Sir, – Under quantitative easing, the ECB will print money, use it to buy government bonds from banks and financial institutions, thereby pushing bond prices up and bringing bond yields (ie interest rates) down – not forgetting that the institutions will pocket substantial profits when they sell their bonds at such artificially inflated prices. The institutions then will have surplus cash which they need to invest, either by buying shares or property (pushing up such prices), or by lending to corporates (to invest in their businesses and boost employment) and to consumers (to lift consumer demand and invest in property, thereby pushing up property prices and retail prices). The net result is that the banks profit and consumers get loaded with debt. And property prices will be artificially inflated, creating another bubble waiting to burst when demand subsides. The trick will be to stop QE before too much consumer demand is chasing too few goods, or else rampant inflation will result. Why doesn’t the ECB just send a substantial cheque to each and every person in the EU each month? We would at least avoid creating a plague of consumer debt. – Yours, etc,
ROGER BLACKBURN,
Naul,
Co Dublin.
Sir, – I passionately hope that the quantitative easing programme will include my arthritic right knee. – Yours, etc,
GRAEME GUTHRIE,
Westport, Co Mayo.