In a recent post Positive Money showed that there is a strong intellectual body of history behind the various alternative proposals for QE [Insert Link Here]. Both John Maynard Keynes and Milton Friedman proposed a style of Quantitative Easing (QE) that was 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.
In effect, both Friedman and Keynes advocated a different form of QE than that which we are experiencing today: one that 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.
At Positive Money we have been trying to keep track of Keynes’s and Friedman’s contemporaries and share them with the public. Accordingly, we will be 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. In our previous post, we highlighted some of the quotes made by prominent Policy Makers and Public Advisors and people working in the financial sector. Today’s post will highlight quotes made by prominent Journalists and Media Commentators. Subsequent posts will highlight quotes made by: Politicians, Activists and Special Advisors.
Journalist and Media Commentators
Martin Wolf, Chief Economics Commentator at the Financial Times
“The Case for Helicopter Money…What makes this policy so powerful is the combination of fiscal spending with monetary expansion: Keynesians can enjoy the former; monetarists the latter. Provided the decision on the scale of financing rests in the hands of the central bank and it, in turn, looks at the impact of the policy on the economy, this need not even generate high inflation, let alone hyperinflation.”
Ambrose Evans Pritchard, The Telegraph
“We may need QE4 after all. If so, let us inject the stimulus money directly into the veins of the economy next time, using it to build roads, houses and an infrastructure fit for the 21st century.”
Anatole Kaletsky, acclaimed author and journalist for Herald Tribune and Reuters
“Instead of giving newly created money to bond traders, central banks could distribute it directly to the public. Technically such cash handouts could be described as tax rebates or citizens’ dividends, and they would contribute to government deficits in national accounting. But these accounting deficits would not increase national debt burdens, since they would be financed by issuing new money, at zero cost to government or to future generations, instead of selling interest-bearing government bonds. Giving away free money may sound too good to be true or wildly irresponsible, but it is exactly what the Fed and the BoE have been doing for bond traders and bankers since 2009. Directing QE to the general public would not only be much fairer but also more effective.”
Simon Jenkins, journalist at The Guardian
“Abandon helicopters. Use bombers. Bomb Germany, France, Italy, Greece, the entire Eurozone. Bomb them with banknotes, cash, anything to boost demand. The money must go straight to households, not to banks. Banks have had their day and miserably failed to spend. From now on they get nothing.”
Larry Elliot, journalist at The Guardian
“QE could have been better designed. There could have been a better dove-tailing of monetary (interest rates and QE) and fiscal (tax and spending) policies. There was a strong case for the targeting of QE at specific sectors of the economy, such as green infrastructure. In retrospect, far too much faith was put in the banks to channel QE to where it was needed. Handing a cheque directly to members of the public would have got money into the economy much more effectively.”
Robert Peston, the BBC’s former Economics Editor
“Because what has been really striking about QE is that it was popularly dubbed as money creation, but it hasn’t really been that. If it had been proper money creation, with cash going into the pockets of people or the coffers of businesses, it might have sparked serious and substantial increases in economic activity, which would have led to much bigger investment in real productive capital. And in those circumstances, the underlying growth rate of the UK and US economies might have increased meaningfully. But in today’s economy, especially in the UK and Europe, money creation is much more about how much commercial banks lend than how many bonds are bought from investors by central banks.”
Edward Harrison, financial commentator for the BBC, CNBC, and Fox News
“What we want to see for economic growth to occur is that financial institutions are making loans to productive parts of the economy that have the greatest impact on sustainable long-term economic growth. Further, we want to see this economic growth underpinned by household and business income that supports further growth down the line. The key here is that the growth comes not from the financial sector or financial assets but from productive assets that throw off income which can be used by businesses and households to repay the debt and take on even more as productive ventures become available.”
Wolfgang Munchau, columnist for the Financial Times
“A helicopter drop means that the ECB would print and distribute money to citizens directly. If it were to distribute, say, €3,000bn or about €10,000 per citizen over five years, that would take care of the inflation problem nicely. It would provide an immediate demand boost, and drive up investment as suppliers expanded their capacity to meet this extra demand. The policy would bypass governments and the financial sector. The financial markets would hate it. There is nothing in it for them. But who cares?”