No way to rebuild economy

CASInO capitalism is back. Stock markets around the world have rallied dramatically since the pandemic- induced sell- offs in February and March.

This is despite economic data indicating we are on the cusp of the greatest downturn in memory with all the associated problems of mass unemployment and bankruptcies.

Some companies in industries such as healthcare, supermarkets, online retail and telecoms will do well in the new normal environment and the increase in their share prices are based partly on this.

But the rising tide has lifted most shares. This is down to the central banks and their commitments to ‘do whatever it takes’.

With interest rates already at nearly zero after the 2008 financial crisis, the U.S. Federal Reserve, Bank of England and European Central Bank have little wiggle room. So they have turned to magicking trillions of dollars out of thin air.

The theory of quantitative easing is that it will boost spending and investment in the economy. But increased bond and share prices benefit the already wealthy.

The central banks argue that this trickles down to the general population, but it is not an effective or efficient way of achieving this. driving up share prices does nothing to increase productivity.

There is another way. The Government should issue bonds dedicated to infrastructure investment and the re-skilling of people who will need to find new careers.

These bonds would lead to something real: renewable energy projects, improved transport infrastructure and a more skilled workforce.

Repeating the policy responses of the financial crisis of 2008 — quantitative easing to the benefit of the City and austerity for the masses — will lead to the same results: an insipid recovery, polarised society, flat wages and zero productivity growth, but record share prices.

TOM HOOPER, Bideford, Devon.