Printing Money Is A Recipe For Disaster

Conflicting inflation figures left some confused. The borrowing debt is set to run into trillions of pounds. The government is set to start 'printing money'. Brown is a victim of his own economic spin. His past false boom years are coming back to haunt him. 

Lies, deceit and spin go hand in hand with the New Labour project but it's in the death throes of the disaster of the economy where the public feel it most. 

Brown and Downing Street have tried every trick in the book to play down the crisis because to admit the truth is to admit past mistakes. There are signs the 'narrative' is changing but it's too late for all that now. 

The real economy is already deflating. Printing money will just make matters worse.

The Retail Price Index (RPI) which includes housing costs is at a 49-year low of 0.1%. But the government's preferred Consumer Price Index (CPI) is stuck at 3%. The RPI has taken a dive because of falling property prices and sinking mortgage interest payments. 

Grave misjudgements were made in the past over which inflation figure to use. Now the Bank is being forced to target CPI to dig the country out of a hole. 

But CPI will catch up later in the year with heavy discounting which is likely to put both measures of inflation into negative deflation territory. 

Back in 2003 as chancellor, Brown switched the inflation target from RPI to the more accommodating CPI.

With house prices soaring, it made sense to spin a measure of inflation that excluded property. And that would allow the Bank of England to cut interest rates.

If the Bank had been allowed to target RPI then interest rates would have remained higher.

Either way, the inflation slump leaves the country dangerously close to outright deflation, with reports the Bank of England is to begin the abhorrent and disreputable method of 'printing money' within weeks, as a quick fix. 

Any government which has to resort to 'printing money' is on its beam ends, with the threat of a new bout of inflation always lurking round the corner.

Inflation will rise while the economy continues to stagnate. The toxic mix of high inflation and near-zero growth leads to 'stagflation'. Brown's government will be the laughing stock of the world. 

The country is hopelessly in debt and borrowing is at a record high. But the government still wants to 'print money' to fund a reckless borrowing binge and ludicrous public spending spree. Sooner or later a new government will have to confront the underlying problems in the economy.

The Orange Party believes the route out of this economic mess is easy to see but because of its past record, impossible for this government to follow. 

There's must be an end to reckless borrowing which will saddle people with debt for decades to come. Hugely expensive white elephants, vanity and legacy projects must be scrapped. UK manufacturing, which is the key survival, must be boosted and supported to kick start the economy, with proper jobs, not the New Deal sham. 

A recent C4 documentary, Dispatches, saw Brown's former trade minister, Lord Digby Jones, despair at the dire state of fiddled jobs figures and blatant, totally meaningless jobs propaganda, while the manufacturing heart of the country is being ripped out. 

Jones is in no doubt: "Brown borrows billions to bail out the banks, he is letting manufacturing fall into an abyss." 

While other countries were protecting their manufacturing skills base, here the New Labour project saw the future wealth in creative and emerging technologies - and the City. Oh dear. 

The recession depression will last for a decade or more. A government, any government, has to  take steps now to preserve jobs, skills and factories or, as Jones warns, "we could blight an entire generation with long-term unemployment and the economic balance of Britain will not be sustainable."

Instead, the government flounders and flannels around printing money and borrowing more as its only escape route, trying to make a shiny silk purse out of an old sow's ear.