The Failure of Austerity in Britain

The central banking system that the western world uses to manage its currency is a favorite target among the more libertarian-leaning wing of the Republican party, but in the case of both America and now Britain, the central bank is the only force capable of preventing the economy from imploding after those same ideologically-driven conservatives gain legislative control.

LONDON (Reuters) – The Bank of England will spend 75 billion pounds ($114.8 billion) more of newly-created money to shield Britain’s economy from the euro zone debt crisis and keep a faltering recovery going, opting for an early, dramatic move to maximize the impact.

Thursday’s decision by the BoE to expand its asset purchase program to a total of 275 billion pounds highlights the precarious state of Britain’s economy as global growth slows, government spending cuts and tax hikes bite, and consumers face high inflation and slow wage rises. [...]

Analysts in a Reuters poll had reckoned there was a 40 percent chance the central bank would restart its asset purchase program, or quantitative easing, this month, though most had only expected an injection of 50 billion pounds.

Sound familiar?

It should, as the Federal Reserve has been forced to engage in quantitative easing twice already here in America and is currently contemplating a third round. (for an explanation of quantitative easing go here)

In both cases, conservative ideologues are preventing the government from taking the necessary steps to improve the economy.

In Britain, where conservatives currently enjoy total legislative control, steps taken by the government have actually made things worse because the solution they chose to employ was austerity. Not stimulus. And because of this, the Bank of England has been forced to act independently.

Fortunately for us, the Democrats still maintain control of the Senate and the White House. If that were not the case, we would most likely be in worse shape now than we otherwise would be after the Republicans implement their "starve the beast' austerity agenda. And up to this point, President Obama and the Democrats have used every trick in the book to prevent the Republicans from achieving that.

Don't bother using Britain as an example of the failed austerity agenda though. You will be told they simply didn't cut spending deep enough.

  • dildenusa

    The starve the beast mentality has been around since Ronnie Raygun himself put the kibosh to it. When Bill Clinton was president and Newt was speaker and Tom Delay and his pal Dick Armey were running the House of Representatives the republicans tried to resurrect it. Of course for Clinton, it made his day in 1996. President Obama is now taking a page from the Clinton playbook.

    • bphoon

      I hope it plays out the same way.

  • Draxiar

    There’s a curious part of me that wonders what America would look like under the stewardship of McCain and Palin. I know, I know…it would probably be disasterous…and as curious as I am I’m glad it didn’t happen. Still…

    Would the McCain Admin rightly blame Bush for the state of the economy? Would the middle class have been so stretched by now that the OWS protests would have happened a year or two ago? Would we have had an all Democrat Congress? Would the partisanship be as caustic? Would McCain have tried to pass any sort of stimulus?

    I wonder…I question…I’m also grateful and hopeful that’s as close to that reality as I’ll get.

    • nicole

      I don’t wonder about it at all. It would have been a disaster.

      Also, you forgot to wonder about whether the stress might have killed McCain while he held the office of the president. *shudders*

    • bphoon

      Would we have had an all Democrat Congress?

      An all-Democratic Congress, please. Pedantic, I know, but still…