There’s nothing wrong with People’s Quantitative Easing

It’s fashionable among the economic scribes to deride Corbyn’s advocacy of what he calls People’s Quantitative Easing (PQE) as though it were somehow illiterate.   In fact it is an entirely sensible policy.   Conventional QE operates via the central bank buying bonds in the financial markets, thus transferring newly-created money to banks, hedge funds and other investors.    The effect is therefore to boost the prices of bonds, shares and other assets, making the rich richer.   The theory then is that this wealth effect should stimulate the economy as the investors who have been enriched by selling assets at high prices to the Bank of England spend some of their profits on the high streets or employing servants or investing in new businesses.   It is clearly a very indirect and extremely inefficient way of  stimulating an economy.   Both Tory and Labour governments have spent £375 bn in using this device with very little to show for it since we still have the slowest recovery for over a century.

A better alternative – though not the best – would be ‘helicopter money’.   Or slightly more realistically, send cheques of £20 a week to every man, woman and child as a sort of reverse poll tax.   Technically, if £375 bn were spent this way, these cheques could continue to be sent out every week for nearly 6 years since £375bn is roughly £6,000 per head when equally divided among the 64 million people of Britain.   That would indeed be a far, far quicker way of stimulating economic activity.   Since neither dropping money from helicopters or sending cheques every week to every household in Britain is very practical, a third alternative is to bypass the banks and, after full and detailed consultation with the CBI ansd TUC, invest directly in key industrial or manufacturing projects.

2 thoughts on “There’s nothing wrong with People’s Quantitative Easing

  1. “invest directly in key industrial or manufacturing projects.”
    Yes, that’s exactly what’s required.

    I’m also very much in favour of investing in house building, especially low cost housing but well designed to minimise their carbon footprint and reduce running costs. When the recession hit, I think the first companies to go under were those making and selling furniture, carpets and other furnishings, because there was little requirement when house building stopped or was greatly reduced.

    This would solve a number of problems: the housing shortage and unemployment, thus increasing tax revenues and putting more money into the economy.

    I live in an AONB which is constantly under threat from developers, so would rather see flats built in or near cities, rather than ruin beautiful countryside which has been placed under threat from more recent Tory planning regulations. More suitable accommodation for the elderly would also free up existing larger houses for families.

    At PMQs Cameron said we need a strong economy to build houses, but I think he had this the wrong way round – building houses would help to create a stronger economy!

    BTW – Jeremy did OK and succeeded in making it a far more civilised affair where others have previously failed. I’m sure he’ll gain in confidence and become more effective; I hope he’s getting some good advice.

  2. Rid us of these yanky companies whose onky gain is proffits by hook or by crook these have taking so many jobs away they cut wages also just so that they get bigger proffits you now the ones crapita serco maximus salus the names are endless but they take our monies offshore isnt it better taking back control once more of councils prisons nhs and all they sold off about time to show the peasants that this partys is about

  3. Slashing the so called ‘welfare benefits’ (surely bona fide National Insurance Payouts) of the sick, the disabled and the unemployed was not only an utterly wicked thing to do it can be seen to be crass economic incompetence. But it was overwhelmingly supported by economically illiterate and incompetent MP’s from all sides who need throwing overboard.
    The time for addressing this wickedness, this illiteracy and incompetence is long overdue.
    Let’s have some action now: we haven’t all got all day, all week or all year!

  4. As someone who isn’t particularly literate in economics I am having trouble finding a good layman’s breakdown of the pros and cons of corbyn’s economic plan. I find it interesting that the media which should provide that kind of service simply can’t be trusted to do so in a fair and honest way.

  5. The deflationary conditions may never be lifted, the development of advanced automated production technology such as robotics, 3D Printers and artificial Intelligence will cause products to become cheaper and cheaper causing a “technical deflation” that will make a long term PQE programme possible. PQE could replace the income that is lost cause of the decline of traditional labour by a rising “technical unemployment”. If PQE is just replacing lost income it can not lead to more inflation because the amount of money that is spend for consumption will be the same. I understand the PQE as a general dividend on technical progess that could be spread equaly to everyone.

    PQE could develop into a basic income over the time so it could not only help to fix the economy but also help to end poverty forever.

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