Ritchie doesn’t understand his own proposal

So, next downturn, we’ll get People’s QE. Huzzah!

Ambrose Evans Pritchard:

The Bank would buy the bonds as needed in any future QE. It would inject the stimulus directly into the veins of the economy through public works. The bonds could be sold again later to drain excess liquidity. This is how quantitative tightening has been working in the US.

Ritchie:
The reality is the bonds will never be sold again: the point is inconsequential. What is relevant is that he appreciates that there is a real need to do this

If the bonds are never sold again – or rebought, to be accurate – then it’s not QE. It’s straight monetisation of the deficit. Which, in extremis, might be a good idea. Milton Friedman certainly thought so.

But then if it’s an old idea then it’s not Ritchie’s is it? And if it is some new idea then it’s not QE anyway.

5 comments on “Ritchie doesn’t understand his own proposal

  1. “Public works”. Fucks sake, does he think it’s 1931? Who will work on these “public works”? Where’s the mass unemployment of manual labour?

  2. @Rob

    The Khmer Rouge didn’t worry about that little detail. I would imagine he doesn’t either.

  3. I’m, shovel-ready to be employed in mass public works rolling out Windows 10.

    The unemployment profile today isn’t what it was in the ’30s. Today it’s a mix of unemployables who don’t have the required ditch-digging PhD and skilled qualified contractors who employers refuse to take on full time.

  4. Murphy’s projects often remind me of an exchange in the film Conspiracy.

    Kritzinger

    “Your plan is unworkable. Your workers…15% urban workers, tradesmen: Almost 20%…
    …bureaucrats: Almost 24%…
    …doctors, writers, journalists,
    actors and so on: Almost 33%.

    Building roads?

    Three quarters of these have never picked up anything heavier than a pencil.”

    Heydrich

    “Yes, and most will be casualties,
    eliminated by natural causes.”

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