Rewarding Problems

Sir Mervyn King is the big cheese at the Bank of England. He claims to understand the problems faced by people who live on their savings. At a press conference, he said,

I have deep sympathy with those who are totally unconnected with the origins of the financial crisis who suddenly find that the returns on their savings have reached negligible levels. These are consequences of the painful adjustment prompted by the financial crisis and the need to rebalance our economy.

He insisted that there can be no special help for particular groups.

All groups in society are suffering from the financial crisis. Difficult though it is, we have to make a difficult judgement about the right course of action for the economy as a whole.

This is twisted thinking. During the housing boom, Mervyn inflated the currency to benefit borrowers. Now things have turned to custard, he forces interest rates down to benefit borrowers. Rewarding borrowers got us into trouble, so he punishes savers to get us out of trouble.