HERE’S a funny thing.

The Covid crisis has made the rich much richer and the poor much poorer. How come and what will be the outcome?

The getting richer part is easy to understand. Central banks around the world are bailing out their locked-down economies by printing money, otherwise known as “quantitative easing”.

In the UK, my old mucker Andrew Bailey at the Bank of England pressed his computer button in March and printed an extra

£300 billion. Just like that. In America, the Federal Reserve has announced it will print “unlimited” amounts of dollars, to keep the economy going and get Trump re-elected (not looking likely). The European Central Bank has been more modest, printing a mere £550bn to keep the EU afloat.

Where does all this lovely cash go? The sensible thing would have been to send every citizen a cheque in the post, with the proviso they have to spend the money by the end of the year. In the UK, that works out at circa £4500 a skull. A family with two kids would get £18,000 to spend, thus boosting consumption in the economy. In fact, there was talk of Chancellor Sunak giving everyone a small donation as a tax rebate, but somehow this idea got lost along the way.

So what did the Bank of England do with its new £300bn? The answer is that it used the cash to buy government bonds – which is a fancy way of saying it gave the money to rich people and institutions. The Bank bought back – at a higher than market value – UK Government debt held by individuals and financial institutions. The latter then use this cash bonanza to plough back into buying more assets – perhaps more government bonds, perhaps company shares, perhaps a new pad in Belgravia or the Caribbean.

Now, pumping £300bn into the pockets of the rich and famous – who already have more money than is good for them – means luxury spending is going to rocket. After all, in the midst of a pandemic and global economic meltdown, what

else is there to do with your time

and money?

Which explains the sudden boom in yacht sales. In the first six months of 2020, online auctions at the three top auction houses – Christie’s, Sotheby’s and Phillips – were up 436% on the same period in 2019. In fact, art prices have been beating records this summer.

It is “spend, spend, spend” everywhere – assuming you’ve got the cash. The Hermes boutique in Guangzhou took in $2.7 million in sales on the very first day it

re-opened after the lockdown was lifted in China. Also, the mega rich want to protect themselves from the virus, so they are shunning hotels and commercial airlines. Result: a hike in sales of high-end properties, and a boom in the charter industry for luxury yachts and private jets.

But there’s more to the wealth effect from central bank quantitative easing than a bit of extra cash in the wallet. The key impact from central banks printing money is that it drives up share prices.

To those who have, more will be given. Take Jeff Bezos, the main owner of Amazon. Last week, Bezos got a lot richer as Amazon’s share value rocketed after a favourable earnings forecast. His shares made $13bn in just one day, taking his personal wealth to circa $189bn. That’s £150bn in real money – not quite the Scottish annual GDP but getting close.

Other billionaires who have seen their wealth grow stratospherically since the pandemic began include Elon Musk, the bonkers Tesla boss, who is a mere $10bn richer since January. Everyone’s countless hours on Zoom have helped its founder, Eric Yuan, add $3.5bn to his net worth. Here in the UK, James Dyson’s fortune is up by £3.6bn – that’s sterling not dollars – making him Britain’s richest man.

Of course, global share prices go down as well as up. Shares fell steeply in March, when the lockdown was first introduced. But they have staged a remarkable recovery since then thanks to central bank quantitative easing giving investors cash to burn.

THE US Nasdaq index of high-tech shares is higher than before the Covid-19 emergency, partly because greedy investors are expecting to make a fortune from any vaccines that emerge.

Even the German DAX share index is back where it was at the start of February. Only the London FTSE 100 is well down on pre-Covid levels, thanks to worries about Brexit. British millionaires are buying property or gold – gold is up 20% this year.

Around the world, the gap between rich and poor has gotten wider since the pandemic began – but especially in Britain. The richest 5% of the population in Britain own more than 40% of the assets, according to the Bank of England. Quantitative easing artificially boosts the market value of those assets – shares, bonds, land, and art works. The rich just get richer and richer while the poor face mass unemployment.

This month, the Office for Budget Responsibility (OBR) published its latest official economic forecast, predicting a UK unemployment rate of 13.2% in the first three months of 2021 – that’s 1930s Depression levels of joblessness.

Conclusion: when we eventually stagger out of the economic crisis caused by Covid-19 – perhaps in the middle of the decade if we’re lucky – the social and economic divide in Britain will have become

a gaping chasm.

The sunny days when economic growth meant a rise in living standards for the majority of folk have long since gone. The so-called economic recovery being punted by Boris Johnson and Chancellor Sunak is nothing but political snake oil.

We need a different economic model. Keir Starmer’s Labour has abandoned former shadow chancellor John McDonnell’s robust “people’s quantitative easing” – investing new Bank of England cash directly into manufacturing and house building – for nothing very specific at all.

In fact, McDonnell’s plan was perfectly sensible, putting new Bank of England cash to productive use rather than giving it to billionaires. It is a supreme irony that the Tories and their Bank of England poodles are printing more cash than McDonnell ever proposed – except they are flushing it down the economic toilet, while making the rich richer.

In Scotland, with the SNP leadership having rejected a central bank or its own currency directly after independence, there could be no quantitative easing at all, people’s or otherwise.

This leaves the SNP without any economic plan except to borrow – which ultimately raises taxes and cuts public spending; or to gear up its new Scottish National Investment Bank. The latter is an important innovation but a perusal of the SNIB’s rules for recruiting board members shows it will likely be run by conservative bankers.

Independence in the 2020s means independence in the midst of an ongoing economic crisis. Any referendum vote may hinge on the SNP’s economic recovery plan. The only obvious recovery tool to hand is a people’s quantitative easing. But that means creating our own central bank and currency.

It’s that or see Scotland’s wealth heading to London, Wall Street or the Bahamas.