The United States has begun another round of quantitative easing (QE), as the Bank of England is being urged to do. The US Fed plans to expand QE by $600 billion (£370 billion), on top of the $1,700 billion already implemented. The aim is to bail out failed financial institutions. Out of the public eye it has allowed western banks (that were basically insolvent) to recapitalise. The effect of this expansion of QE will be to generate another bubble and another collapse.
Further, this mass money printing causes capitalist investors to seek refuge in tangible assets such as commodities. Oil prices have soared to a two-year high, gold is at an all-time high, while silver is at a 30-year high. Cotton prices are up 68 per cent; sugar by 66 per cent; rice is up by a third. This surge in the price of commodities will add more difficulties to those already being experienced by industries and consumers.
So we are paying for the banks all over again. The banks get eased. We get more and more price rises. That’s capitalism for you.