The event came just two weeks after the Bank of England announced its intention to create £70bn in an attempt to stave off a recession. It will use the new money to flood financial markets and push up stock and bond prices.
At the launch event, Positive Money supporters held up banners saying “QE drives inequality”. This reflects increasing concern about QE’s distributional effects. A Bank of England report showed that because QE has kept stock and bond prices high, and 40% of stock market wealth is held by the richest 5% of households, QE has made those households better off by an average of £128k each.
Positive Money is launching its campaign for QE to be abandoned in favour of an alternative which doesn’t have the same negative side-effects. It recently coordinated a letter from 35 leading economists calling on the Chancellor to support the creation of new monetary policy tools. Alternatives to QE proposed by Positive Money include creating new money to finance a cash transfer to households, a tax cut, infrastructure spending or house-building.
Positive Money director Fran Boait said:
“Theresa May has warned that QE increases inequality, and yet her government has just given the go-ahead for the Bank of England to do more of it. This time, we’re not going to stand back and watch this happen.
We’ve launched this campaign to call on the Chancellor to abandon QE and allow the Bank of England to create money for people, not financial markets. We are building a coalition of economists, policymakers and ordinary citizens to hammer this message home over the coming months.”
One of the economists supporting the campaign, hedge fund manager Eric Lonergan said,
“Quantitative easing as currently implemented is distorting asset prices, with little tangible benefit to the economy. It may even be damaging, given its impact on pensions and savings.
These are no longer controversial observations. We need monetary policy to directly target household disposable income – through a citizen’s dividend”.
We have started a petition calling on the Chancellor, to give the Bank the means to target the money at people, not financial markets. Please add your name.