Stop austerity & cut deficit by printing money & sending cheque to every household (except rich)

Arnaud Montebourg, France’s economy minister who has just resigned, is quite right.   He denounced austerity policies as “absurd” because they had brought about “the most destructive crisis in Europe since 1929”   He rightly attacked the Eurozone’s fiscal stance as “the cause of the unnecessary prolongation of the economic crisis and the suffering of the European population”, and he correctly demanded a major change of policy away from “the extreme orthodoxy of the German right”.   Montebourg is not the only one who has been railing against the absurdity of counter-productive policies which are relentlessly dragging down the Eurozone into deflation.   Renzi, the young Italian prime minister, has rightly been demanding an easing of over-tight fiscal policies and a longer timescale to generate the growth to enable his country to overcome its excessive indebtedness.   Italy, like Japan before it, has now endured nearly two decades of falling living standards and in the absence of growth will soon find maintaining its interest payments unsustainable.

Merkel’s policy of endless austerity is wrong, wrong, wrong.   Worse than that, it is ruthlessly selfish.   The German position, ostensibly coloured by their experience of hyperinflation in 1923, is that any monetary expansion in the Eurozone must be resisted like the devil.   Their real motive is that enforcing austerity is an effective weapon for achieving German economic dominance throughout Europe by relegating France and Italy, let alone the southern European rim, to the sidelines as subordinate partners.   However, all hope is not yet lost.   According to the latest quarterly figures Germany suffered a reduction in its GDP of 0.2%.   This is not good news in principle, but the only thing that will chasten the German government out of their arrogant smugness is when Germany itself begins to suffer a serious downturn.   Germany’s over-dependence on manufactured exports may now begin to tell against it, and its obsessive fetish with an excessive tight fiscal stance may slowly become untenable.

It might be thought that the woes of the Eurozone have little to do with the UK, though half our exports still depend on Eurozone growth.   With UK growth forecast to be 3% this year Britain, as the Tories will endlessly tell us, is doing well, indeed a model for other countries.   But arrogance is not just a German problem, it’s Osborne’s too.   The signs of cracks in Osborne’s economic facade are already beginning to appear.   The official tax receipt figures for July turned out not to be the £50m surplus expected, but a £234m deficit, which takes some explaining if growth is really 3%.   Moreover the so-called recovery is heavily weighted in favour of services (predominantly the City of London) and not in manufacturing or construction (the rest of the country).   As the recovery steadily implodes next year for lack of demand, the UK will need to learn the lessons of the Eurozone and to stimulate demand either by QE targeted directly on industrial projects, not the banks, or by printing money and a helicopter drop (metaphorically speaking) of a large cheque to all families throughout the UK below the top quartile.


4 thoughts on “Stop austerity & cut deficit by printing money & sending cheque to every household (except rich)

  1. arrest those responsible for this collaspes yet they still fiddle their bonuses while the poor pay has for buying stuff one cannot buy if you havent that to spend ask rtu ids his pants it seems are paid by us but nethertheless we suffer yet ask george and carney were is this upturn in the markets even food bills are down the only ones spending it seems are the rich and those in parliament who dont pay nowt out has its paid for by that open till jeff3

  2. This is precisely the advice given by Martin Wolf here- “The Case for helicopter money.”

    Also Adair Turner

    As Keynes advised, “we should create money and hide it in bottles in coalmines.” He advocated printing money and spending it directly into the economy during periods when the banks stopped lending because he knew that bank lending was an essential part of the money supply (as in his treatise on money). He knew that if government did not create money deflation and austerity would result.
    He also advocated deficit spending with the view to taxing later when things improved. Although the wealth accumulated by the banks and the top few percent would allow for a land and wealth tax now.
    Ignoring this advice is not just brutal but incompetent, even if you are working for the City. The banks will have very little wealth left to extract if they starve the economy to stagnation.

  3. ‘printing money and a helicopter drop (metaphorically speaking) of a large cheque to all families throughout the UK below the top quartile’ sounds good to me. However, as the economist Steve Keen emphasises, there has to be a proviso that the cheque must be used to clear household debt before any other spending. IIRC the size of the cheque should be sufficient to reduce aggregated household debt to 15% GDP. Brilliant advantage, apart from facilitating increased demand, the banks would be stopped in their tracks from trading in debt and would be vulnerable to proper regulation i.e. separate retail and investment or better still nationalise.

  4. All of which seems pretty twee and redundant on a day when yet another child abuse scandal, (once again under a Labour controlled council,) is splashed across the headlines, (“it said that three reports from 2002 to 2006 highlighted the extent of child exploitation and links to wider criminality but nothing was done, with the findings either suppressed or simply ignored; sound familiar, Mid Staffs for example?)

    “The Times revealed details showing that police and agencies had extensive knowledge of these activities for a decade, yet had failed to prosecute.”

    Once again Blair’s New Labour at it’s completely rotten worst?

    As always it’s was nobody’s fault and no one is to blame.

    Is this what we’ll be voting for if we re-elect Labour?

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