“Printing money is the last resort of desperate governments when all other policies have failed.” George Osborne, January 2009.

Today, the Bank of England announced that it would be injecting £50 billion into the economy by...er.... printing it... 


Ooooops. 


It seems that, in the words of Mr Osborne himself, we have a desperate government which has run out of resorts.


That is a shame for the rest of us, as the consequences of quantitative easing, as it is euphemistically known, are quite damaging. And they are particularly damaging to two groups to which Osborne's government might be thought to be sympathetic, if only because they want their votes.


They are the hard pressed, hard working, decent British families up and down the country, that so many of their ministers appear to meet every day (how do they manage it?), and older people on fixed incomes, particularly those about to buy their annuities.


The first group are hit by inflation. If you are hard pressed now, and you are likely to get no pay rise, or  a very small one, you must have been welcoming the reduction in inflation from 5.2% to 4.2%. You'll be getting poorer and poorer for sure. You'll still be able to afford less and less, but with falling inflation, it is, as it were, less, less and less. 


However printing money devalues the currency and the inevitable result of that is that things cost more. So inflation will be on its way back up again.


If you're a pensioner (and thus quite likely to vote), your pension will rise at the rate of inflation... or at least the rate of inflation that the government admits to, which as we know is never anywhere near realistic. 


And the poor are usually hit harder by inflation, particularly if it is, as it has been recently, inflation of the absolute necessities of life: food, gas, electricity. Some estimates have put inflation for the poor at between 12% and 20%.


Pensioners who saved a bit for their old age are cruelly hit, because even if they have the money tucked away in long term, high interest accounts, it is unlikely to be returning anything like the rate of inflation that its owners are suffering. In short they too have less and less each year. They may as well go out and splash the lot on having a good time, and turn to the state for help with rent and council tax.

The people coming up to retirement are finding that their saved pension pot will buy them much smaller pensions. Financial services company Hargreaves Lansdown found that a £100,000 pot would have bought an annual pension of around £7,800 in 2008, but just over 3 years later would only purchase a pension of £5,900. With the state pension at around £5,000, that would give a retiree an income of around £11,000 (less tax and council tax). 


With poverty level in the UK set at around £16,000, that shows the kind of future the average Briton will have in old age. 


But back to Osborne, the Soothsayer of Old London Town, I'm inclined to think that if you are in politics, with even a slim hope of power one day, you should be careful what you criticise and how you criticise it.


What do you say to that, Oh Wise Soothsayer of Old London Town?