Thursday, February 12, 2009

Quantitative easing explained

Central banks have lowered interest rates in the forlorn hope that it will get Jo Public breaking out their credit cards and the banks resuming doshing out buckets of credit. It hasn't worked.

Yesterday the governor of the Bank of England gave a press conference to tell us what we already know – the recession is bad and getting worse.

There was also something else he sort of said but couldn’t exactly get the words out – the UK is about to follow the US and start “the printing presses rolling”. In economics speak it is called “quantitative easing”.

What has this got to do with 50-plus marketing?

Well, the success or failure of this approach could lead to a fundamental realignment in the wealth profile of the generations. If the process goes wrong it will unleash inflation that will devalue the wealth of the older person. It will devalue your wealth as well, but if you are young you are less likely to have as much cash as your parents.

The US has gone down this path, the UK is about to start and my guess is that other countries will follow. What amazes me is how few people have the faintest idea what it will mean and how it will work.

Why not spend 3 minutes of your life looking at this animated explanation in the FT. Even if you have to take a free registration it is worth the effort.

If you want a more personal reason for understanding QE then think about the admiration from your fellow marketers when you drop it into the conversation at your next marketing meeting. Dick Stroud

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