CommentIsLinked@LDV: Vince Cable – Confiscating savings from the poor is both stupid and cruel

The Independent today has an op-ed piece from Vince Cable. You can read it in full here, but here’s an excerpt:

As it became clear that we faced a serious recession we Liberal Democrats broke the taboo of the political and economic Establishment by calling on the Monetary Policy Committee to cut interest rates by 2 per cent initially. Our call was treated like a rude noise in church. But it has happened – and more – and we now have a two per cent base rate.

The danger now is of deepening recession mutating into deflation and a downward spiral of falling prices and wages. The Bank of England have to minimise that risk. They should cut further today and keep cutting: the classic response favoured by monetarists and Keynesians alike.

The base rate is, however, becoming a secondary concern in banking and monetary policy. The issue is now the supply of credit more than the price. Despite the injection of capital the banks are on strike…

The real scandal is the penal treatment of savings under the means-tested benefit and pension credit system. The Government, in effect, is confiscating savings from the poor and thereby destroying their incentive to save: this is a stupid and cruel policy.