2010, People’s Quantitative Easing: Professor Richard Murphy and Colin Hines

Accountant Richard Murphy and Green New Deal co-ordinator Colin Hines, anticipate another credit-crunch-induced “crash”, when the only feasible and affordable rescue package will be another form of quantitative easing (QE). See their paper here.

Christopher Thompson, a widely respected journalist, recently wrote (New Statesman paywall) about the asset-rich reaping the benefits of Western governments printing trillions to boost their economies, while the millennials and poor have lost out. An earlier Telegraph article noted:

“A pervasive sense that the financial elites pulled a blinder – while austerity is for little people”. 

QE must generate jobs for the “left behind” and other workers in the entire country rather than today’s beneficiaries – the financiers and the property-and-share-owning rich.

gren qe murphy hines coverMurphy and Hines advocate revisiting Jeremy Corbyn’s People’s Quantitative Easing (PQE) which would help to fund vote-winning economic improvements nationwide.

PQE was a policy announced during the 2015 Labour leadership election, requiring the Bank of England to create money to finance government investment in housing and public transport. This would aim to turn the UK into a high-skill, high-tech economy and to build more council houses in order to lower long-term housing benefit costs. To achieve this, the Bank would purchase bonds for a state-owned “National Investment Bank”. Once the economy had recovered, PQE would not be needed as increasing tax revenues would pay for necessary investment.

Criticised

Many commentators, apparently content with the status quo, criticised the proposal or damned it with faint praise like Robert Peston, when BBC News Economics Editor, who could only see People’s QE surviving “as a contingent rainy-day monetary tool, for when the economy is next in direst straits”. http://www.bbc.co.uk/news/business-3437608

Endorsed

Economist Robert Skidelsky offered a qualified endorsement of Corbyn’s proposals to carry out PQE through a National Investment Bank and both The Guardian and the Financial Times have published favourable articles assessing the proposal. The Independent published an article arguing that a limited amount of PQE would usefully increase employment and inflation, reducing the burden of debt accumulated since the financial crisis of 2007–08.

The Daily Telegraph reported that HSBC’s chief economist, Stephen King, and Standard Life’s senior international economist, Jeremy Lawson, support policies such as People’s Quantitative Easing should the economy move into another downturn despite the use of traditional quantitative easing (QE) policies, one Telegraph columnist opening:

“Jeremy Corbyn’s QE for the people is exactly what the world may soon need” – just as Murphy and Hines propose – “to inject the money directly into the veins of the real economy”.

 

 

 

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