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4 May 2016
Prominent politicians who advocate a different type of QE
In a recent post, Positive Money showed that there is a strong intellectual history behind the various proposals for alternatives to QE that were aimed at the real economy.
In a recent post, Positive Money showed that there is a strong intellectual history behind the various proposals for alternatives to QE that were aimed at the real economy. Today, these types of proposals are commonly referred to as “People’s QE”, “Sovereign Money Creation”, and “Helicopter Money” amongst others.
They advocated a different form of QE than that which we are experiencing today, one which would be relayed away from the banking sector and speculators and towards consumers, non-financial businesses and low income earners – and one that could directly back investment projects, rather than create risky asset price bubbles.
We are currently releasing a series of posts that illustrate the various influential people who advocate a different type of QE. Each post will address a separate category of influencers. Today’s post will highlight quotes made by prominent politicians. Subsequent posts will highlight quotes made by civil society organisations and policy experts.
Politicians
John McDonnell, Shadow Chancellor
“QE is good enough to save the banks but [People’s QE] isn’t good enough to put people to work? …We would only use it in the right time of the economic cycle. Interestingly enough, one of the hedge fund managers in the city last week came out in favour of [People’s] QE because he said the last round of QE increased the price of assets and poured money into their pockets. If you design it properly and make sure it goes into infrastructure and skills you can grow the economy but only in the right time of the economic cycle”
http://www.bbc.co.uk/programmes/p033rr21
Zac Goldsmith, Conservative MP
“If the majority view is that quantitative easing is necessary, we need to ask this question: why not inject those funds into the real economy—into housing and energy projects of the kind that Opposition Members have spoken about—rather than using the mechanism in a way that clearly benefits only very few people within the world of financial and banking wizardry that we are discussing?”
http://positivemoney.org/2014/11/mps-debated-money-creation/
Lord Robert Skidelsky
“An alternative would be to distribute the central bank’s newly issued money directly to housing associations, local councils, or national or regional investment banks – any organisation that could carry out infrastructure projects. This is what Corbyn proposes. Corbyn should be praised, not castigated, for bringing to public attention these serious issues concerning the role of the state and the best ways to finance its activities. The fact that he is dismissed for doing so illustrates the dangerous complacency of today’s political elites.”
MP Peter Lilley, Conservative MP and former Cabinet minister
“I am rather attracted to the idea of helicopter money; …I think it was he [Milton Friedman] who introduced the metaphor, and said that it would be just as effective if money were sprayed by a helicopter as if it were created by banks.”
http://positivemoney.org/2014/11/mps-debated-money-creation/
MP Jeremy Corbyn, Leader of the Opposition
“One option would be for the Bank of England to be given a new mandate to upgrade our economy to invest in new large scale housing, energy, transport and digital projects: Quantitative easing for people instead of banks.”
Paul Tang, Dutch MEP
“[Jeremy Corbyn] says what we need is QE for the people and not for banks. This is an interesting idea and some economists tend to agree with him, which makes it even more interesting…I also saw this week Willem Buiter who says well, if Citibank is projecting that we are going into a global recession, what we need now is helicopter money – this is not the same as QE for the people – we need helicopter money not only in the euro and in the UK but also in the US and in China.”
http://positivemoney.org/2015/10/mario-draghi-is-open-to-considering-helicopter-money/
Richard Burgon MP, Shadow City Minister
“The horror with which the Westminster elite has reacted to Jeremy’s proposal of “quantitative easing for people instead of banks” is just plain silly. £375bn was created by the Bank of England to recapitalise the banks and inflation is around 0 per cent. But the usual suspects attacking Jeremy Corbyn’s clear anti-austerity economic policies claim that a smaller level of “quantitative easing” in the real economy would inevitably lead to high inflation. There is simply no evidence for this.”
Molly Scott Cato, MEP for South West England
“Quantitative easing to date has simply further benefited wealthy elites. But QE is just a technique to create money and we need to reclaim it for the common good. We need the money we create to be invested in a future we want to see. So, for example, we need to invest in energy from safe, clean renewable sources and provide safe clean homes for all the citizens of our continent. This public investment will create jobs for the thousands of unemployed across our continent while simultaneously building up our green infrastructure.”
http://mollymep.org.uk/2015/06/15/greenqe/
Caroline Lucas MP
“It is understandably difficult for people to get their head around the idea that the Bank of England could magic up £50 billion of Green Quantitative Easing. Yet it has already e-printed £275 billion (around £4,000 for every man woman and child in the UK) in an effort to get increased borrowing to British business via giving the money to the banks. But this money has completely failed to reach small businesses in the real economy which urgently need support. The bankers have had their £275 billion chance. Now it’s time for the Bank of England to help create jobs, stabilise the economy, and support the environment through a package of Green Quantitative Easing.”
http://www.carolinelucas.com/latest/caroline-welcomes-report-calling-for-green-quantiative-easing
Mark Durkan MP, former deputy First Minister of Northern Ireland
“My right hon. Friend the Member for Oldham West and Royton (Mr Meacher) made the point that the whole approach to quantitative easing—several Members have questioned it at a number of levels—proves that the underlying logic of sovereign money creation is feasible and workable. It is strange that some of the people who would dispute or refute the case for sovereign money creation sometimes defend quantitative easing in its existing form and with its current features.”
http://positivemoney.org/2014/11/mps-debated-money-creation/
The Late MP: Michael Meacher, Labour Party of United Kingdom
“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 and TUC, invest directly in key industrial or manufacturing projects.”
http://www.michaelmeacher.info/weblog/2015/09/theres-nothing-wrong-with-peoples-quantitative-easing/
Note: Positive Money has recently released a Guide to Public Money Creation: Outlining the Alternatives to Quantitative Easing