The House of Commons Treasury Select Committee is undertaking a landmark inquiry into monetary policy. Our aim is to persuade the committee to acknowledge monetary policy’s bad side-effects and to consider the benefits of fairer and more sustainable monetary policy tools. With this in mind, we coordinated a joint letter from over 40 leading economists, as well as a statement from nearly 10,000 people.
We made a comprehensive submission of our own, in which we set out how reform of monetary policy could help rebalance the economy away from our dependence on financial services and property speculation.
This submission argues that:
- Loose monetary policy is ineffective because it relies on an already highly-leveraged private sector to take on more debt
- By artificially inflating asset prices, QE has contributed to inequality and worsened the housing crisis
- Monetary policy is running out of ammunition to respond to future crises
- A new relationship between the Treasury and the Bank of England is needed to allow the creation of new monetary policy tools
- A monetary-financed stimulus would be preferable to quantitative easing in its current form
The submission has been published on the Parliament’s website and you can read it in full here.