Quantitative easing can be successful if the cash is given to people who will spend it. Giving it to banks is a waste of money but if the Bank of England were wise enough to give it to my camino pals then the economy would quickly and successfully be stimulated.
Economists know that the concept only works if the money gets spent. If it goes into the money markets it get spun around like a blood donor in the platelets unit and is largely returned. The money markets take the bit they want and nothing more.
Give it to Paul or Harry and suddenly the cash is moving around the economy. On the camino we live hand to mouth spend £20 a day and live like the frugal middle class pilgrims we are. Harry and Paul however know better.
While Harry will pay €150 for the last room in logrono Paul will pay €100 for a taxi to meet his pal for a few bevvies before returning to Fromista for the train. He went further when the train strike hit his train to Santander and paid €220 to get from Fromista to Santander.
Quantitative easing suggests that Luigi cabs of Fromista will now take his family out for a meal as he has €320 more euros than this time last week while the local garage is requesting fuel for Fromista more regularly.
The pueblo economy is jumping as this €320 goes around the town. The butcher is selling meat to the restaurant and the vegetable garden is depleted - and all because of QE or Paul and Harry being prepared to spend.
Remember QE is not just for the bankers - it's supposed to be for us!
Sent from my iPhone
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