Tag Archives: People’s QE

Oil prices rallied last week, after a surprise drop in US crude inventories. Despite on-going volatility ahead of the Opec exporters’ cartel meeting on April 17th, the trend seems clear. Oil is up 40pc since mid-January.

The dollar fell, meanwhile, as minutes from the Federal Reserve strongly suggested US interest rates won’t rise anytime soon. The greenback is at its weakest against the yen since 2013 – which is how Uncle Sam likes it, given the related export boost.

Far from “normalizing rates” over 2016, as was promised December when the Fed hiked borrowing costs for the first time in a decade, America’s central bank could soon employ yet more “extraordinary measures” – as some of us said at the time.

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Being an economist often means telling people things they don’t want to hear. Or, at least, it should. That was what I told a group of smart young sixth-form economists I met last week at Cambridge University. It’s a message that needs renewed emphasis, given the early policy musings of Labour’s newly-elected leader.

This column has a long-held aversion to quantitative easing. I accept, in the immediate aftermath of the 2008 Lehman Brothers collapse, that some “extraordinary monetary measures” were justified. The Western banking system, after years of hubristic and sometimes fraudulent behavior in the City, on Wall Street and elsewhere, was close to collapse. Lax regulation by successive governments on both sides of the Atlantic meant deposits of ordinary firms and households were dangerously exposed to potentially explosive investment strategies.

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