of money printing to finance the public debt.

Officially, the practice of ‘monetising’ the public debt by simply printing money to fund it is not just frowned upon but considered to be the dangerous road to hyperinflation – but this is precisely what the Bank and the government are doing, and now they intend to print another £100 billion to stoke the flames of hyperinflation.

Back in March the governor of the Bank of England, Andrew Bailey, tried to deny what was taking place and in an interview explicitly stated: ‘I just want to emphasise that we are not abandoning the, I think, very clear central bank philosophy in terms of monetary financing, because history tells us where that leads.’

The lessons from history that Bailey was referring to were of those same attempts by capitalism to print its way out of a depression by artificially creating trillions of valueless paper money – most notably in Zimbabwe in 2007 and in the German Weimar Republic in the 1920s.

Vast amounts of worthless paper money to pay off their massive national debts resulted in hyperinflation that destroyed the currencies, and plunged these countries into complete economic collapse with prices of essential goods spiralling out of control, leaving the people facing starvation.

With capitalism plunging into another Great Depression and hyperinflation, the only future for the working class is to seize the power and put capitalism out of its misery through the victory of the socialist revolution.