The Bank of England loves QE because it is a policy under its control. It opposes genuine reflation as possibly leading to runaway inflation – hardly Britain's top economic problem just now. But the governor himself is in denial. He appears genuinely to believe that QE is "putting money directly into the wider economy" and that "the one word we need to hang on to … is patience". He has brainwashed the Commons Treasury select committee to this effect. It is like watching a patient haemorrhaging blood on the operating table and telling him to wait for a new hospital.
If the government really wanted to inject cash into the economy, it would address the liquidity trap head-on. It would order the Bank of England to add, say, £1,000 to the current account of every adult citizen as a "people's bonus". Such an injection would not depend on Bank discretion. It would not await a government infrastructure project or a business wanting to invest. It would instantly transfuse between £30bn and £40bn of cash into the demand side of the economy.
This need have no impact on Osborne's borrowing targets or deficit, since it would be new money. The chancellor would declare the bonus "off-limits", an emergency stimulus to growth. It might push up some prices and suck in some imports. It might seem to reward the feckless as well as the thrifty. But it would do what the government claims it wants to do – that is, "inject money into the economy".
Free money is for rich people, sillies. The poors might spend it on junk food and beer, instead of caviar and champagne.