By: Richard Evans
August 14, 2013
Impoverishing savers has been a price worth paying for rescuing the economy – so runs the official justification for the Bank of England’s money-printing program.
But it turns out that the benefits of printing all that new money may have been negligible. According to a new study by two senior US economists, America’s second programme of quantitative easing, nicknamed “QE2”, boosted economic output by just 0.04pc.
Simply telling the markets that interest rates would remain low was more effective, adding 0.09pc to growth, said Vasco Curdia, senior economist at the San Francisco Federal Reserve, and Andrea Ferrero, his opposite number at the New York Fed.
These experts did not calculate the equivalent figures for the British economy, of course. But it’s not unreasonable to assume that the story here would be similar. If so, it follows that the enormous pain suffered by Britain’s savers and pensioners at the hands of QE has been for nothing.
That pain includes annuity rates falling to record lows and inflation being allowed to eat away at fixed incomes. The total cost to savers has been estimated at many tens of billions of pounds.