The US Fed’s decision to print some more was clearly designed to show Mr Obama they are doing something, at a time when he needs to show his determination to get unemployment down.
There was no great need to print more dollars. The US banks are better placed than European ones. The US money supply has been expanding modestly anyway. The US economy has been performing better than most EU economies.
The immediate joy in world markets at the thought of yet more money in circulation was to be expected. Maybe Mr Bernanke is right and this latest round of money printing will not be too inflationary in itself. However, the promise to keep interest rates on the floor until 2015 at the earliest is another blow to savers. It is also surprising. There could come a time before then when the Fed needs to brake the inflation it is currently trying hard to provoke.
On the other side of the Atlantic Mr Draghi has been hinting that he wants to print, but his stated policy still does not allow that. He has to watch his back, as Germany is no fan of money printing after their bitter experience of it in the 1920s when it led to hyperinflation. Markets also seem to ignore the fact that Spain and Italy will have to enter IMF programmes before the ECB will buy their bonds.
The UK is pressing on with its latest programme. With RBS and HBOS still troubled banks, and with the stiff regulatory controls on new credit, the QE’s inflation consequences are for the moment restrained. In recent weeks the thought of more US QE has knocked the dollar generally, including against the pound. The pound, of course, devalued so much more early in the Credit Crunch when all this monetary experimentation first began.
There is no substitute for creating stronger and more competitive banks, and for both the private and public sectors getting on top of their excess debt problems. Money printing may delay some of the adjustment, but it does not replace the laws of arithmetic. Mr Micawber still was right to say keeping income slightly higher than expenditure made for greater happiness.