If you’re in a hole, stop digging. But not it seems if you happen to be the European Central Bank (ECB) dealing with the depressed Eurozone economies.
The ECB has announced quantitative easing (QE) measures ie printing new money, amounting to a staggering €1,100,000,000,000 (€1.1 trillion), in order to stimulate economic growth.
This high-risk strategy assumes that the recipients of this ECB largesse ie the banks and other capitalist financial institutions, will provide private industry with new investment. But why would capitalists rise to the bait with a current excess of capacity in industry?
Indeed, political economist Richard Murphy has rubbished the ECB’s QE measures, saying: “Because… there is no demand for new cash for private sector investment in the EU, or beyond it, this money will not be invested in new productive capital. Not a new job will be created as a result. Not a single social need will be met. Instead the money will be used for speculation… There will be a boom. A bust will follow.
“But in the meantime market gamblers will celebrate their profits, acclaim their abilities, and demand their bonuses.
“A few will get very rich indeed. Many will pay the inflated commodity prices and vast numbers of young people will end up priced even further out of property markets, where a few will purchase considerable portfolios and yet more trophy apartments that prevent access to housing at affordable prices to millions. This will be socialism for the rich.”