Monetary policy has an enormous impact on politics. It’s time for a radical rethink (The Guardian)

“Theresa May knows monetary policy isn’t working. QE is increasing inequality, and low interest rates aren’t the solution”, writes Fran Boait in the Guardian, 12th October 2016.

Here’s a short extract:

It’s becoming clear that monetary policy has impacts that are of enormous political significance, and it isn’t being closely scrutinised by parliament. At a parliamentary debate on the effectiveness of quantitative easing on 15 September only eight MPs spoke. But more economists and politicians are waking up to the fact that you can’t carry out monetary and fiscal policy operating in total isolation, and if we want to rebalance our economy away from housing bubbles and an oversized financial sector, then monetary policy needs a serious rethink.

An idea that is gaining traction is that monetary and fiscal policy could work together to deliver “monetary financing”. Under this proposal, new money would be created by the Bank as with QE, but instead would be spent into the economy by the government to boost investment, employment and incomes. It’s an idea known as people’s QE.

Read the whole article here.