The Bank of England has just announced that it will take " quantitative measures " to ease the economic crisis that is destroying world trade.
What that means is that it will use the printing presses to generate $ 163 billion of new banknotes and put that money into circulation to ensure that the drought in bank lending is broken.
The Bank of England was once the world's most respected issuer of currency. After the second world war the American dollar surpassed the British pound as the premier currency in world trade.
The value of money depends entirely on the respect with which it's issuer is held. In the case of the Bank of England, this respect goes back to the days when any reputable currency was backed by the " Gold Standard ".
A paper banknote had no intrinsic value, but the fact that the bank that issued it promised that for every one of it's banknotes in circulation the bank crypt held gold bullion of equal value provided a guarantee.
In effect, the banknote was a promissory note, guaranteeing that if it were presented at the issuing bank it would immediately be exchanged for it's face value in gold.
The Gold Standard was abandoned many decades ago and now the value of a nation's currency relies entirely on the faith and goodwill that the public have in the trading standards and governance of that country.
The fact that the Bank of England is now running the printing presses and intends to inflate the currency in circulation by $ 163 billion must send a chill down the spine of any economist.
Over centuries that was the act of desperate dictators and governments on the brink of collapse. Printing huge amounts of cash to fund government spending was a sure way to surge inflation - and ultimately cause a collapse that made that money worthless !
We are in a recession. There is no doubt that it is a world recession - and it may well turn into a full depression.
What is happening with the printing presses of countries like Britain makes it clear just what disaster is in store for world finance !
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