LAST WEEK the Bank of England (BoE) finally confessed that it doesn’t understand its own quantitative easing programme (QE) – the central, in fact the only, policy adopted by the Bank to keep British capitalism from total collapse.
This startling admission was forced on the BoE by an Independent Evaluation Bureau review which found a ‘significant knowledge gap’ by the Bank that meant it had been unable to ‘build public understanding and trust in QE’, and warning about the ‘widening wealth gaps in the UK’.
According to the review, the BoE’s complete ignorance over how QE worked and what its long term effects are resulted in the policy being ‘a poorly understood monetary policy tool for much of the public and ‘contentious’ for some people.
In fact, the working class understands only too well that QE has enriched the tiny capitalist class while millions of workers and their families have suffered acute poverty, that is what is really scaring the Bank.
QE was brought in by the central banks of Britain, the US and Europe in 2008 in order to prevent the total collapse of the banks internationally.
Trillions of worthless paper money was printed and handed out in what was claimed at the time to be a temporary emergency measure.
Workers were assured that all this money would ‘trickle down’ to them as it would be used to stimulate capitalism through investment in jobs and industry.
This of course never happened. Instead, all this paper money was used to inflate share prices and increase the wealth of the bosses and bankers.
It was used by the bosses to buy back the shares in their own companies to inflate their share prices and guarantee them multi-million pound wages and bonuses.
It now turns out that, far from being a temporary emergency programme that would end when capitalism had emerged from crisis, the Bank now insists QE ‘should no longer be seen as a transient, “unconventional” crisis response.’
In other words, printing trillions of pounds of paper money indefinitely is the only policy of the Bank to ward off the final reckoning when the UK capitalist system collapses under a mountain of debt and worthless paper money.
Tory chancellor Rishi Sunak knows full well that this massive money printing cannot go on forever. He has made it clear that this debt will have to be paid off through inflicting the burden on the backs of workers and the middle class.
Already in the Tory press and amongst Tory MPs the war drums are beating for an all-out assault on the working class through wage cuts and savage austerity measures including putting an end to employment laws making it easy to sack workers, and moving to completely close down industries deemed ‘dead wood’.
The same war against the working class is being prepared in America where 10 million workers have lost their jobs during the Covid pandemic with millions more reduced to absolute poverty.
Incoming president Joe Biden has announced a $1.9 trillion ‘rescue’ package for US capitalism designed to rescue the big corporations while letting the working class sink.
This was made clear in an article in the Telegraph newspaper this weekend which praised Biden for turbo-charging the US economy, while noting that all this money will not be used to ‘prop up decaying industries’ and that ‘America is letting the money flow, leaving it to flexible labour markets and digital disruption to sweep away the dead wood to bring about Schumpterian renewal.’
This is the idea of economic ‘creative destruction’ which has been adopted by bourgeois economists as a policy of destroying workers’ rights, mass unemployment and letting the weak companies collapse in the hope that the banks and large corporations will survive the carnage.
The only way forward for the working class is to build a new revolutionary leadership throughout the unions that will mobilise the strength of the working class to put an end to this bankrupt capitalist system through the victory of the socialist revolution.