The Bank of England has announced it will continue to stimulate the economy because of the faltering recovery. In other words they are going to take money from everyone and give to a much smaller group of people. Undemocratically.
To recap the Bank of England says it stimulates the economy by buying bad assests from banks. Or assets as they say they cannot value in the market, or assets thay can not determine the fair value in the market. In other words, bad loans.
They give money to the banks for this rubbish and they say that the banks will use this money to make more loans to businesses to help grow the economy.
Okay, so the bank of England say it will give the banks money but where will they get the money from? From everyone that has money. To identify what this means we have to identify what exactly money is.
Money is people’s labour and resources (land, machinery) in a form that is easily traded. Simple as that.
So going back to what the Bank of England is saying. They are going to print more money and give it to banks who have made mistakes by making bad loans.
So how does this effect you? Well, first of all do you agree that when the Bank of England prints more money they are not making your labour more productive and they are not making more land or machinery?
If you agree then when the Bank of England prints more money they are actually putting more money into the “system” to to represent the same amount of labour and resources meaning there is more money to buy the same amount of stuff.
For example means that whereas before there was one pound for a hour of a person’s labour, there is now one pound and ten pence for one hour of a person’s labour.
How does this effect you? Well if you were paying someone to clean your house you would pay them 10% more to get the same result, ie a clean house.This 10% increase in cost is directly down to the Bank of England printing more money. Or to put it another way the Bank of England has reduced your spending power by 10%.
This article continues here by defining recession and identifying it’s causes
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