Wouldn’t the money be better employed encouraging young businesses?

Although there are hundreds of varying estimates of the cuts in public spending since May 2010, it’s highly unlikely that the net-net figure is yet over £10bn.

The progress has been held back by Civil Service and Local Government filibustering, costs of EU membership/bailouts, and (in the earlier period) a few increased borrowing costs. Mainly, it has been sabotaged by everyone wanting to be a special case, and the economy slipping from Dead Stop to Full Reverse Both…..causing increased welfare payments.

But let’s be generous and say the savings have been £10 billion.

So far since these spending reductions began, the Bank of England has spent over 27 times that amount on Quantitative Easing. Allegedly meant to stimulate the economy, it’s mainly about giving banks a way of dumping toxic loans sold by those bankers we really must stop bashing because they’re doing such a great great job. This will then (allegedly) allow them to lend more money to business, but the targets they’ve been set (and mainly missed) are miniscule compared to the amount spent buying the toxicity. The private hope of all concerned is that our banks will deleverage and recapitalise – thus making them immune to the coming Tsunami from the eurozone.

The Bank of England has just announced that it will spend a further £50bn on the operation during February. That’s five times the total saved on government spending over 21 months in just the one month – reaching a grand total of £325bn. In the view of many people whose opinion I respect (especially me) the entire QE policy is an economic waste of time designed to repair the financial black hole created by idiotic investment banking practices; but it can’t repair even those, because the surreal leveraging multiples created by ‘notional money’ bets are far greater than any cash mountains held by sovereign States – including China.

Now, I’m not arguing for stopping the spending cuts. However, if the QE was instead used for direct loans to smaller companies which have an excellent outlook and business model (but can’t raise the cash from any of the banks we’re spending £325bn to protect) then surely that would  represent an investment rather than dead money?

QE is not an investment in something sensible, because the banking systems of the world are doomed to fall over anyway. And while – in desperandum extremis – you can have business without the existing banking structures, you can’t have banking without the real wealth generated by business. This would also, it goes without saying, be a far more efficient method of creating genuine new employment.

I do not think there is a flaw in this argument. It’s a view I’ve held since 2008, when I argued passionately for raising interest rates, not lowering them. It is based on a league table of importance that goes 1. Social stability 2. Personal discipline 3. Business 4. Banking reform.

Yet unbelievably, in the face of this gigantic con-trick, the right wing press continues to demand an end to ‘banker bashing’.

Somebody needs to mount a  serious challenge to that emotive verb: the Mail argues that trade unions should be forced to show responsibility in the face of a national crisis, and the Telegraph says banker-bashing must stop. I don’t want to bash either Unions or bankers: I want to bring them to book, and make them face equality before the law rather than their own political or financial ends respectively.

Otherwise, we might as well start using the terms paedophile-bashing, rapist-bashing or even football salary-bashing. Nobody is being assaulted here – and nothing will be saved if we don’t change tack soon.

For once, Nigel Farage was right yesterday when he said the Government rules through fear. It’s true of the EU, and its even more true of the banking system. We need trading friends and banking system – just not these ones. To hell with the banks: let’s get Britain’s new business base growing. It would be an infinitely more fruitful use of the funds available.