Why are NHS funding critics silent on Quantitative Easing?

After the prime minister’s announcement that the NHS would be given a large boost in funding only partly paid for by taxes, some backbenchers called for fiscal responsibility. For them it is paramount that a government should live within its means and avoid increasing the budget deficit. And yet they have nothing to say about monetary policy.

Quantitative Easing (QE), the creation of money out of thin air by the Bank of England, with the intention of boosting demand has been carried out in a manner highly beneficial to owners of existing assets. The Bank’s website explains how it works. It buys bonds from the private sector with money that did not previously exist, with the intention of raising the price of assets, including shares, domestic houses, and commercial property, which by definition lowers yields. Borrowing not only becomes cheaper but the ‘wealth effect’ of higher asset values leads owners whose houses and shares are now worth so much more to increase their spending, creating demand for goods and services and increasing employment.

QE has worked, but as Andy Haldane, the chief economist at the Bank of England has repeatedly shown, the main beneficiaries have been people who already owned assets before QE started.