Oliver Cooper: Inequality will widen until banking is reformed
Oliver Cooper is a Conservative activist and member of the Progressive Conservatives.
The seven people that read the New Statesman must have had a shock the other week to find that “we’re not all in this together”. It must come as a surprise to find their biases confirmed in such a way.
So David Blanchflower revealed, a combination of high inflation and pay increases in the financial sector are threatening to increase inequality. And right he is. But what we’re experiencing now – inflation and the unending enrichment of bankers – is Blanchflower’s coup de grace.
The keen-eyed among you will remember ‘Danny’ as a former member of the Monetary Policy Committee, as his NS biography indeed brags. He was one of the people appointed by Gordon Brown’s Treasury to set interest rates, and was thus responsible for controlling inflation.
And in that role, he stood out. Not as an inflation hawk, but as a man obsessed with printing more and more money. For nineteen straight months, he voted to cut interest rates and prime the presses. He was Mr Quantitative Easing. That’s a particularly bizarre way to prevent inflation.
I hardly need to go into the consequences. Ask your bank manager for a 0.5% mortgage, and he’ll laugh you out the door. But if the same bank goes to the Bank of England and asks for it, they’ll get it – and they’d have got it even cheaper if Blanchflower had his way. Inflation up.
The newly-printed money, which has devalued everyone else’s, is borrowed by bankers. They keep some of it in their vaults, but lend almost all of it out to ordinary punters at 4-5%: making a profit by encouraging a borrowing bubble. Bankers’ pay up and everyone else’s down.
That’s not the bankers’ fault – I’d do the same if I were simply handed £200 billion. Increased inequality is a natural consequence of printing money and the fault lies with people like Blanchflower that printed it. We need reform of the banking system, ending the Bank of England's privilege, to prevent another crash and give savers and working people a break.
If you print money, don’t be surprised that inflation increases. If you give it to bankers, don’t be surprised that bankers get richer. Blanchflower shouldn’t be so sanctimonious about the impoverishment of the working classes – that legalised theft was all of his own design.