Oh what a joy it is to be alive; Britain’s jobs are booming, share prices are through the roof and low interest rates means cheap mortgages galore. Of course this isn’t the real economy – this isn’t GDP and productivity and making value of something that comes out of the ground.
Happily Theresa May has now acknowledged that the quantative easing and low interest rate policies are out of date and should be booted out (along with Bank of England supremo Mark Carney.)
This managing of monetary policy reminds me of a short story by American writer Howard Fast. In his jolly tale a magic bin was invented whereby all your household rubbish disappeared. It was incredible, he was lauded from Alaska to Arkansas. Then, a few months later cracks started appearing in the sidewalks of New York city and before long the paving erupted into huge terrifying mountains of household rubbish.
You see, masking the problems by certain magical techniques only postpones the inevitable. And the people in charge know this – only the likes of Osborne and Carney will have ridden off into their gold-plated sunsets by the time Satan calls in the numbers.
So what is needed in an intervention that allows the market to act as it should be doing and not by massaging interest rates. Yes, it will hurt but a correction now is better than catastrophe in the future.
Low interest rates and quantative easing have fuelled an asset and property bubble that will burst – only we need to let the air out slowly.